Snow Wonder

Snow fell this morning. Solid, heavy snow.

“What a wonderful world”, Louie Armstrong used to sing, in a song written during a winter wonderland, possibly around Christmas. Just when the thick powder graciously makes its entrance from the early hours of the night to the next morning, before people set out to work. And you almost feel the snow fall ends right when the morning starts, with chronometric precision.

It is at this time of the morning, when the switch goes off in the head of your neighbours and everyone comes out to shovel at unison.

Shoveling driveways with your neighbours is the equivalent of the barrio chat room. Never two canadians had much to talk about except when they are shoveling their driveways. You get to know the person next door more during this activity than at any barbeque or get together.

Resilience, endurance and wit are put to the test, and most comforting of all: resting the shovel on your shoulder on a clean driveway with the feeling of having conquered disturbances of the weather. Could there be any feeling more canadian than this?

Canadians: this is our war since the one from 1812, this is our disaster scenario, our deepest crisis. Heavy Snow falls are here to create special social dynamics and promote communication, solidarity. It is as if Nature or God wanted to grant people from first world countries with a reason for bonding and helping each other. We need to understand this to solidify better connections with people. And perhaps fight mental health. It could be message we all need to hear, in a poetic form, that just before Christmas, we receive a vehicle to make better relationships and give a hand – or a shovel –  to our neighbours.

I hear you Louie. Wonderful it is.


Reggaetton, a pacifier for a baby country

One wonders why the Cuban people has fallen for Reggaeton so hard. It is difficult not be exposed to the genre anywhere in the country. It is everywhere, played, hummed and danced by all generations. We could argue the genre lacks the musical mastery that  permeated other eras, or that it promotes a relaxed moral values to youth; but the essence of my concern lies in how the entire country is hypnotized and there doesn’t seem to be a wake up moment anytime soon.

For a country that has always been a champion of musical expression, this passage almost feels as an obligated compromise; we don’t have the magnitude of long gone composers,  and the tech revolution pushed us through the socialization of music. Nowadays it’s much easier to make music than in the 1920s, and nobody seems to care about finding exceptional talent. We have switched to a mode of instant gratification with shorter attention spans and consuming music is one more piece in this game.

But Cuba has the lowest internet penetration in this hemisphere, products and services are not competing for attention from cuban eyeballs like in other countries, so what is the problem? why is reggaeton the ubiquitous music that cubans enjoy, with zero space for anything else?

The answer might lie in how cubans manifest themselves through music, especially in the absence of other vehicles of expression. As one of the states continuously condemned by Human Rights violations and demanded to release journalists that are held in jail, Cuba leaves almost no option for free expression; making the country a pressure boiler screaming for a voice. Like a baby crying for food. Every baby needs a pacifier to stop crying, it might not bring him food, but at least the crying stops. With the reggaeton, and allowing its musicians to live large, the cuban government might have created the perfect formula to repress free expression. Buffoon artists get rich but keep the hordes at bay, a small price to pay by the King and a big pacifier for an entire country.







The Inauguration of a Republic

Well, Donald Trump is the POTUS. If you have been in a coma for the last 2 years, don’t wake up. The ceremony was short, under a rain threat, as if the sky were in a rush. But beyond all the rhetoric on both sides, we witnessed a peaceful transfer of power, a pillar of a triumphant democracy. The teachings are there for all to see, the mechanism to install it in our countries with the local flavour.

Imagine an inauguration of a cuban president in 2046: a platform is setup on the stairs of El Capitolio, the place where Congress and Senate meet. The podium where the president elect will be sworn-in, is extending outwards, trying to fly over the crowd below. The press is accommodated over blocks on both sides of the platform, and seating arrangement is projected on the sidewalk and onto the street.

