Noah Healy Profiting Thru Commodities

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Hello, Welcome to another episode of
night Be Media's Living the Dream. I'm

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your hosting moderator. My name is
Gregory Tucker. I know it has been

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a while we've been working behind the
scenes and getting more guests to come on

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the program and share their story.
So in the upcoming episode, we have

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some pretty interesting guests that will be
appearing on this program. Again. Night

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Be Media's Living the Dream is about
the entrepreneur story of how they turned a

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dream into reality. Today, our
guest is going to be Noah Heally taking

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us into the world of commodities.
So I hope you have your pen and

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paper already to take some notes for
Noah. We'll be sharing this information with

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us again. Want to emphasize if
this is your first time visiting, please

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leave a comment and if you find
value in this program, please do us

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a favor or do us this service
and that is hit the like button,

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subscribe and leave a comment. Welcome
to Nightbeat Media's Living the Dream podcast with

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your host Gregory Tucker, where we
discuss the entrepreneur's journey of turning a dream

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into reality, showing you how to
learn, overcome, and acquire strategic action

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steps. If you're ready to turn
your dream into a reality, then get

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ready to take action. Here's your
host, Gregory Tucker or us in the

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opener, we're going to talk about
numbers, crunching numbers in how they play

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a major part in our lives.
Today. Our guest is mister Noah Heally,

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and he has some very valuable information
to cheare with you. So I

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hope you are sitting there staying tuned
and ready to take notes. And with

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that said, let's introduced our guests. As we like to always ask our

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guest, tell us about yourself.
Okay, Well, like you said,

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Ms Noah, I live in the
town. I was born and raised in

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Charlottesville, Virginia, and I'm I'm
a recreational mathematician and I'm working on a

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project to upgrade how commodity markets work. Would that say? What we're gonna

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do, Noah is We're gonna jump
right into it now for some of our

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viewers right here, commodities when you
think of about it, most people are

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thinking, okay, they know about
stocks, or they may not know about

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stocks, but commodities is another part
of the market place where a lot of

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people are able to flourish, become
wealthy. You know to see how a

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free market actually works. Now,
one of the things that you've done,

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Noah, is you've looked at the
market and you put a system. You've

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kind of realized that there's a system
in place that many of us are totally

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unaware of. So we we hear
people every now and then turn on the

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news and you'll ear pork bellies,
for instance, that's one of the commodities

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right there, or grains, oaks
and grains, or soybeans. Now,

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a lot of people are wondering where
do people or where does the market get

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that information? And how are things
priced the way they're priced? Can you

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up us with that? Absolutely?
And it is a it's a fairly simple,

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but at the same time sort of
indirect approach. So what the market

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does is it provides a place for
people who want to buy and sell to

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come together, and then it publishes
the deals that get made in that forum.

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And so what that means is that
as a buyer, you come in,

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you get to see the deals that
are being made, and you could

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to decide what sort of terms you'd
like to offer, and the same thing

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happens for sellers. The thing that
gets tricky about this is that deals are

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being made at an enormous rate of
speed because people are coming into these markets

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from all over the planet, and
so it really isn't practical for individuals to

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actually keep track of what's actually going
on. So you're talking about stocks,

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people that are familiar with stock markets
know that the map of what their prices

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look like is just this sort of
way wildly swinging graph that's going up and

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down constantly. That is that's a
property of the market, this kind of

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marketplace itself, because we use the
same kind of marketplace to trade stocks,

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and so those that wild jag is
sort of around the point where the deals

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are getting done, but sometimes instability
occurs and it suddenly jags off very high,

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very low. And so that's that's
the space that commodity markets operate in,

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where the deals are sort of good
for a microsecond and people are trying

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to come to grips with this system
that's just sort of always sliding away from

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them. And the thing is that, particularly for commodities, because they are

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these you know, industrial process types
of products, there is a more steady,

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underlying, sort of facts on the
ground thing of what's going on.

