Friday, August 18, 2017

Making Money on Fear: Volatility and Futures Derivatives

Recent events have shocked the market, creating both panic and opportunity for investors. One such opportunity exists in a class of vehicles whose underlying value is derived from a measure of volatility in the market.

The index, colloquially called the "fear index" on wall street, is the VIX.

When the vix rises, it is indicative of fear, OR uncertainty (they are the same as far as market is concerned). Now, the derivatives which I'm referring to are actually not based on the VIX, but on ANOTHER derivative of the VIX, known as vix futures. These futures are essentially the expected future fear of Wall St, and I've been trading on the difference between the current spot price and the futures price through two primary vehicles:

1) When Fear spikes up very suddenly on a grave event, such as North Korean nuclear threats, I do a quick VWAP analysis of a derivative known as XIV (inverse VIX or "betting on calm").  During that crisis, XIV fell about 20%. As the event drew to resolution, it rose again - as non-events will lead to subsiding panic, and money to flow back into the market.

2) When fear is at an all-time low, buying VXX (betting on fear) can be risky, but highly rewarding if an event does happen. For instance, the VIX (fear index) was at extreme calm levels around August 1st. The VXX (betting on fear) fell precipitously in March from 18 dollars to 11 dollars on August 1st. Then it shot up dramatically to $14. Putting that in perspective, if you had spent $1000 dollars buying VXX at all time low volatility, you'd have made $400 profit or *40%* gains.

HOWEVER, the VXX, TVIX, and UVIX (all fear-betting) ALWAYS fall from volatility spikes. That means traders must either risk calm market conditions in these tickers and face a slow bleed, or must be extremely agile in reacting to disruptive market events. The first time I traded VXX, I scalped it (buying and selling between the oscillation of fear and greed). I don't recommend this, as VOL can shift violently and suddenly. After a 200 gain scalping VXX, I ended with a 100 dollars LOSS.

The result of this ticker is many people seeing it run 10-20% and chasing profits, only to have calm resume, and find themselves at a 30% loss. 

Adding complexity to the equation, there is the phenomenon of contango and backwardation, terms that describe the relationship between futures prices (the expected futures versus future spot price). Contango implies that these are moving in the same direction, and backwardation is the opposite.

From this dynamic, I've come up with a trading strategy where you scale in shares of XIV (calm) as the spike is happening. In these situations, the fear will rise a little, then a little more, then suddenly spike. So you don't want to bet everything on the little rise.

My strategy involves buying 1 share for every percentage point the XIV rises (generally speaking within ranges).  So if panic increases by 3%, I buy 3 shares of calm. Yesterday, panic increased by a whopping nearly 20%, and I made the mistake of going all in at 5% (not following my strategy..). As calm has ensued, my purchase price is approaching and I am anticipating around $200-$600 profit. But it will take possibly weeks because I entered too early. Still, any position in the XIV is good money, barring extraordinarily disruptive events (such as impeachment for example). I don't recommend holding XIV for long periods if possible to avoid - as a market crash would chop its value in half, leaving you waiting months or possibly years just to break even.

For those looking to hedge against market volatility, there are several options, but I think the best possible options are cryptocurrency, or hard assets (such as real estate).  There is a trust fund that holds bitcoin which can be purchased on the Chicago exchange called $GBTC. Note that in order to buy this, you may need a margin account, as TFSAs sometimes can't hold OTC (over the counter) stocks. As such, any capital gains on this stock are taxable, so beware, you need to file any gains with Revenue Canada.

Another hedge against market volatility is in commodities such as precious metals and oil. An interesting trend has emerged (one that I in fact predicted 6 months ago) where volatility has unsettled the algorithmic trend of the bull market, as volatility disrupts artificially intelligent trading systems, which are reliant on time series analysis.  As a result, algorithmic traders will underperform in times of volatility - meaning if you own TECH stocks, it's time to sell and rotate into other sectors.

For instance, a company called Delcath Systems (a nano-cap healthcare company) was trading at 0.16c/share yesterday.  I bought 25000 shares. By the end of the day it was selling for 0.21.  It was the highest volume traded stock on the market, and my position gained $1200 dollars in profits.Another incredible trade happened with a company called $DGLT (Digiliti), where the stock rose suddenly 100% from 9 am till noon. I noticed an unusual amount of volume. The stock then rose violently to $1.07, an increase of over 430%.  I got in with 4000 shares at .70c for a profit of $1000.