The outgoing president meets the president elect and spouse at his house, La Casa Grande. The exquisite building, with eclectic design, was erected in 1920 and served as the presidential palace until 1959. The modern president has to be connected to the past of the country, he or she most return to La Casa Grande. It must be named that way, gone will be the days where the president doesn’t feel like one of us, doesn’t represent the people. His house won’t be a mansion or a palace in a hidden suburb, his house will be the house of all cubans, for they will be governing as well in the most superlative way. A big house, La Casa Grande, on plain sight for everybody to see.

The north lawn will be en el Lado del Morro, the south lawn on the Bellas Artes side. It will be time to take away the Granma and other rusty artifacts to a resting place, a tomb or a nostalgia museum and rescue the beautiful garden that the ancestors built. These gardens will serve as space for media press conferences, space for the president to conduct walk meetings and a helipad for helicopter take off and landing.

The separation of powers will have happened by then, executive power in La Casa Grande, the legislative power in El Capitolio and the judicial power in The Supreme Court, where el Consejo de Estado resides, behind the Raspadura en Plaza Civica.

After showing the president elect around La Casa Grande, they both jump in the car to be driven around Avenida de Belgica, Malecon, Galiano, Zanja, Dragones e Industria; right at the back of El Capitolio. The president elect will walk through the hall Los Pasos Perdidos and reach the podium to be proclaimed official as the president of Cuba.

What a perfect moment to wake up from a coma.






How artificial intelligence is transforming financial risk management

A Toronto startup shows how automated due diligence will affect not just what you invest in but who you work with

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When an investment firm requested a search of documents related to Sino-Forest Corp., the Chinese forestry giant once listed on the Toronto Stock Exchange, a due diligence software engine dubbed The Brain came up with an article that asserted the company didn’t appear to own as much land as it claimed to. Unfortunately for Sino-Forest’s shareholders, this search took place years after the RCMP and Ontario Securities Commission accused the company of fraud in 2011. The article The Brain found, however, predated the investigation by several months. “Research analysts would have loved to have had that article years ago, but everyone missed it,” says Dan Adamson, one of The Brain’s developers.

Adamson, 40, is the president and CEO of DDIQ (Due Diligence Intelligence Quotient), an offshoot of Toronto artificial intelligence (AI) startup OutsideIQ focused on applying the technology to investment research. The firm launched The Brain in April 2014 after about a year of development, billing it as the first AI solution for fraud investigations, and anti–money laundering, anti-bribery and anti-corruption compliance undertakings, as well as third-party vendor screening.

DDIQ’s software engine is on the leading edge of what Adamson says is a new era of cognitive computing. “We’re expecting machines to do more and more for us. It’s no longer sufficient to just return a list of search results. There are millions of pages out there. People need to know the right information to extract from those pages. And they need it fast.”

How fast? The Brain can read a thousand articles a minute, says Dean Rootenberg, DDIQ’s chief data scientist. It recently found 800 phone numbers in the U.S. for an individual a British investigator was looking into, he adds. “How long would it have taken a person to do that, if they even could?”

The Brain isn’t about putting human investigators out of work so much as making them more effective, Adamson says. “It automatically gathers information from the open web, including from deep web sources—the sources that normal search engines cannot access without manual, human intervention—saving hours of research time.” Most government and regulatory websites are deep web sources, and The Brain is trained to access them automatically. It can also identify and rank whatever risks it flags.

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As an example, Adamson tells of a Toronto high-net-worth investor who was considering investing about half a million dollars in an information technology company about to go public in June 2014. It was a deal his brokerage house encouraged him to make. Before finalizing the transaction, however, the investor wanted to be confident that his considerable investment was a wise decision. He turned to The Brain for help.

“On first glance, the firm had a nice presence and looked like a real company,” says Adamson. But as The Brain began to look deeper at what companies it had acquired and others it was connected to—as well as the people involved in them—it found information that was buried, probably intentionally. “It started to piece together a whole lot of negative information that wasn’t definitive but, to me, it sure as heck looked like [the top executive] had been involved in a series of pump and dumps,” Adamson says. The client didn’t invest in the public offering and fired his brokerage firm. He did think, however, that the fee he paid DDIQ was well worth the cost.

