The Online Investing AI Blog

Good looking waitresses could be bad for your assets. (Creative Commons.)

Can the number of good looking waitresses in a restaurant tell you something about the state of the economy?

Could Big Mac sales help you trade currencies?

They just might. You can check out The WSJ Guide to 50 Indicators by Simon Constable and Robert E. Wright for these–and a lot more financial forecasting devices.

Not all the indicators are as fun to research as waitresses and Big Macs. In a serious, but highly readable style, the authors introduce you to a wide-range of the most important portents of coming economic conditions.

The book does a good job of introducing a range of indicators–from macro-economic to micro-economic and from established to esoteric. There is the well-known Libor indicator, but there’s also, for instance, the aforementioned “good looking waitress”–or Vixen–indicator. Here’s how the latter works: Count the number of good looking waitresses–the more there are the worse the economy is.

Although, the authors also tell you that’s a risky trade and, depending on your marital status, a risky practice.

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Photo courtesy Creative Commons

Depending on who you talk to, the economy, the stock market, and the world as we know it is either in a free-for-all dive into oblivion, or is simply in a correction stage with the continuation of the bull market to continue.

Then there was the S&P 500 downgrading American debt. That should make for an interesting Monday morning for traders. I bet there’s a lot of Maalox sales at groceries stores around Wall Street.

(Here’s a good recap on the situation by Monevator.)

What do I believe about the sitch?

That wouldn’t be any fun. I would much rather show you what some other people–people a lot smarter than me–have to think. Here’s a list of what I’ve been reading about the stock market swan dive and debt status.

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Image courtesy Creative Commons

Investing, Money, Success behavior, buying, emotions, failure, Investing, loser, manias, markets, Money, selling, stocks, Success, winner

BitCoin is either an economic revolution or another foray into the internet-based currency trap.

Technically, it’s a person-to-person virtual currency network. When you use bitcoin, you’re actually receiving protected digital keys that you can use to exchange for goods and services from other folks who accept or use Bitcoin.

If you buy an item, that coin transfers to the next person, just like passing on a dollar at the grocery story.

However, Bitcoin takes a different tack from early attempts at virtual coins.
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Business Strategy, Internet, Money coins, currency, exchange, fiat, gold, markets, Money, person to person, silver, technology

Investing, Money, US Economy depression, dips, housing, Investing, markets, Money, prices, recession, recovery, stocks, Success

After reading this fascinating article over at Digital Trends, I started thinking about how cool it will be to have my own jetpack. Way cooler than a Segway, for sure!

What I like about this idea is that it shows how quickly a wacky idea can become real. Many people may think that the jetpack will be too expensive or impractical, but I think that point of view is shortsighted. After they go on sale, those problems will gradually get solved.

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Accelerating Technology, Dreams Come True cars, china, flying, ford, india, jetpack, jetsons, markets, Success, technology

Many people think that stock markets are unpredictable and random. It turns out that they are in fact somewhat predictable and not random at all. They exhibit what is known as complex, or emergent behavior.

Emergent behavior comes from the interaction of many actors. The behavior appears to be random and unpredictable, as if it were determined by very complex rules. Yet in fact this emergent behavior is generated from very simple rules. The rules for each actor are very simple; the behavior that emerges from the interaction of the actors is complex.

What does this have to do with trading?

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Accelerating Technology, Great Books chaos, complexity, flocking, markets, rules, simplicity

Now I am reading Van Tharp’s Super Trader book. I have read several of his books, and I like them for a few reasons. First, he is a NLP (Neuro-Linguistic Programming) modeler. This means that he understands how our brains work, and realizes that our results are determined by our beliefs. In fact, he makes this a major point in this book.

This is your Brain on Trading

While most other coaches and writers focus on the details of trading, Van Tharp recognizes that trading skills are of secondary importance. Understanding how our brains work is more important. Noticing our beliefs and seeing how they affect our trading is more important. Some people say that trading is 90% psychological. Van Tharp says that it is 100% psychological - all of our results are ultimately determined by how we think.

How does this make us successful traders?

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Dreams Come True, Great Books, Investing, Money, Success beliefs, books, Investing, markets, Money, psychology, Success, trading, van tharp

This article on Yahoo Finance talks about how the housing market is continuing to decline. As with most government intervention, the effect of the first time buyer’s credit had a short term benefit and I think it will have a long term negative effect.

Besides that, it enticed the most naive and inexperienced buyers to buy at the worst time possible. The housing market is going down and there is nothing to slow it down. Unemployment is high and the economy is weak. It is quite easy to see that housing prices are not likely to rebound any time soon.

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Money, Success, US Economy business, buyers credit, entrepreneurship, foreclosure, government, housing, markets, unemployment, yahoo

After reading this article on Forbes.com, I feel like the writing is on the wall, and I have posted about it before. The government’s massive spending may not have been enough to turn the economy around. It was enough to delay the destruction, but in doing so only makes it worse.

Many people who bought houses in the last year thought that they could get a free $8,000 just by buying a house. Hate to break it to you, but it’s not that simple. The reason the government was giving away the money was in an attempt to prop up the housing market. The only problem is that it was unlikely to work.

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Investing, Money, Success, US Economy houses, housing, markets, Money, real estate, Success, tax credit, unemployment