Ok, so we have the parasite working for us. What else could we do? Interesting investment strategies and so on.
I am interested to focus on the parasite and not run all directions at the same time. The parasite needs our collective intelligence. I hate the concept of ‘general intellect’ because I think we are anything but general, but many you get what I mean. We are many and we’re interested in many different things. That’s all true. But we can also do something that energy and diversity, and not just propose 1001 projects that RH should start or get involved in. In that way we may end up with empty hands pretty soon. The parasite is an absolutely unique gem. Hackers, academics, artists, activists never have a sovereign source of income. They are not supposed to. At best they are salary slaves, and most of are members of the fast growing global class of the precariat. I would love to build up a community, a live chat channel of sorts, that can feed our parasite with good ideas.
@glovink I like your thinking here. In terms of a good avenue to feed in the good ideas, our thinking was that this would be a good platform. Would you agree with this? (At least initially - it would be awesome if we could bake this into the web platform itself!)
The projects member meeting in Loomio has been fantastic in the sense that it seems people have been asking ‘how can we do this better’ - the meeting itself, running by the rules of the old cooperative form, seems in some way quite rigid - like there isn’t quite space to do things differently if we were to want to (like a large ship set on one trajectory). In the past, this rigidity gave workers new space in relation to the conditions of the time (collective bargaining rights, mutual aid, etc in the face of ‘bosses’)… but in today’s conditions, this same feeling of space isn’t generated with this rigid cooperative form (in this case at least - though it is the organizational hack that allows us minor asset owners to tinker within the Wall Street data feeds).
We have taken this as the starting point for the new tools that need building - how can we create new space, in today’s conditions that might allow:
As you put it (among other things)
As a hacker, my predisposition is to ask, how can we make automation work in our favour in this case? Can we bake this into the core of a member owned platform? Can we update the cooperative mission with something more agile when needed?
I’m curious about the Parasite. How is it actually coded (not that I think I would understand everything). Is the source code secret? If so, can we assume that it is in fact not compromised (I’m slightly paranoid, but it’s ok, I’m also being followed)? How can it be tested. Is it running non-stop? Could we run parallel “babies” of the Parasite and test them against market data or give them pocket money to speculate with and then use the results to upgrade the main Parasite? As far as I understand it only makes sense to have one main Parasite running with all the big bag of money in it to achieve some sort of economies of scale. How difficult would it be to tell the Parasite certain things such as “don’t invest in this particular company or industry right now”?
Sorry if the answers to some of these questions are out there somewhere, I have read most of what I could get my hands on but in this day and age we all have information overload, I guess…
Were you the Magnus who dropped in virtually to the London Office?
Either way, welcome! Make sure to drop in here and say hello: Introductions - Come and say hello and introduce yourself!
You can read more about the Parasite by going to the US patent office online The Parasite is then covered by these two patents: US Patent 7835968 and US Patent 8484118
Actually the algorithm is like an elaborate recommendation engine (kind of like when you buy a book on Amazon and they say - “You might also like this”) - in RHC’s case - the recommendations are based on consensus of emergent choices by several ‘competent’ actors.
As we have seen recently though - humans do get it wrong. So there is certainly space for looking at new angles - so it is great that you and @glovink have gotten straight stuck in.
Does this answer your question?!
Also… there is this thread: Financial technology
These forums have the potential to become a real petri dish for collating the vast expertise of the existing cooperative so that we can continue evolving…
Hi Dan and everyone
Yes, I followed some parts of the London Office from home…
Thanks for the links to the patents (Detail: If others want to find these patents then there’s no “s” in the middle of the first patent, simply 7835968 as far as I can see).
Have corrected the error in the original post. Thanks!
Having read descriptions of parasite, and briefly reading the patents (not claiming to understand them fully). I still believe that the current code can only work (on average) where the positions taken are expected to appreciate in the context of the current markets. If you could point out that there have been specific shorts or positions in inverse funds taken, that would prove me wrong and at the same time make me feel better.
I would think that the funds recent performance would add some validity to this point.
I think for this discussion to go any further we would have to have a significant number of members say that
- the above might be true
- current financial markets may be at or approaching a critical point.
So what could RHC do? Many things. But any of the possibilities would be on some agreement that a divergence from the status quo is in order.
Otherwise we will just get lost in fruitless discussions.
I really hope someone will comment on this one way or another.
You’ve actually made an accurate assessment in identifying that the portfolio put together with the recommendations typically has < 10% made through shorting strategies…
I’d also agree (& I think most others within RH) that it would make sense to diversify the approach - what should this look like?
The R&D crew have been busy designing and tinkering with underlying algo-plumbing but we are always looking for more diverse expertise, experiences and networks to get involved in this ongoing work.