The firm charges clients a fixed monthly subscription fee, starting at $250. The price rises from there, depending on the volume of searches. No other company offers the same service, says Michael Beber, a former Canadian forensic accountant who is now president and CEO of Exiger, a global regulatory and financial crime, risk and compliance firm based in New York that has an equity stake in DDIQ. “In the compliance space, there are lots of competitors who have similar risk-related data, but it’s not put through any analytical engine,” says Beber. “Investors already have too much information. They need the right information, and that can only come from an analytics engine, which is fast and cheap, or a manual researcher, which is slow and costly.”

The automation of due diligence “is absolutely the wave of the future,” says Michael Volkov, CEO of Volkov Law Group LLC, based in Washington, D.C., and author of a white paper entitled “How to Automate Third Party Due Diligence Monitoring: Ten Steps to Success.” He thinks the spread and improvement of AI for due diligence will have a dramatic impact not only on the investment industry but also just as importantly on business operations. As the technology gets cheaper and more widely available, companies will use it to vet business partners and suppliers. It will become part of overall risk management for every organization, Volkov says. This will matter all the more as business relationships become globalized. Brand equity can evaporate due to a preventable mishap or an unsavoury affiliation—often instantaneously, thanks to the power of social media.

Whether DDIQ becomes a leader in this transition depends as much on its business plan as on the technology, Volkov says. “I think it’s fantastic, what The Brain does, but the next big step is what do you do with the information it gathers?”

Many of DDIQ’s clients are involved in deals that have international components. “The Brain uses a translation engine and can work in 29 languages,” says Adamson, who says the firm is working on adding to that number. “For some reason, Russian is often requested,” he laughs.

Adamson hopes that one day his company will be the hub for any and every inquiry into company operations. “My elevator pitch,” he says, “is that we intend to become the Google of risk.”

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Originally published on Canadian Business Magazine

Social Media Chatter: Good For Investments? Take This Survey

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At 1:07 pm on Tuesday, April 23rd of last year, a single tweet from the Associated Press’s Twitter feed stopped the stock market in its tracks.

Breaking: “Two Explosions in the White House and Barack Obama is injured.”
In the next three minutes, the price of crude oil swooned, the yield on the 10-year Treasury note dropped as investors shifted out of risk, the Dow Jones Industrials dropped by 150 points and the S&P 500 lost more than $136 billion in capital value.

Within three minutes, an AP employee tweeted “We’ve been hacked.” That was followed quickly by official confirmation that the “news” was a hoax, the work of a hacker collective loyal to Syrian President Bashar al-Assad.

Within a few minutes the market had almost completely corrected, but the breathtaking speed of that sharp market U-turn brought home to portfolio managers and individual investors some important new facts of life on the trading floor: that Twitter, Facebook and other social media have become critical sources for market-moving information and they can move world markets in the blink of an eye.

“The AP fake tweet was the most active two minutes in stock market history,” says Eric Scott Hunsader, the founder of Nanex, which serves market data to trading houses. “It was one of those things where everything aligns. It was in the afternoon, nothing else was really going on, and also the news seemed credible. It was a perfect storm, and then suddenly it was gone.”

It was all over but the head-scratching. How could the market have reacted so swiftly, both to that single tweet and to the quickly following news that it was fake? Clearly social media had become a greater force in stock market movements than many previously understood, but how—and why?

One answer: large-volume trading driven by computer algorithms, otherwise known as high frequency trading (HFT). The product of Wall Street’s geekiest quants, HFT is a confection of advanced math, predictive analytics and machine learning. Its algorithms are built to evolve internally, “learning” from the results of their trades, which means they end up behaving in ways that even their creators can neither predict nor completely understand. But the AP tweet did make one thing clear: When Twitter talks, HFT listens.

