Unbearable Slowness
At what rate do we process new information?
Sometimes every minute feels too long. You just can't wait for the hour to be over. Maybe you are sitting in a waiting room. Yearning for a distraction. Outside the window, the sky is plain, not a cloud to notice. You crave for the flow of your thoughts to move faster. You spend your time waiting for it to be over.
Other times, you look back and can't account for all the days that have passed. It's already September. How fast the year flew! You wish you spent every single second more wisely. Hoping time went slower and you still had one more day before your deadlines.
Two things to notice here.
The asymmetry of time. There seems to be a stark imbalance. How come that when we look forwards, time seems to expand, while when we look backwards it shrinks? Why at once we want it to move faster, and the other way around? Forward-looking time is perceived as abundant wait, backwards-looking time as scarce memory.
The quality of attention. The second is that the way we process information, how we focus, makes all the difference in our inner perception of the flow of time. Somehow, the happiest moments seem to be those when we don't think about time altogether. No anxious wait, or pensive melancholy. No clocks, schedules or memories, just the present moment.
If you think you are boring your audience, go slower not faster.
Gustav Mahler
In the recent stimulating paper "The Unbearable Slowness of Being", neuroscience researchers from the Biological Engineering division of CalTech assess human cognitive bandwidth. At what rate do humans process information?
Combining the available anecdotical evidence from professional typists, memory competitions and Rubik cube speed solving, they arrive at the conclusion humans operate at an information rate of at most 10 bits per second. This seems so low! At that speed, good luck for any brain-machine interface...
It is note-worthy that the information capacity of the brain is much larger. The "outer systems" are dealing with a rich continuous stream of perceptual (sounds, visuals, etc...) stimuli at several order of magnitudes higher rates. A single photoreceptor emits 270 bit/s and there are over 6 million of those in an eye. Our perceiving peripheral systems seem to equipped to manage Gb/s of data flows. Yet, our mind, our conscious "inner system" only process a meagre 10 bits/s. Our motor, cognitive or perception rates are capped at the firing speed of a single neuron!
Coming next…
Intrinsic time flow is a fascinating research topic. A distinguished contribution in the field came from French mathematician Benoit Mandelbrot. He studied financial time-series with original new mathematics, that stemmed from realising their scale-invariant properties. The markets movements over one hour are affine to those over one week or one year. His (multi)fractal model of asset returns unlocks significant explanatory power, by making explicit the intuitive concepts of a slowing or accelerating time. The dynamic study of volatility is born.
“Stop playing games!” - how many times have we complained to a friend or a partner, that we felt was acting from a fundamentally dishonest place? This classic from 1960s Californian psychiatrist Eric Berne belongs to a time when game theory as a mathematical discipline was relatively young. Its insights are deep. Berne’s understanding of our most mundane, everyday interactions is built around transactional game analysis. He offers a structural view to account of behavioural patterns, often unconscious, with a hidden payoff that keeps the drama going.
Is reality so broken we are better off living in a videogame? The 2011 book by game-designer Jane McGonigal is a thought-provoking ride. Far from just being something to do when there is nothing to do, games have a wide cultural significance and power. Simulations engage the limits and possibilities of our imagination. By re-routing our attention and focus, games hack our sense of time… and may even help us transcend our hunger!
Did you know?
Equities holdings (as a share of all financial assets) are at record highs across American households. This is surprising in a time of relatively higher interest rate (SOFR 5.35%). The risk premium rotation theory would advocate less appetite for riskier assets. Guess what: any theory that models human beings linearly as “pull this lever, get this action” is flawed.
On a different note, this broader exposure may have repercussions: when markets perform well, households may feel wealthier, which can boost consumer spending. Conversely, a market persistent decline could dampen spending, in turn a accelerating a downturn.
Last week was a blood bath in the S&P500. This felt as a self-fulfilling prophecy. Before the week began, commentators anticipated how poorly had markets performed on average during September in the last five years. Flows rushed out. Momentum strategies reversed. Until now, mid-caps with momentum had been one of the best performing “factors” year-to-date [ XMMO 0.00%↑ ]. To have a memorable deep dive into factor models from a practitioner’s point of view, I can’t recommend enough the recent Flirting with models interview of Giuseppe Paleologo.
What else… The yield curve of the 2s - 10s uninverted. For the US Government, it is now cheaper to borrow for 2 years than for 10 years. Long-dated bonds are poised to do well in the short-term as the market prices in more rate cuts. The ECB is meeting on Thursday 12th in Frankfurt and it is expected to cut rates from 4.25% to 4%. The FED will follow suit the following week.
Like in all the best stories, it feels the wind is changing. We are sitting near a turning point. What’s coming next?
The Chinese have a great way to put it. We encounter brightness unexpectedly from the inconspicuous detail (yi wei she ming). The beginnings of good and bad fortune are tiny as a sprout, so people overlook them. Only the sage sees through them (Book of Huainanzi).
To really see the little things is to see the big things they betoken, and see them well before their development becomes obvious. Such seeing penetrates to the virtual depth of the world, perceiving incipient mutation, recognising opportunities to align and transform with the changes. (Barry Allan, Vanishing into Things, 2015)
Feeling the rhythm of the flow of time may offer us anticipatory insights. Have you ever felt that moment in a football match, when after a rather monotonous period, everything seems to unravel in a short time-span? Volatility spikes. It’s contagious. Suddenly, all the team believes a comeback is possible.
We feel the contraction and expansion of time at both the individual and collective levels. We hold our breaths together. Together, we wait and we rush.
Stay curious. Keep noticing!
David