All in all, on a day when Facebook, Google, Amazon, and others were bleeding, I had the most profitable day of trading ever with over $2000 in gains and an overall 15% increase in my portfolio.

Volatility is GOOD for retail investors, because you don't have to compete with a legion of algorithms trading at microsecond frequencies, with access to far more information than you, and having far better tools to analyze price movements in real time.

My advice to day traders is NOT TO DAY TRADE during a bull market, you will be scalping pennies and risking large amounts of money. My advice is to pick two stocks in every sector, one being the best in class, and the other being one with the most upside potential (based on fundamental analysis).  Open up a position on an extremely RED day. Don't buy when the stock is already going up, that's just exposing you to unnecessary risk for very small gains. When volatility hits, simply HOLD your positions and WAIT, while you scale into the XIV.

On a more personal note, I've been trading too much, and have lost some life balance. Money isn't everything. So I built myself a schedule to limit my trading.. I've probably spent 10 hours a day trading this week (including aftermarket research).  Time to go play piano and walk the dog. Good luck everyone.

Tuesday, July 25, 2017

The Coming War in the Middle East

It may be a bit naive to say that a war in the ME is coming, because by many indications, it's already at war. But this is a war alike to many modern conflicts, mediated through proxies, clandestine action, and doublespeak.

The current landscape is divided generally into two groups:

1) Pro-Western powers: Saudi Arabia, Israel, Iraq.
2) Pro-Islamic powers: Iran, Qatar, Turkey, Syria, Yemen

The war in Syria, and the violence in Yemen, are connected very deeply to animosity between Saudi Arabia and Iran (a mirror reflection of US-Iranian diplomacy). There are several proxy wars raging in the ME, and they are spread across various regions, including Libya, Syria, Nigeria, Yemen, Afghanistan, Iraq, Gaza, and others.  There is a distinct front comprised of US allies and “Islamist” opponents.  Adding into the complexity, Russia is stymying US efforts to overthrow Assad by arming ISIL. Woven into this tapestry of violence, deceit, and profit-taking, is an underlying religious, geopolitical, and cultural struggle that spans thousands of years and is marked by significant divides in ideology between Shiite and Suni muslims.
Recently, countries in the Western bloc have increased rhetoric and proxy aggression toward Iran, including Saudi Arabia, whose crown prince and former defense minister made statements about curbing Iranian influence in the region (Yemen, Syria) by “bringing the fight to Iran.” This came a few months before a major arms deal between the US numbering in the billions (as well as deals with the UK for the less substantive but still significant arms deal of nearly 300 million euros).
Added to this, nations in the Western bloc have also now blocaded and severed all political ties with Qatar, which had positioned itself as a de facto Switzerland for many years in the region (while also funding various terrorist activities, according to the Western bloc).
There are four notable centralizations of tension in the ME – located in Yemen, Syria, Iran, and Israel. The last, but not least of this list, bears a significant symbolic barometer of tensions between jews and palistinians, including settlements in the West Bank, aggression between Israel and Gaza, and orthodoxical Jews looking to build the Third Temple and seize the Dome of the Rock – one of the holiest sites in the Islamic faith. 
Each one of these nexuses is a place where aggression is funneled, either through strategic cooperation initiatives such as the Iron Dome, or more clandestine or commercial support through arming and funding insurgents and militants. This was especially egregious when ISIS militants were seen using UN armaments.
Surrounding all this is the nebulous spectre of oil.  Many of the nations in question depend quite significantly on oil for revenue to balance their budgets, including Iraq, Iran, Saudi Arabia, Gaza (LNG), Russia, Syria (gas pipeline to Europe from Russia), and Qatar (to a lesser extent of 100 000 BPD). 
There is a mutual entanglement such that many countries will face austerity of oil prices decline to levels as were seen at $20/bl in recent history.  Saudi Arabia is preparing for an IPO of Aramco, their largest oil producing company, with a price tag in the trillions. But this depends quite significantly on oil prices being in the $50-60 range.  Efforts to manipulate price have been made by OPEC, who agreed to cut production last year, and extended that production cut into 2018. However, the market has been uninspired by these efforts, posting the most significant drop in prices in recent times.  This has spurred some panic and desperation among E&P investors and large institutions that fund US Shale.
When analyzing the likelihood of all-out war, it’s important to measure the economic impact first and foremost.  Historically, humanitarian interventions on the behalf of the United States are almost always a sham for yielding some geostrategic or economic advantage.
With extreme pressure on the Saudis to influence the price ahead of the Aramco IPO, and facing possible austerity – while shale in the US is highly leveraged with large debts – we’re seeing a situation where Wall St and large banks will require a war to achieve profits in the shale boom. Furthermore, massive reserves in the Middle East pose a long-term threat for energy hegemony for a fairly recently emerged US oil production sector – and this is not limited to the ME. South America also poses a threat, with countries like Venezuela (the largest proved oil reserves on earth at 300 billion barrels) – who by no coincidence are facing sanctions from the US from importing oil – at a time when oil prices have pushed the country to the brink of revolution.
Once again, we are facing a geopolitical landscape centered on profit and energy hegemony, as well as strategic positioning to supply the EU with liquefied natural gas (US hegemony of which is threatened by Gaza, Syria, and Russia).  Even more critically, the red sea, Persian gulf, and mediterranian are crucial shipping lanes for oil, and in which violence has escalated – with Yemeni attacks on Saudi refineries and ships. 
The political landscape isn’t much better, with Trump selling billions to the Saudis in weapons that are assuredly used to kill Yemeni people, and his plans to scrap the nuclear deal, and a dramatic increase in US war propaganda against Iran, the chances of an all-out war are exceedingly high, given the historical trend for these factors as major catalysts for conflict.
A large war between fairly significant coalitions is emerging, one which some have warned could lead to WWIII.  I just want to alleviate those concerns briefly, by pointing out that a ME war would be beneficial to Russia, who would love to see oil prices reach $100/bl (a very real prospect if all-out war with Iran occurs). Added to this fact is the very real possibility of mutually assured destruction and the end of the human race itself – and war between the US and Russia becomes extremely unlikely on the order of a fraction of a fraction of a single percentage point.  For all his flaws, Putin is a rational optimizer who fears this outcome (with good reason).
The conflict is also isolated, to a certain extent, by the confines of Western Europe past Turkey, and Asia, with India making statements of neutrality, and China looking merely to continue its meteoric GDP growth and booming manufacturing.  The US and China are too interconnected to risk war – the loss in profits would be pronounced, and is an outcome that is considered extremely undesirable for both sides.
This leaves at most a dozen nations pitted against each other – many of them small and considerably weaker than US, Saudi, and Israeli military and economic might.
Looking forward, expect a number of catalysts to be influential on this outcome:
-         Terrorist attacks
-         Oil services sabotage
-         Proxy violence
-         False flag attacks
-         Iranian failure to meet OPEC compliance
-         Significant drops in oil prices (which cause Austerity, which cause Unrest, which cause parochial dictatorships to arise).
-         Tensions in Israel, Gaza, and the West Bank.

