Long Time Coming

It’s not that I’m so smart, it’s just that I stay with problems longer.
Albert Einstein

There’s something deeply affecting about staying with a problem for over 30 years. Once you get some resolution, part of you wonders why it took so long to get answers. A more forgiving part of you thanks Einstein for the inspiration to carry on. One can only be happy when that ah-ha moment finally arrives.

Such is the case with Hypernomics. After first entertaining the idea at 14, somewhere around 49, I saw the first hints of the practical applications of Hypernomics. 18 years later, we have evidence of its practicability in one of the most complicated markets, that of securities.

In Feb 2020, we made our first investments based entirely on Hypernomics. Far from being perfect, tests suggested that given a market downturn, we would suffer losses. Figure A shows we’ve endured setbacks in 2022. But backtesting supported the idea we would lose less than the competition.

In the longer run, in Figure B, the theory has had a chance to shine. Note the Hypernomics fund is doing more than 2X as well as Berkshire Hathaway and over 3X what the other major indices are doing.

#innovation #markets #investments #hypernomics

Interest Rates And Currency

Last time, we examined how the amounts of currency and foreign exchange reserves drove currency prices.  There are more forces at work here.

A country’s prime interest rate is one of them.

Below we examine the linked effect of interest rates and currency value from July 12, 2019.  The rates in the study vary widely and are part of what supports the price of money.

At left, we see how the world reacts to the Volume of money, the foreign exchange reserves, and the prime rate, here set to 2% (Sweden’s at that time).  If we change that loan figure to 63% (which Brazil had then), we get the picture at right.  Note the Value response plane is lower.

While the statistics for this analysis are significant (P-Values of 3.30E-12 for the equation, 4.96% for Prime, 3.06E-12 for Volume, 0.01% for Foreign Exchange Reserves), the Mean Absolute Percentage Error (MAPE) is high, at 117.5%, meaning there is more work needed to decompose this market.

#currency #prices #markets #price #investing