Market And Demand Formation

Tesla is here to stay and keep fighting for the electric car revolution.
Elon Musk

How do markets form?  What happens when they do?  Let’s look.

The modern mass-produced electric car market began in 2009.  As Figure A displays, there was a sole entrant then, the Mitsubishi i-MiEV.  By 2012, in Figure B, many more entrants came into play.  Three years later, with Figure C, prices for most models fell, and they attracted more customers.  Producers were able to drop prices because their production lines displayed learning curve effects.  They benefited from lower costs from more efficient workers, standardization, economies of scale, and other factors.

Figure D shows us that by 2018, many new models moved into the market.  Several models (all Teslas, marked with the yellow dots) combined to form the market’s Demand Frontier.  That line is highly correlated (adjusted R2 95.4%, P-value 5.04E-04) and relatively flat, with a slope of -0.36.

In 2019, electric car sales fell about 10% from 2018, despite Tesla’s Model 3 success.  Given the flattish Demand Curve, that suggests buyers would be eager for a high-range vehicle with a price lower than the Model 3.  All competitors priced less than the cheapest Model 3 have less range than it does.

#demand #marketanalysis #marketformation #demandformation #demandplanning #curve

Call Off the Panic

“Present fears are less than horrible imaginings.”—William Shakespeare

The FAA recently made clear it will impose more stringent requirements on Urban Air Mobility (UAM) vehicles.  In response, pundits started screaming about the end of that market even before it began.  They think the added costs are insurmountable.

Who told them that?

Yes, there will be significant costs in the added requirements.  But many companies have managed to work themselves through FAA regulations and come out with safe and profitable models.

Profitability, of course, is the key.  To clear development and certification costs, UAM manufacturers need to know if they can make money with their products.  All should note the United Airlines (UA) order from Archer.  UA will spend $5M for five-seat Archers, which are only slightly faster than five-seater Robinson R66s, which sell for $1.1M.  Oh, and the Archer has about a seventh the range of the R66.  The difference is the decibels.  Lower noise widens the market for UAMs, which should have comparable or lower costs than traditional helicopters (due to fewer parts) and higher prices.

Next time someone tells you the sky (or UAM market) is falling, see what they’ve shorted.

#urbanairmobility #UAM #markets #innovation #FAA

Life’s Easier With Enhanced Vision

The good thing about science is that it’s true whether or not you believe in it – Neil deGrasse Tyson

What would it be like to do astronomy without a telescope, biology sans a microscope, or defend air raids without radar?  We don’t have to live without these visualization aids in the modern world.  We needn’t rely on Stone Age tech in the Age of Information.

But you are very likely working from a like disadvantage in market analysis.  While we proved 4D data science works in fields as varied as beef production, package delivery, and spaceships, up till 2020, we had not taken a run at the stock market.

Then we did.

As shown below, the principles of Hypernomics have been applied successfully for picking securities, as it has for us for the last 26 months, with actual monies and stellar returns.  This fund is yet another story about how we applied the tool profitably.  We believe the fund will be to Hypernomics as books were to Amazon.  Eleven years after we started, we’re looking for partners.

Who wants to join us?

#datascience #hypernomics #innovation #marketanalysis

The Little Fund That Could – And Did And Does

Yeah. Beethoven was deaf.  Helen Keller was blind.  I think Rocky’s got a good chance.
Adrian, ‘Rocky’

Funny thing about entering a game late.  People think you can’t play just because you haven’t been on the field.

Make no mistake.  We’re a late entrant.  Many might think of us as a world-weary veteran reliever, coming in the bottom of the ninth to get out the last batter.

We see ourselves more as an untested first-round draft pick sitting on the bench.  And we’ve been studying the game – and we think we’ve figured a few things out.  Our fund reflects that.

We founded Hypernomics, Inc. (yes, it’s official, we were formerly MEE Inc.) to offer training, software, and consulting for the field we discovered, which, of course, is Hypernomics.  We still do that, and that’s what’s kept the lights on.

More and more, though, our advisors and we are seeing the potential of this fund.  We’re not open to the public, but we think one or more firms could benefit from licensing our analytics.  Just as we didn’t know about Hypernomics until we discovered it, we don’t know what to do or where to go exactly.

If you have some thoughts, please share them.

#hypernomics, #stockmarkets, #innovation, #stockanalysis

Love, Luck, And Technology

It was 20 years ago today/Sergeant Pepper taught the band to play.
The Beatles

Tim is always with me.

That’s not a metaphor.  It is a biological fact.

You see, 50 years ago, I was diagnosed with kidney disease.  Back then, such a condition was often a death sentence.  I knew kidneys excreted waste products and looked for ways to help mine out.

So, I started running – 30 to 50 miles a week.  For decades.  In the middle of that, in the early 1980s, I met Tim Schreiner while at Lockheed Martin, and we became friends.  He ran with me too, and we liked the same bands and the cool stuff we helped build at LM.

Some 21+ years after my diagnosis, the kidneys failed, and I went on dialysis for a year and a half.  Then I got a cadaveric kidney transplant, but it never worked right, and after another 6+ years, I was once again on the verge of kidney failure.

Enter Tim.  Ten people offered to give me their kidneys.  Tim demanded to be put at the front of the line.  He tested, matched, and decided to save my life.  I knew life would be better with a good kidney, but I never knew how much.  Tim offered me so much; I can only hope to repay society a fraction of what he did for me.  20 years later, we’re both doing fine.

#transplant #love #luck #technology

Abiding By Minimums

One bourbon, one scotch, one beer – George Thorogood

In addition to all the great music he made, George Thorogood knew when he wasn’t drinking alone, he could move it on over to his local tavern and abide by their two-drink minimum.