For investors, oil and gas is a good play right now, especially US Shale. The risk of war is understated by pundits, and should be considered extremely likely in the next 12 months. Another place to invest is defense, such as Raytheon or Lockheed. It is also recommended to hedge into utilities and commodities as market instability may catalyze a significant decline in the value of the FANG (facebook, amazon, Netflix, google) stocks.

Monday, June 19, 2017

Predictions on the Stock Market

A simple prediction about the US stock market - I am anticipating a crash in US equities especially those in the tech sector.  There are several underlying causes of a large concentration of investments in what are referred to as the FANG stocks (Facebook, Amazon, Netflix, Google).. in fact, the sector is responsible for a whopping 40% of the S and P's gains year to date.

As a consequence of this concentration, tech stocks, and this includes the semi-conductor sector, are highly overvalued, in some cases 20 or 30 times, on par with the crash of the nineties with the dot com bubble.

Meanwhile, other sectors have fallen, including energy, into far oversold territories (based on factors such as the Relative Strength Index, Earnings Per Share, and capital return on investment caluclations).

So why is this happening?

Among many factors, the one which I believe will cause a crash is the transition from institutional investing from humans to machines. 

Increasingly, machine learning is used on the stock market, to trade at extreme high frequency, and oftentimes on private, secret exchanges known as Dark Pools.

So how do these artificially intelligent traders work?  AI traders are concerned primarily with price movement, which is a lot of ways, is in the language of the machine - calculus.

Firstly, let's define the price of a stock.  A stock's price is the sum of all investor sentiment in the value of a business.

All that complexity, the factors the influence that sentiment and factors influencing those factors, creates a feedback hierarchy of immense complexity, where interrelated variables can have nonlinear influence on each other, making for a seemingly unpredictable movement in price, or what is commonly called the "random walk" hypothesis of price movement.