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There's so much desire for food.
There's so much production for food. These

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two things come together on a day
by day basis, and so there's an

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opportunity to make this relationship much more
direct and to clean up a lot of

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that instability that's intrinsic in doing it
indirectly. Okay, and with that being

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said, I'm going to go ahead
and bring up your chart, so that

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way it kind of gives them a
better idea for of how this is all

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or how it all breaks down.
You have your producers consumers, here's the

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market speculators, and as far as
how it starts and how it ends,

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could you break it our unrapid force, Noah, absolutely, So let's start

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with this style of chart. So
the basic idea here is that time goes

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from top to bottom, so this
is effectively one trading cycle. This would

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happen over and over and over again. But things that are at the top

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of the page happened first, and
things at the bottom of the page happened

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last, and this happens in order. So this kind of layout with arrows

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connecting lines like this allows us to
describe relationships that are evolving over time with

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multiple parties in a way that is
somewhat clear. And again, what's going

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on here is that there's three sides
in this market, not just two.

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So the kind of easiest way to
understand this is is to sort of walk

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down it the first time, just
sort of with things happening, and then

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we're going to sort of walk back
up and see why each of those things

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happened. So let's start with step
one, publishing price information. The market

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has its current view of what the
present in future look like, and it

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tells everybody what that is. And
then the three sides split off because they

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each have a different action to take
based on how they feel about what the

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market thinks is currently going on.
Producers offer to sell, consumers commit to

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purchase, and speculators commit to future
price updates. So what does that mean.

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That means that based on where prices
are now and where prices look they're

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like they're going. Producers decide how
much they should sell today us versus how

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much they should just keep in the
barn or in the warehouse or whatever,

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and they offer to sell the amount
that it makes sense for them to sell.

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Consumers at the same time offer to
buy the amount it makes sense for

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them to buy, and the speculators
take a look at what's going on,

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think about what they know, and
think about where the errors are or even

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where other people might think errors are
that should be restabilized, and so they

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put in their least about the future. With that set of information, the

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marketplace can then collate contracts to trade
between buyers and sellers, which it sends

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back out to them, and they
can aggregate the information that's coming in from

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speculators and collect the moneies that they've
invested in the future. So then we

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have a phase where those contracts are
actually executed. The producers make the deliveries,

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which might in sort of small regional
markets might involve getting on a truck

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and driving over to your neighbor's house, but in large organized markets basically involve

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updating the escrow warehouse to let them
know that this palette doesn't bold you anymore,

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it now belongs to this other person. The consumers confirm the delivery,

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and at that point the market can
release the escrow, so everybody's safe trades

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can't happen, you know, you
can't be sort of your money's gone but

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the stuff's not here, or you
delivered but there's no cash. Everything's set

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up from that side, and also
as the market tracks actual trades occurring,

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it can measure how well the previous
speculators did and carve out their share of

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the revenue that it's collecting to operate
itself as its commission and so this kind

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of thing that you could see in
the first phase it sort of we're starting

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in the middle of things. We
have price information, so it doesn't really

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make sense where that comes from and
why people are doing it. But now

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that we've walked through, we walk
back. We see that this is a

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system of secured trade at known prices, which is very attractive to people that

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make commodities for a living or need
to buy them for a living. So

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they're going to be coming in.
They're going to be able to use this

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speculator half of things to forecast or
negotiate those prices in in directions that are

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useful for them. And third parties
will be able to come in to improve

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that speculatively by putting useful information into
the system. And so that's that's where

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this thing stabilizes towards a functioning marketplace. Okay, that was good right there.

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How you broke it down what we
saw and we could actually see it

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far as on the chart. Now, for those of you who are listening

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to the podcast, we did have
a chart that was on the screen.

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If you look on our YouTube channel, you'll see the visual video podcast,

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and that's where you can actually see
the chart what Noah was describing right there.

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Now, there's a couple of factors
that also play into this, right

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Noah, and that the variables such
as what is it market makers? Could

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you tell us about the market makers? Certainly so, market maker is a

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role that exists in the existing marketplace
because the market needs trades to be happening

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in order to have prices to deliver, and so there are people whose job

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it is to make deals even when
nobody else wants to make a deal.