Bar owners found enforcing that requirement necessary to keep them in business when they had entertainment. Who wants free riders when you can find those who will pay?

Hypernomics knows that minimum requirements are just as crucial as those dealing with maximums. Businesses go under if they don’t make enough sales – we’ll have more on that in the future.

Military forces have similar considerations. The United States Air Force found that spreading their aircraft around gave them more flexibility to fly to distal locations. They typically group aircraft into squadrons of 12 or 24 planes. But, when it came to the B-2, they found themselves at a loss.

As its price soared past the $330M/unit limit backing the 132 bombers they wanted, they got 21 B-2s at $1.2B each instead. With so few, they put them all at a single site, Missouri’s Whiteman Air Force Base, losing flexibility and response time in the process.

Too often, as we try to get everything we want, we lose sight of what we need.

#hypernomics #minimum #markets

The Value And Demand For Taxpayer Dollars

Don’t Worry, Be Happy – Bobby McFerrin

In May 2020, CA Gov. Gavin Newsom said he wasn’t worried about Tesla leaving the state.  Last month, when Elon Musk announced he was moving Tesla to TX, the Gov. changed his tune.  It seems he felt he helped create the company, citing the tax breaks he gave them.

Hypernomics has seen this argument before.  Breaks in CA usually amount to slight and temporary reductions in the business-crushing tax rates CA has compared to other states.  That’s why companies by the thousands have been leaving CA.  A legislative “solution” to lost tax revenue is to have CA tax requirements follow businesses and individuals once they leave the state.  But that 1) denies some tax monies to other jurisdictions and 2) makes it less likely for new companies to enter CA.

CA has the best weather in the US, but the Tax Foundation ranks it next to last in its business climate.  As hypothesized below, the Value to taxpayers increases with the physical and business environments. Increasing the latter’s Value makes it more appealing to taxpayers – if they are attracted enough to come into the state, they offer more Ways for CA to get needed tax dollars.  At the same time, all mature markets have Demand Frontiers, which deliver the Means by which they must abide.  It’d take lots of work to learn these forces in detail. But avoiding that effort leads to unpleasant surprises.

And worry.

#hypernomics #innovation #taxpayer #taxanalysis #markets #economics

Details Depict Markets

If you don’t understand the details of your business, you are going to fail – Jeff Bezos

You’ve heard about people getting lost in the details.  What if the opposite is true?

Hypernomics finds that diving into details is the only way to comprehend a market.

Paul Samuelson wrote, “the equilibrium price…the only price that can last, must be at the intersection point of supply and demand curves.” (Economics, 4th Edition, p. 63).  While he won the Nobel Memorial Prize in Economic Sciences, he never worked in aerospace.  If he had, he would have discovered that no solitary “equilibrium price” lives there.

But there is even more to it.  As A reveals, the new aircraft market splits into those for Civil and Military submarkets.  Within the former, there are five sub-submarkets, and all of those have their Demand Curves which combine to form a collective Aggregate Demand Curve, B.

Helicopters perform missions, and each of the eight has its Demand properties, C.  With 75 models, there are hundreds of sustainable prices, all held up by the Value of their models’ features (not shown), as limited by their available funds (Demand).

Dig deep into the data and pay attention to the details.

You’ll find they’ll pay off.

#hypernomics #innovation #marketanalysis #markets

Hypernomics: 3rd in a Series

Perfect is the enemy of good – Voltaire

Suppose you have the task that fell to Cristina (C): Find the Demand Frontier slope for flat-screen TVs. Her sister, Sheila, charged with estimating their value, had it easier, as she found the features and prices for these devices on many sites (see the post three months ago).

In a perfect world, Cristina would have receipts for all models sold, forming a complete database. But no one has that. How can she discover a work-around? She gets an idea.

She finds a nearly perfect world for stocks. In studying the S&P 500, she sees all outstanding shares and prices (A, less Amazon and Google). When she charts their Demand Frontier in blue, she finds their slope is -0.413, a statistically significant result with a P-value of 7.9E-06. She hypothesizes that the Demand Frontier slope of the market’s daily volume will mimic all shares. She plots volume against price and finds its slope of -0.398 (P-Value 8.16E-04), which varies less than 4% from the total.

Excited, she maps the number of ratings for TVs against their prices and finds that they too form a viable Demand Frontier (B) at their limit (P-Value 1.99E-05).

It’s not perfect.

But it’s good.

#hypernomics #innovation #markets #marketanalysis

Simplify Results For Management

“Simple can be harder than complex.” – Steve Jobs

Suppose you analyze a market and find four features that help describe a product’s value or sustainable price. Your power form equation reads Price = constant * feature 1^a * feature 2^b…feature 4^d. How can you simplify each expression so that more people can grasp its meaning?

Helicopters (A-C) come in many designs and sizes. You suspect their useful loads, cruise speeds, and the number of engines support their prices. Analysis confirms that, but the resulting equation is complicated. You want to know how noise, or its lack, contributes to prices too. You find data on cabin and sideline decibel levels, but it’s spotty.

You want to be both simpler and more thorough. What to do?

Poring over the data, you find that pound for useful load pound, helicopters with more main blades fetch more money. That’s because rotor systems with more and smaller blades disturb the air less and create less noise. In D, you can take that expression, Blades^d, and depict the projected Value increase as you add blades. Combining D (and like tables for features a-c) with Demand analysis (see the last post) permits fine-tuning against the market’s needs.

#hypernomics #markets #marketanalysis #innovation #future #futurism