The opposite is true.  There are factors that influence the price, like the profitability of the company, or the number of media headlines it receives.  Machines can interpret this data of immense quantity with extraordinary speed, and using statistical regression methods, can identify - and appropriately incorporate correlations into its price predictions.

The price of a stock, at any given moment, can be thought of as analogous to a particle or object that has a bidirectional movement in one dimension (price), and a constant forward motion along the arrow of time, and this is important to why prices have long term dependencies, and why they possess underlying cyclical fractal shapes (self-similar repeating patterns). There are layers of invariant geometry nested in the price movement which are not decipherable by human thinking (nor, I should say, fully by AI  either).

Betting on an up or down movement is not like flipping a coin at any moment - momentum is conserved to an extent, which causes stocks to run up or down.

Catalysts from the world can be viewed as nonlinear disturbances which can reflect that price... but on a deeper level, there is an important threshold between price and value that when not maintained, can prime the system for a correction toward a greater equilibrium state.

Just as if you successively place pebbles onto a suspended piece of paper, eventually, the weight of the stones is too great for the paper to sustain its shape, or "morphology."  Interestingly, the most advanced of these quant funds is Renaissance Technologies, whose founder did pioneering work on the mathematics of algebraic topology.

This is important, because the machines read the price as a geometric object (a vector of price magnitude and direction) in an abstract topological space. The "paper" must achieve some morphism in under to accommodate the stress of so much "stone mass" or price movement on the system.

These AI systems are not just one kind of architecture either - they are a network of varying types and fucntions of AI that cooperate to justify an action to buy or sell. These modular neural networks are very sensitive to sudden shifts in the importance of variables, because they are trained on enormous quantities of data (several terrabytes per day of training data at Renaissance).  That makes the machines extremely good at reading price by evaluating price as a finite time-series, and making predictions.

However, chaotic events and historic shifts in technology, culture, and geopolitics are not factored in by these machines - events like these are stochastic probabilities which are uncertain in the language of mathematics by definition. Catalysts can therefore have more extreme effects as retail investors' react and prices move, and the AI flags a certain vector of price movement justifying a sell or buy order. 

The introduction of increasingly concentrated wealth in automated trading architectures has caused what's called "overfitting" (in AI engineering terms) to a bias. This means that all the machines are interested at looking at the same types of variables, and combined with increasing wealth pouring into what are called Quant funds (quantitative), this overfitting has become more dramatic, pushing the momentum of stocks into a positive feedback loop - and the machines can push a price way beyond its value (or below it) through Dark Pool accumulation, a practice of trading on secretive private exchanges in large blocks of shares. 

At some point, a correction will occur, the S and P has acquired a tremendous amount of capital energy, with the Fed pouring out zero percent for the last decade and derivatives and ETFs soaring far higher than in the crash of 2008.

I predict a precipitous decline in the entire market, followed by (another) recession. During this time, the machines will be unaccustomed to a weaker, more balanced market - and will need to be re-trained. That means human-run hedgefunds may outperform the algorithms during the downturn.

I'm expecting a major catalyst, like a hack (Yahoo), or even a geopolitical event. Even the most innocuous perturbation could cause a steep selloff by the algos, who, all detecting a large shift in momentum, will exacerbate that momentum with unimaginably large selloffs (in trillions of dollars), which will quickly snowball as Markets reel and panic sets in. Bulls will become bears, and begin shorting the market (Warren Buffet already is).

 This is not an exaggeration. Algos control 70% of all institutional investing. Major institutions like Goldman Sachs, JP Morgan, Renaissance Technologies, and Blackrock are all moving to computerized trading, while simulatenously warning over the problems of overfitting.

Enter cryptocurrency - which itself is recovering from a massive shakeup to the record high Bitcoin, which had risen to near $3000 CAD, and the newer Ethereum, which also fell 25% last week.  This may indicate that algorithmic and trading volatility has become displaced beyond the confines of the market and that large institutions are claiming territory in crypto as well.  Crypto may not be the safe haven that it seems from market and economic turmoil.

That being said - the market always rallies after the inevitable bailout and quantitative easing. You could go long on the market and as long as you live long enough, make a decent profit of about 10% annually, averaged out. But it might be time to hold some commodities, utility equities, and physical assets - wait for the crash, then buy in those sectors where human investors are likely to go - where profits or hype are.  I see Amazon for instance seeing a 30% pullback, then reclaiming that 30% over 4 years.  I don't have any stakes in tech, but if I did, I would be selling right now, and buying again after the crash.  You can make a good 60% return if you do it perfectly.