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And that's something that has been being
diminished somewhat by computer trades that are basically

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so willing and so ubiquitous that trades
can sort of always be happening. But

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even so, sometimes the computers step
back from the market, and there's a

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role of stepping in and bringing this
together. What what my system does is,

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it is it essentially gives these people
a different role of actually making the

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marketplace in the first place, so
that market line. There's a role to

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be had in my system to operate
the market in which you are simply providing

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this sort of three sided service and
charging a commission on the trades facilitated,

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and that can be significantly more remunerative
than the existing markets. To put some

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numbers out there, the CME Group
is a publicly traded company and according to

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their numbers, their annual revenue is
about four billion dollars a year. According

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to the US Census figures, the
amount of market transaction costs and commodities,

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which isn't solely the CME Group,
but they are by far the largest operator

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of that sort of thing in the
United States, is an excess of eight

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hundred billion dollars a year. So
they're collecting something like half a percent of

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the transaction value chain by by being
market makers, by being market operators,

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and a CDM style system, this
this sort of thing would allow those people

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to simultaneously shrink that very large number
and create a more efficient and prosperous economy

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while growing that small number and thus
having a much more prosperous company. Oh

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okay, so this right here,
your system is designed in order to condense

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it somewhat, but at the same
time give a bigger yield. Yes,

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absolutely, So the key thing for
any market system is volunteerism. So the

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thing that makes economy is function and
grow is that people are willing participants.

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If you're getting conned into buying things
on a regular basis, then probably things

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aren't really going that well economically speaking. And certainly if if you're you know,

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sort of being threatened into doing things, then then it's it's very bad.

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Indeed. So a market needs to
be able to offer all the people

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it needs to participate something that's a
good deal from their perspective. It's not

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enough that it's what you would want. It has to be what they would

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want. And so for CDM to
become successful, each of these three participant

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groups and the operator themselves all needs
to be able to get something out of

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it. And since each of these
things, you know, consists of businesses,

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what they're looking for the out of
these things is profits return on investment

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those sorts of things. And by
creating a more efficient algorithm, we can

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lower friction, lower cost, and
actually offer a share of that improvement to

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each of these roles and consequently have
a better marketplace. Okay, Now there's

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another term that I've heard, and
that is he'll climbing. What does that?

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So he'll climbing is a term used
in like optimization theory for a generic

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set of optimization strategies. So at
the very basic, imagine that you needed

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to get to the highest point and
how could you do that. Well,

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you know, here in our day
to day lives, you know, you'd

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take out your phone and you'd ask
it for you know, turn by turn

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directions to the top of Mount Everest
and go do that. But in computer

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optimization, we don't really get to
sort of play those types of games.

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So come up with an algorithm that
would cause that to happen. So imagine

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this, look around yourself one step
in each direction and figure out what the

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highest point one step away from you
is, and then step to there,

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and now do it again. Just
keep doing that. He'll climbing is a

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very nice algorithm because it's simple,
it's it's very easy to understand how that

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works. It's very easy to actually
implement that in abstract scenarios where you're not

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really standing on a field or something, but you really do have some kind

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of abstraction like supply and demand and
people coming together, and so the algorithm

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that existing markets implement is a hill
climbing algorithm. Basically, if the market's

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out of balance, then you will
make more money by trading in the direction

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towards the markets balance than away from
the markets balance, and so the market

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will hill climb towards these equilibrium positions. Hill climbing, like all potential optimization

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algorithms, has drawbacks, and for
hill climbing, the two big ones are

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multidimensional systems. So usually hill climbing
is first exposed to people in terms of

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optimizing a function. So you just
have a line on a graph, and

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so when you when you're looking at
sort of all the steps that you can

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take, there's only two steps you
can take. You can go right or

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left. And that's pretty easy to
understand. But if you think about like

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the first thing I talked about,
like if you're doing it yourself and you're

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looking around yourself, there's sort of
a circle around you of you know,

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an infinite number of directions that you
could potentially check. And in abstract spaces,

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there's no reason to be restricted to
small numbers of dimensions like we actually

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visually engage with. So in an
environment like the economy, where there are

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dozens or hundreds of products that might
have interrelations with one of another. Looking

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at your neighborhood can involve an extremely
large number of examinations, and that that's

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a real cost. The second problem
with hill climbing, which probably isn't so

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much of an issue for economies,
is something called local maxima. So I

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live in a hilly place. If
I were to engage in hill climbing,

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I would wind up at the end
of my block, because that's where the

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highest point in the neighborhood is.
But I would not wind up in the

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highest point in the town that I
live in because that's across town, and

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it's across town. There's there's a
couple of valleys between me and there,

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and so hill climbing would never get
me to there, And so that becomes

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a challenge where you've got this maximizing
thing, but it comes up against sort

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of a a little shallow gap,
but it can't bridge that gap. And

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the way generally hill climbing can get
past those kinds of gaps is through randomness,

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which now explains when we're talking about
how markets sort of jump and then

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suddenly jump around that's that's a normal
hill climbing behavior of First off, you