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According to Irene Aldridge, managing partner at ABLE Alpha Trading and author of a book on high frequency trading, HFT algorithms sift through lots of news sources—SEC filings, financial news sites, trade publications and, not incidentally, social media feeds—looking for and assigning values to specific words as well as words in close proximity. In the case of the AP tweet, says Aldridge, it is likely that the algorithms picked up on the word “explosions” in combination with “White House”, “Barack Obama” and “injured”, and deduced a major sell signal—or perhaps simply a signal to stop trading. Given the consistently high volume of HFT trades, that alone can cause prices to drop. The HFT algorithms also take cues from each other, which can redouble their market effect.

HFT algorithms and social media have been reinforcing each other for the last decade, with social media providing grist for the algorithms, which validate the significance of tweets and posts. In the process, Twitter and other social media began attracting a growing readership among human traders and investors.

That attention focused sharply after 2013, when the SEC began allowing companies to release earnings and other market-relevant news via social media, giving them the status of primary sources for critical investment intelligence—and making them irresistible as a platform for portfolio managers and analysts to post and tweet their own market insights. In April of that year, with a single post (“We currently have a large position in APPLE. We believe the company to be extremely undervalued”), Carl Icahn added $17 billion to the value of the company in the space of one hour.

If the result of the social-media congregation has been a sometimes bewildering array of data, opinion and advice on Twitter, Facebook, LinkedIn et al, it has also made them essential checkpoints for every active trader and investor.

The big investment banks and hedge funds have companies like Dataminr to sift for trading signals in the social media noise. Small players and individuals have a harder time of it. Even the biggest financial news organizations find themselves lagging behind the social-media speed curve. A crack journalist with the best set of Wall Street friends on Facebook and sources on TweetDeck is no match for an algorithm that sees it all, and all at once.

That said, every institutional and individual investor now stands to benefit by staying current with real-time social media data on the individual stocks they own or contemplate buying, which is easy as a hashtag search.

And every responsible investor can take another lesson from the fake AP tweet about that explosion at the White House: It pays to stay skeptical, about tweets and posts as well as the Wall Street Journal. As the author of Social Media Strategies for Investing, financial analyst Brian D. Degger, recently told Forbes: “You never want to act on information you receive from one source of insight…. Everything you receive has to be taken with a grain of salt.”

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Original article published on The Atlantic here.


What Your Consultant Can Do For You

Nowadays a dilemma is present at corporate offices: how to deal with consultants that are hired for a single project. Do they get the full time treatment or the concession of an ephimerus life at your organization? Having been a consultant myself for over 8 years, I can underline that is neither.

Consultants are brought in to provide the perspective of an outsider, without any bias or emotional commitment. This idea is supposed to be quite at the center of the relationship, however organizations often miss the point. Wholeheartedly a risk taker, a consultant is at his best when he is most different than the rest. It is his ability to steer away from the pack of full timers that makes his practice desirable.

It is said that creativity is the ability to connect dots from multiple disciplines, being able to absorb from different environments, borrow and innovate on the already known; consultants are driven by this principle. They have already wandered around gathering all the experience your full time team hasn’t gotten by being in a silo and proves to be valuable for the project.

But being a consultant is not a walk in park. There might be time gaps when you don’t get paid, and just when you start feeling conformable and make friends at the workplace, it’s time for the contract to end. As  a one-man show, you have to spend more time working on your finances, corporate taxes, and all the business nuisances. There is a high degree of risk carried over every time a new contract starts and every time another one ends.

That’s why the most powerful weapon a consultant has is his integrity and ethics in the quality of his work. As risk takers, free birds, consultants don’t fear to speak their minds for the quality of the product. Their concept of job security is the ability to perform their job anywhere for any organization, without staying at the same place for too long. They see change as necessary, even more, as crucial for their success.

So next time you have to deal with a Consultant at your corporate setting, embrace the fact they have to be different than your full-timers and realize they don’t swallow the same pill of apathy or indifference to every order that comes from the top. Let them do their job. Make use of the experience they bring  for a better product. You won’t regret it, nor will your users.