 The crash will be over for Amazon when the RSI (weekly and monthly - 14 period) falls to the 30-40 range - that will mean a near 50% drop in Amazon's price to around $600 in the worst case scenario. 

I precict the time frame for this to occur will be sometime between now and the end of 2018.

For investors, defensive stocks are utilities, bonds, cash (to a lesser extent), and gold.

I am trading in the oil and energy sector, expecting a redistribution of capital after the crash, and an increase in oil prices to $60/bl by the end of 2018.

Of course, I don't hope this happens - I just think that it will.

Friday, June 16, 2017

Poem on the Fly

I am the watcher on the wall,
where everything moves but me,
time spinning
somewhere out of reach.

Oh my sweet omatadia
painting gray fields
of blurring abundant
sugarcubes and shitpots -
soaring and swooping
stupid into walls and windows,
and it's only by chance
that you opened the door,
let me in.

I'm drawn to you,
as a lover is pulled
by the eyes,
I fly to them
as though I could drink you.

I become
your specular black halo in a whir.
I touch your hair, and taste lavender.

You tell me to fuck off,
but I never understood a damn thing -
and it always sounds like screaming,
and everything moves but me,
as I watch all the pieces of light
gathering along your edges -
thinking surely, this is God,
and let the swatter fall,
your holy holey monolith
where all smudgy sacrifices
have gathered to pay your homage,
and a thousand eyes shut hopefully at once.

Thursday, June 15, 2017

Coming Out Evomonkey

There's been a lot of development in recent years regarding civil liberties among LGBTQ members, who gained victories in the US when gay marriage was passed under Obama, while at the same time, battling some of the more regressive states.

Progress in Canada has also been rapid, where same sex marriage is legal, and where hate speech in the context of gender is specifically forbidden by law (c-16). Canada is widely considered one of the most progressive countries on earth in terms of gender - and this is something I applaud and feel great pride over as a Canadian citizen.

In exploring my own thoughts and feelings on the recent bill C-16, I came to a few conclusions about gender as it is understood in modern terms, and where I stand on gender and sexuality.  

This exploration has led me to the conclusion that I am genderless as a gender - note, this is not to mean that I am sexless - my sexual organ is male in nature, but many who also possess genetalia of one sexuality identify with various gender identities.

Firstly, let's talk about gender identity itself.

I looked for various definitions of gender identity, trying to get a uniform perspective. The best definition I found was "one's own experience of one's own gender." 

Gender is a social construct to a large extent. So how am I experiencing my own social construct?

I see society as a giant dominance hierarchy inherited from primates, and their progenitors from the sea, and this hierarchy propagates on our basest of urges. Awareness of this fact is a key deterrent for ape like behavior such as fisticuffs or hegemony.

Increasingly, as one examines gender roles in society, the bullshit meter becomes more sensitive. Tradiational narratives are boring social constructs designed to favor procreation and meekness before the overlords, like good like Protestant baby factories. Women, treated like cattle and exchanged with dowries, only given the vote, in relatively recent history.

Gender is the inheritance of a legacy of stupidity and regress - so why should I participate in such an absurd, failed act to categorize the nuanced nature of human sexuality and perception?

I dare say, I have no legal obligation to.

My own beliefs determine my gender, and they are as such:

1) Gender is a social construct designed as a meta-informational-technology to expand the dominance hierarchy.
2) Gender is not a spectrum of what are classified as "feminine" or "masculine" traits. I acknowledge only human traits.
3) Differences in gender identities are a function of differences in genetics and experience - no two genders can ever be the exact same.
4) Gender has increasingly become a political and ideological standpoint - one which I choose to abstain from. You cannot generalize a gender of one - good luck trying.
5) Gender evolves in real time and is immeasurable, an indeterminant value.

As such, I am henceforth declaring my new gender, Evomonkey.

Note:  the pronoun or categorical descriptor of my non-descibable non-categorical gender is subject to change in real time. 

My gender doesn't require you to use any special pronouns as I prefer the English language without even more gibberish inundating it every day. But if you call me evomonkey I won't mind either. I also accept Evo and Monkey. My girlfriend, a cis-norm, calls me monkey-bear - which is technically a hate crime but I'm not pressing charges.