The forums are a first public step in that direction - so, thanks again for getting straight in!
I also have a few questions and remarks about the parasite:
I agree. I also want to quote @glovink from the September meeting minutes
Our parasite, imho, should be radically negative. It
is nonsense to state that everything will be fine and that markets always bounce
back etc. No, markets do crash. And a lot of hedge funds indeed speculate on this,
and say so openly. Why not RH? Let’s forget the positive Deleuze and walk on to the
other side. Celebrate the Dark Deleuze! Negativism is a very healthy antidote and is
a good way to prevent depression!
This is important for me. I want to be laughing (to the bank) when all the big investors are crying come next market crash. Can we program the parasite to favor shorting against nasty companies like Glencore or Chevron? I want to make money from their misfortune. If RH is a hack, it needs to be anti, there needs to be a sting. This is the fun part. A hack stripped of anti-conventional intent is not a hack at all.
Something else: who knows what is in the portfolio? Can/should that be clearer?
Can you say whether there has been any change in in the RHC’s investment strategy?
I was hoping to see more discussion on this topic particularly as the NAV continues to decline.
Excellent & important questions.
I would really like to respond with a long long post; let’s see what I can do.
Having more investment instruments and having multiple strategies would be absolutely wonderful. And that is what we decided in the member meeting on December: to work toward diversifying and making the project more robust.
The problem is that the traditional coop does not suit that well. It is run by volunteers, as the AUM has not grown enough to support salaried positions. And it takes a lot of committed work to device & deploy new investment instruments. (In fact, it takes a lot of work just to keep the coop going as it is; just the "customer care” alone is several hours per week for 4-5 persons each). Not to speak of the needed general meetings and so on.
Fortunately, during 2015, we (meaning the volunteer team, the board and advisors, members and other people who have taken part in the open offices and other events) believe to have found a way out of this impasse. A goal and a means.
The goal is to continue Robin Hood as a project that evolves, automutates and takes new forms. The next step: the coop of the 21st century as a platform (like facebook or airbnb) owned and operated by its members/users. What if we had a platform, where your money would not sit in a bank, doing whatever the bank wants it to do, but doing what you tell it to do? What if we had a platform, where anyone could develop financial instruments, and launch them as apps for other members to use? A distributed platform like the blockchain. A platform where the success of one endeavour would feed into the success of others. There would be every opportunity to device different investment strategies and different ways in directing profits or other funding to projects. Equity crowdfunding with bells and whistles. No mandatory general meetings; everything happening on a peer-to-peer basis. We are very excited about this possibility.
The means: open sourcing and becoming more focused. Open sourcing is precisely what is happening here, in discourse. The idea is that both 1) the tasks of the coop 1.0 as it is can be divided among more people, making the coop more sustainable, and that 2) the development of the coop 2.0 can be sped up. Becoming more focused: since the spring, a group of people, most of them also volunteers in coop 1.0, have formed a start-up for-benefit company, so that they can concentrate fully on developing the platform. A separate entity, the start-up, is needed in order to gain access to external funding, manage risks and make commitment possible.
We (the volunteer team) are right now preparing a longer document on this process towards the coop 2.0 as a platform; it should be ready in a couple of days and will be posted here.
So, to finally to come to your questions, the fact of the matter is that the volunteer team is, at the moment, more excited about developing the next step, the platform, than tinkering with coop 1.0. It would seem a waste of efforts and quite unwieldly to try to add something beside the parasite, when in view we have a financial-social platform that could – at least potentially – do so much more: options, equity crowdfunding, venture communism, skill-sharing and collaboration, structured finance, something akin to basic income for its members, and so on.
Now that does not mean, in any way, that we should not be thinking about and developing alternative investing strategies. Quite the contrary. That is exactly what the platform is for.
Does that make any sense?
More direct answers.
We can’t program the parasite to do shorting & stuff, since it is it has its own logic, operated and programmed by Sakari Virkki. We can program something like the parasite to do shorting & stuff. In fact, the artists Goldin & Senneby are doing something like that. It would be wonderful to do a project with them. Who wants to take the lead?
The parasite is, of course, all the time changing its view on the market, according to the changes in the market. But its basic logic has not been changed. As for the portfolio, it probably should be more clear and open what is in it, and Sakari has discussed the porfolio in the monthly Newsletters in the past. On the other hand, the portfolio is what the parasite does or results in, so opening that in detail would tip the parasite’s hand.
Thank you @Tere for your answer. I am beginning to understand the long-term ideas for RH. Very exciting, I won’t keep you off your work any longer!
