Taking a Little Trip and Trading's Resemblence to Poker

As we conclude another week at the Finance Magnates newsdesk, our editors take a brief detour to enlighten us with a selection of their favourite stories and reading recommendations.

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Victor Golovtchenko commences by taking us on a little trip...

Taking a Little Trip

A new popular trend in Silicon Valley could hold the key to performance boosting drugs. Wired Magazine is running a story that could surprise many executives all over the globe and push them into experimenting with LSD and psychedelic mushrooms.

While you might be looking into the stimulative effects of coffee and some legally available performance enhancing drugs, silicon valley execs are taking their competitive advantage to a whole new level.

Psychedelics have long been associated with creative thinking, however their usual recreational use is not suitable for work environments due to the profound spiritual experiences that LSD and mushrooms can cause in a user for a period of as long as 12 hours.

Wired explores a “microdosing” trend while reminding us that the current digital revolution which we are all enjoying was started in the aftermath of the psychedelics cultural movement which started in the '60s.

Some top execs (including Steve Jobs) have been admittedly dosing themselves, while the US government appears to have been experimenting with volunteer scientists who have managed to solve complex problems while under the influence.

The Fall of Man

You have probably seen the hundreds of books out in recent years claiming that the modern world is either turning us dumb

or giving us intelligence greater than any previous generations. But while the smart phones vs smart people debate rages on, a more likely observation was left unnoticed - until now.

Writing at the Washington Post’s Wonkblog, Christopher Ingraham highlights a new study revealing that today’s men are not nearly as strong as their dads were.

It shouldn’t be unexpected to learn that people who grow up in the age of the information/service economy don’t have the same physical capabilities of their more industrial forefathers, but I haven’t seen it really discussed in academia or the media.

It is a subject that could have grave implications for health, retirement and other aspects of planning for the future – for now it’s interesting to see that for the first time in history, the old are stronger than the young.

Just imagine what Hemingway would say if he had lived to see a 50 year old steel worker arm-wrestling a 25 social media manger. Computers are making us weak!

Investing and Poker

The renowned hedge fund manager David Einhorn once said: “Both poker and investing are games of incomplete information.

You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical”.

Well, apparently he was right, at least when it comes to the investor engaging in trading. Trading bares a strong resemblance to poker.

We tend to think that a good trader runs complex calculations, based on his knowledge and experience, upon deciding to buy or sell a stock, currency or commodity.

But in fact, the process that goes through his mind in the seconds before buying or selling looks more like the decision to turn left or right when somebody walks in front of you in a narrow street, rather than solving a math formula.

An article written by Jon Asmundsson, published recently in Bloomberg Markets, examined the psychology behind the trading process.

The article presents research, based on an MRI test that was conducted on traders, that shows that the most important feature that a trader must hold is the ability to read the situation based on hints. Basically, to successfully guestimate your way through.

Smart Machines on the Rise

For the first time, Gartner has added the Blockchain and 15 other new technologies to Hype Cycle For Emerging Technologies 2016. While the blockchain is more or less known to the brokerage industry, other additions may not be – but they are still very interesting.

Machine learning, general purpose machine intelligence and smart workspaces are the topics that we should take a closer look at.

Whenever new technology pops up on the scene everyone wonders how this can be used in our industry. In an article published by Forbes, Louis Columbus claims that smart machine technologies will be the most disruptive class of innovations over the next 10 years.

'Disruptive' is a key word in the fintech industry. Gartner sees the following technologies leading this revolution:

Smart dust, machine learning, virtual personal assistants, cognitive expert advisors, smart data discovery, smartwWorkspace, conversational user interfaces, smart robots, commercial UAVs (drones), autonomous vehicles, natural-language question answering, personal Analytics , enterprise taxonomy and ontology management, data broker PaaS (dbrPaaS), and context brokering.

Every single technology, except perhaps drones and autonomous vehicles, can be used in the trading industry. Just imagine how these could be used in marketing and customer care departments.

Education? Why not – smart robots teaching new clients how to trade. The one thing that bothers me is, will such smart machines need a licence from regulators to teach?

That ends another week of stories that our editors are reading. Feel free to share your views in the comment section and any recommendations of your own. We look forward to hearing your opinions!

Check out our previous posts here:

The Perils of Low Interest Rates and Subprime Auto Loans

No Gold Medals for Waste, Corruption….or Smog

No Doubt The Most Brutal Fight Yet

Robots, Cyber Motives and a Trader’s Addiction

An Attractive Commodity and the Pyschology Behind the Far Right

Banking on Pokemon and a Philosophical Victory

A New Breed of Plutocrats and China’s New Weapon

Gold Standard After Brexit and a matter of National Identity

Genetically Edited Humans And Electronic Persons

Computerised Storytelling And Quantitative Easing Doldrums

Eyeing Up This Year’s Biggest Tech IPO And The Search For Quantum Questions

Financial Efficiencies And Inefficiencies

The Bank Robber And The Psychologist

Fly Me To The Moon….And Bremain In The EU

Brexit: Ice-Cream Magic Or An Artistic Defeat

Virtual Reality and the Dark Side of Shaming

Insider Trading and the Dude Driving Istanbul Mad

On Valley Life and Opening Up AI