If you aren't aware of my gender, and you assume I am male because of my physical appearance or your interpretation of maleness in my actions, I won't fault you and do not expect you to refer to me by my pronoun under the burden of ignorance. In fact, any recognition of my characteristics, whether you interpret them as male or female, is a compliment.

And when you refer to me as male, my gender (my experience of my own gender) interprets that as Evomonkey.

You say:  "Hey man, what's up tonght?"

I hear: "Hey Evomonkey, what's up tonight?"


"Nice slam poem gurll!"

is heard as

"Nice slam poem Evomonkey!"

Evomonkey as a gender, acts as a sort of filter, transmogrifying all femininity and masculinity into a neutralized state, only considered in relation to each individual.

As such, if I say "he," or "she," or "him," what I actually mean is evomonkey. I choose to say these pronouns out loud, despite my gender identity, out of respect for those who identify within normative categories. 

So what's it like being Evomonkey?

Well, today, my particular gender has a sexual attraction to women, but an aesthetic attraction to men. For example, Ryan Gosling is handsome, however, I do not crave to suck his dick.

Since asexuality is a sexual identity, I am sexually attracted to women and asexually attracted to men.

I'm also asexually attracted to puppies, sunsets, Monet's paintings, and abstract geometrical forms, especially fractals.

My position on the advancement of gender rights, and the law, is to simply abolish or ignore gender altogether, it's such a waste of energy. If you want to be a woman, do it, be a man, do it, be yourself. Who cares? We're all special.

I'll be submitting for a revision to my birth certificate to declare me as either genderless or Evomonkey in the near future. 

Monday, May 15, 2017

Independence, entrepreneurship, trading equities, and the value of time.

I recently began my adventure as an entrepreneur, when I founded my own company called Prometheon Neuroenhancement (soon to be re-branded as True Focus) in the summer of 2016; specializing in cognitive enhancement techniques that are applicable to a number of areas.  The spectrum of utility ranges from decreasing depression and anxiety, to improving working memory and enhancing productivity.

Before I started my business, I was working retail at Pier 1 imports - lugging furniture, arranging candles, and sporting a big smile in my large blue apron. Now don't get me wrong, this was a great place to work, but as I was working there, struggling to pay my bills, I realized an important fact:  that time is the most precious resource we are in possession of.

I founded my business in part because I wanted to pursue more independence as a matter of self-actualization, but also practicality - the endeavors that interest me the most happen to be the most profitable in terms of a time : revenue ratio.  I will explain this in more detail a little later, but the need to properly invest my time became greater and greater as my financial situation got worse.

The realization that I was bleeding time was an important one. Because I was converting time into money for pennies on the dollar, with little prospect for advancement, a raise, or any significant return on that investment. What was the worst, was that I had to spend much less time investing in myself

I decided to take the knowledge I had accumulated on neurohacking, and start my consultancy business.  I had acquired this knowledge over a number of years, as a matter of survival, after being ravaged by Lyme Disease, which had left me with significant cognitive impairments and no prospect of recovery.  Because this was also an area of deep interest and passion for me, it wasn't hard to see the value of expanding my knowledge.  I spent over 10 years collecting, organizing, and applying the things I was learning to my own health and well-being. The program was a complete success, and I had not only recovered from the disease, but had outstripped my mental abilities from before the damage by a considerable margin (15 IQ points and several hundred percentage points in productivity).

I had also administered modules of the program to people online, who were also suffering with Lyme and post-Lyme symptoms.  I derived a great amount of satisfaction from knowing that I was helping people who had suffered so deeply, and in such isolation, as I had for many years.  I soon realized the applicability of these techniques to a surprising range of functions; after all, we live in a society where the use of our minds is often paramount to our success - whether you're a student trying to ace an exam, or an executive managing large accounts.   

I was doing so well, after about two months of the business operating, I was able to quit my retail job and focus fully on neuroenhancement. But this presented a few problems too.  I was a novice entrepreneur and made a few key mistakes.  Firstly, I was idealistic - I wanted to charge the absolute smallest amount of money for my services, so they could be made available to people who couldn't otherwise afford the extremely expensive (and not covered by OHIP) costs of therapy.  As someone who also suffered from both PTSD and ADD, I knew the extreme costs, sometimes as expensive as 200 dollars per hour.  Considering that standard psychotherapy can take years for trauma, you could be looking at tens of thousands of dollars annually.  Incidentally, people with mental illness aren't usually raking it in, creating a sort of paradox where making money depends on good mental healthcare, and good mental healthcare depends on making money.