I think my idea of a negative parasite was a bit naive, as it is already very dark, investing in everything as long as it makes money with a devil-may-care baddest-muthafucka-in-da-hood attitude, rather than my own post-hippie views of betting against evil companies.
The Zero Magic trick would be a first great addition to the RH umbrella, though: an activist hedge fund that purposely bets against unethical companies after learning Greenpeace/Avaaz is planning a major campaign ( engineering its own campaign is probably too risky as it can too easily be construed as insider trading). I wouldn’t know where to start, but yea, let’s try to develop this “app” on the new blockchain platform
Didn’t want to imply anything like that, sorry! I like what I/we are doing. The point was just to emphasise that going forward we need new tools.
Tere, thanks for your reply, and yes what you’ve said makes sense, all of it.
I echo the sentiment that a previous reference I made to shorting the market and Parasite was off base, and didn’t fully account for the logic of the parasite.
Just thinking aloud about strategy ( i have read quite a lot of the forum and modus operandi of RHC so apologies if this is covering what has been mentioned around the forum.)
If you are trying to bring more resources into the commons, isn’t the parasite in the hands of RHC alone, a tilt at windmills, (€150k out of a multi trillion dollar pot) Also, isnt the speed of distribution of funds creating a double whammy?
ie the parasite (just like all of us) is operating in an economic environment where every dollar you take out the Wall St system is likely to be replaced with more dollars from QE. And while it seems that only a small percent of every new QE dollar is going into the general economy, still, that whole new dollar diminishes the value of what the parasite has rescued from Wall St?
And the double whammy is that if the dispersal of funds takes many months, the value of those funds is given time to further diminish.
A couple of thoughts with strategy.
a) Is there a way to license the Parasite to other groups, for a multi parasite approach? Knowing how scurrulous these financiers are, even get certain players in Wall St to have a go at their competitors, and hope they can get out before it backfires on them in some unforeseen way.
b) My understanding is that RHC 2.0 is focused on blockchain projects that circumvent the Wall St / central banking hogwash.
Maybe use the Parasite as a strategic selling tool, in the sense of using the Parasite to attract multitudes to support the RHC 2.0 blockchain based projects.
When the time comes and there is a decent and successful portfolio of apps etc underway, show off the fruits of the energies that have been committed to dark investing, and quit the Parasite while it is ahead, as a demonstration of an unequivocal intent to focus all the brain power and creativity behind Parasite, into directly constructive and commons oriented blockchain financial projects.
I am thinking ahead and it could be very counter-productive in the public perception of the RHC 2.0 platform if the parasite takes chunks out of Wall St yet doesn’t relent being a dark agent while we are saying, hey we are the light, the good guys offering you cool and liberating and “ethical” financial instruments Bit like hackers who turn security contractors, if they turned out to be still hacking, how would that go down?
edit: When I say “ethical” I understand that is an unpopular / overly restrictive term at RHC, in this context, it could be replaced with “fair” which apparently is a concept that every human has an innate grasp of.
Hi Andy! First the straight replies:
a) we as RHC can’t, just like that, since we use the parasite as per agreement with Sakari Virkki; in order to do something like that Sakari would have to agree.
b) yes, 2.0 does not necessarily have to have anything to do with Wall Street; it will be a set of tools for financial transactions, some of which might be, if the users/operators so wish, with Wall Street.
More generally, this line of thinking is one of the reasons why the next steps towards 2.0 feel necessary. The Parasite is great in many ways, both practically and in the thinking that underlies it, but it is not a “multitool”. As the members and the volunteers of the coop think that more options are needed, well, then we have to find new ways.
If Parasite does work as a recommendation engine as you say, I think its use could extend beyond investing. What it sounds like to me is that Parasite is essentially trying to select the most “hyped” capital (confidence in capital, both specifically and generally, is a strong factor in its value), and in the context of RHC, this selection is used to invest. This works because the value of capital is based on its expected future earnings, and the set of assets top investors are confident will earn a return would strongly overlap with the set of actual biggest earners. In fact, without some incredible feats of data collection and analysis, this is probably the best possible way for a program to capitalize based on market conditions.
Another potential way to programmatically capitalize, but not based on market conditions, would be to pick assets at random. This strategy could also take the high-frequency approach, depending on a high volume of marginal positions to add up to a large aggregate return.
With a different goal, I think Parasite could be useful, as well–if its goal were not to capitalize but to disrupt capitalization, Parasite could be useful for this, too. Whatever process is used for decapitalization could be guided by Parasite to make the most efficient use of whatever limited resources it has. The disruption of specifically the top investors’ capital would have the twofold effect of reducing not just the investors’ confidence in their investments, but confidence in investment generally.