But my assumption was also wrong:  charging $20 an hour for neuroenhancement, after costs, was significantly less than making minimum wage.  Considering this is a 1000% discount on the market price, it should come as no surprise that it was not sustainable.  I soon found myself in the same position as before, where I was working a lot of hours for little pay. At the time, this was satisfactory because I enjoyed  helping people, and because I was also gaining new knowledge and experience with high value and collecting valuable data for creating future intellectual property. So those costs, in my mind, were well spent.

So despite my best intentions, I had come to face a hard truth: that money is integral to propagating the service I was providing, and so I started to learn a lot more about social entrepreneurship, and how doing the right thing doesn't have to mean languishing in poverty.  Indeed, it is my conviction that social entrepreneurs will dominate capitalism in this century (a topic for future posts).

Once I had established a stream of income from Neuroenhancement, I began the critical application of neuroenhancement to itself. This is an interesting aspect of the program, which is both a cognitive enhancement platform, but also an optimization algorithm. Meaning I was taking the most effective, fast, and important elements of the program, and prioritizing them. It also meant minimizing the time that a participant needed to commit to a program to achieve gains.  This is trimming the fat, cutting the crusts, tightening the belt - pick your analogy - but doing more with less became critical to moving the business forward.

It wasn't long before I began to apply the optimization strategy to my everyday activities. I started planning out my days with greater detail, while also quantitatively measuring gains and productivity.

That involved asking questions like:

1) What is the most important priority today?
2) What are the long-term investments and strategies I can contribute to today?
3) Will I get a good return on the investment of my time?
4) What are the minimum and maximum theoretical returns?
5) What have the returns been on previous investments?

The questions you ask yourself will vary, but the core concept comes down to measuring what amount of time you have invested, and what you expect to get out of that time-investment.  Let's go through a couple examples.

Let's say you spend the day working on your novel (I spend 1 day a week fiction writing); that's a long-term investment.  But if you complete it, it's conceivable (if its of a good quality), that you could have a whole passive income stream coming in. This is a long-term investment with a high spread of theoretical gains: meaning you might get nothing out of it in terms of monetary profit (be sure also to measure how it benefits your advancement of skills), and you could also get a lot out of it. This will be later compared to the Beta value of equities (how risky or volatile is the investment?)

Now let's say you spend the day mowing nieghbor's lawns.  You have made a short-term investment, with immediate, guaranteed gains. This is a low-risk, low-reward investment of time.  There will be times when this is necessary. Just as you diversify your portfolio of investments in various time-scales and levels of risk, so should you invest your time as such.

Another important point I found was evaluating the type of returns - money isn't the only thing you need to consider.  We're facing industries where jobs are regularly replaced or become outdated. This is where having transferable skills is useful, and just as Benjamin Franklin did daily neuroenhancment, so should anyone interested in job mobility. 

Now let's say you spend 25% of the day mowing lawns, 25% writing your novel, 25% learning a new skill, and 25% investing in your own happiness and well-being.

The last point is crucial to understand, because it is an often overlooked time investment, but one which yields significant returns.  Happy people aren't productive, and speaking from personal experience, suffering makes creativity nearly impossible.  Just ask Sylvia Plath's oven.

So how do you decide which endeavor is worth investing in?  That's where your high-low theoretical or real yield comes in. When considering this, make a list:

1) What did I lose by investing my time in this?
2) What did I gain by investing my time in this?
3) On what time-scale will I see returns?
4) What distribution of returns (in magnitude) can I expect?
5) Did the time spent cultivate direct or transferable skills?
6) Did the time spent contribute to a favourable mind-state for productivity?

The exact optimization algorithms for neuroenhancement will be included in my book, Metamorphose: a Neurohacker's Guide to Transcendence.

One advantage of entrepreneurship is that you can intelligently evaluate the return in investment for your time while keeping in mind the value of basic human happiness, which should be a central goal - to get satisfaction from being alive. You can define "satisfaction' as it suits you - not everyone's path is the same, and that's a conversation you need to have with yourself.

But no matter what you strive for, happy people are proven to be more productive, so there's little room for argument that the investment is worth making.

This is one part of neuroenhancement, asking "what mind-states are most fertile for which types of productivity?" Then learning to create those mind-states by manipulating internal and external stimuli.

I realized that I can't do one thing all the time - it just isn't me. Sometimes I feel the need to read balance sheets and dig into some prospects, other times, all I want to do is bang on the piano and write some tunes.  To an extent, I had to learn to accept myself in order to get to where I could be confident what I was doing had value. 

But one key point I should make is that none of my activities are justified retroactively, everything is planned to achieve a certain effect or goal. Nothing I do, even wasting time doing nothing, is without purpose.

Anyway, once I was settled into my new life on the farm, I also began trading the stock market, which of all my activities has been the most profitable per time spent and just a very rewarding experience. But I didn't go into trading blindly - I don't have any special aptitude I know of. There's a common adage about retail traders that says 90% of new traders lose 90% of their investment in the first 90 days.  I spent several years studying the supporting knowledge that underpins how markets behave to avoid that scenario; including economics, finance, artificial intelligence, fractal geometry, mass psychology, and many other elements that underpin a stock's price. I also constructed predictive models and began "paper trading," where you execute imaginary trades and look at the effectiveness of your strategy.

All in all, I probably invested a good 1000 hours into this education, at first, simply because I found that topic intellectually stimulating. I was fascinated with computational theories of the Universe like complex systems theory and Wolfram's automata, as well as artificial intelligence, especially as it concerned neural networks. I found it especially puzzling that all of the complexity underpinning a given security could be compressed to a binary plane, a squiggly line.

Side note: I am happy to announce that I was able to build my first neural network earlier this month, and used it to approximate values of square roots, using a program called Simbrain.I plan to use deep learning to analyze the most impactful variables on stock price through regression.

Back to the subject at hand.  I recently calculated the time:profit ratio, for trading as compared to Pier 1 imports as a retail clerk, and trading part-time had a whopping 700% difference in profit : time. But in order to gain that I had to also spend considerable time studying.  But the major advantage is that the things I learn have value elsewhere - especially in working with clients focused on productivity enhancement - which I believe will become a huge market for human resources.

Given my priorities, being happy, using my time well.. I designed my day to an equilibrium.

Here is an overview of what a typical day is like for me now:

8:00 AM - wake up, stretch, drink coffee, kiss girlfriend, feed the dog, pet the dog, look at the sunrise, eat breakfast.

8:30 AM - premarket assessment - who are the big movers and shakers on the market, have there been any significant developments underpinning a potential move in stock price (such as FDA clinical trials or SEC investigations, Elon Musk's twitter).

9:30  AM - Monitoring price positions and assessing short-term opportunities. Researching and re-evaluating long-term positions relative to broader market conditions, world events, mass psychology ( and reviewing analyst assessments.  When I'm done trading, I codify gains and losses in data sheets.

10:30 AM - Study / Self-improvement: currently I am studying neuroanatomy, programming in python, and practicing piano.  I also meditate, do audiovisual entrainment, and dual n-back working memory training.

12:30 PM - lunch

1:00 Pm - Go for a run with the dog.

2:00 - Prometheon - client sessions, writing IP, working on case studies, gathering and reassessing research, selling, etc.

5:00 - Whatever I feel like doing.  Sometimes, this is video games, other times, I will continue writing, or researching for the next day's opening bell, write poetry, or nonfiction - lift weights, watch a movie, whatever.  It's OK to work here, so long as I am enjoying what I'm working on.

This schedule is a general idea of what it's like for a day in the life, but I also change this day to day and week to week.  Some days are more fertile in terms of writing fiction, other days, are big music days where I will produce several new songs.  Allowing for flexibility means "striking while the iron is hot."

As an overall picture, I went from slaving in a retail job where injury and depression were inevitable, in a $1200 a month apartment I couldn't afford and didn't want, to living on a horse farm in the country for $400 bucks a month, significantly happier and most successful than ever in my life.What's more I'm making enough to support my goals of helping empower others. My ultimate goal is to somehow make the best tools in neuroenhancement completely free.  I still have a lot of work to do and I am constantly developing new ideas, like a mobile app, virtual reality applications, automation, and integration with digital mental health services.  I am putting one foot in front of the other and doing the work, hoping I will get there some day. 

And you can do this too - there's a significant argument that we live in a time where you must be able to do this, as markets are created, destroyed, and transformed at an exponential pace, you may be required to learn a new task or skill quickly - you may need to diversify your income streams to hedge against unpredictable forces. Former employees of Blockbuster video, and current employees of Netflix can attest to this.

So when you wake up tomorrow, remember to ask yourself, is my time being spent in a way that benefits me most? How can I change? What are the steps I need to take to get the most out of my time? And perhaps the most crucial question; am I happy?