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never want your algorithm to settle down
because if it does, you sort of

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stagnate. And then two, when
when you're in an unstable environment, you

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will suddenly find yourself in a position
where you've thought you were heading towards something

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that you were pretty close to,
and then you suddenly discover that just you

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know a little bit over in that
direction, there's a much better thing,

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and everything starts flooding in that direction
instead. So that's that's that's how hill

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climbing works. It's quite impressive that
human beings sort of discovered a hill climbing

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optimizer eight centuries ago, but in
just the last eighty years, with the

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advent of computer science and so on, we've actually learned an enormous amount about

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optimization algorithms. And what my systems
actually doing with integrating multiple speculative points of

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view is effectively creating what would could
be termed a meta algorithm. So people

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can engage in hill climbing algorithms to
figure out where prices are where they're going,

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but people can also use other more
advanced techniques from operations research and their

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own planning and so on, and
what my system will do is effectively aggregate

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those into a super algorithm which will
take weighted values from each of those depending

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on how valuable they're they're turning out
to be. So what you get is

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sort of a super intelligence that is
extracting the most effective approaches from everybody that's

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engaged in the marketplace. So there's
the artificial AI. Is that what I'm

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hearing? There's an aspect, there's
an aspect that AI has come to be

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a stand in term for one specific
optimization algorithm based around neural networks in these

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in these days, But the general
term artificial intelligence simply refers to systems capable

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of sort of intelligent decision making that
aren't human brains or some other animal brain.

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And so marketplaces have been artificial intelligences
for centuries before computers were really even

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the thing, because they do they
do extract these multiple points of view from

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people using the hill climbing algorithm.
It's just they're using one specific algorithm,

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which is which is sort of being
overtaken by events and technology, and so

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if we want them to keep working, we need to update. We need

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to update that algorithm. So in
other words, we have to keep feeding

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a machine right there, So instead
of it's just going to arbitrarily come out

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with something you have to it only
comes out with good quality if it's fed

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good quality data. Exactly. Yes, uh yeah, the market, the

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market's not a genie or an oracle. It's not. It's not telling us

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what to do. It's taking on
our our actions and our desires and finding

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the best of those and and presenting
them as sort of that what the wisest

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guidance that is available. Much like
government. Uh you know if if if

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you don't participate, it gets very
very bad. That it's there's not an

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US and to them it's all us
and us okay. And with that then

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said, how long did it take
you know what, to work your to

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develop your system. I would say, I would say, to be completely

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fair, six months from sort of
intuitive idea in order to actually said I'd

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really solve the problem. I think
the key thing was getting the code written

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and then analyzed. It took me
about three months to find a problem solution.

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But writing code, particularly writing the
first draft of code for something that

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you've only got some math equations for, always has some tricks to it.

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So I'd go with six months,
okay, And one other thing in that

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is how does this benefit the average
person? Well, to go back to

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those numbers, those hundreds of billions
of dollars show up in your grocery bill,

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They show up in when you're buying
lumber, they show up in the

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cost of clothing, they show up
at the gas pump, they show up

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in every part of your life,
and they also show up in your business

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choices. You know, we have
this this thought that, like, you

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know, working for a bank in
the city is a good job because there's

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you know, very high returns and
a lot of opportunity, and working on

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a farm in the country is a
bad job because there's very low returns and

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not a lot of opportunity. So
the kinds of things that you can do

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with your money and the kinds of
things that you can do with your life

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are shaped by these costs, and
markets only recently got this expensive. Part

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of the large shift in behavior from
uh sort of goods and goods production to

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services production is that there's been a
vast expansion in the amount of money that

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can be made by by market services
and financial services. So by simplifying this,

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we reach a point where actual stuff
is less expensive, can be made

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with higher quality, and jobs making
actual stuff that's less expensive and our higher

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quality are more available and more remunerative. So the common man, as it

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were, gets to sort of go
to a world where what they're doing is

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just more useful. Okay, Well
that was a great explanation in a wrap

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up. Also, because the main
thing that we want to do here on

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this program is to educate people at
the same time sharing journeys far as how

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entrepreneurs or individuals overcame those obstacles on
their journey far as creating or turning that

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vision into a reality right there,
And I think he did a great job

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far as at summarizing that there,
Noah, And for those of you who

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look at it and say, well, what does all of this number crunching

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or all this information has to do
or how it affects you know just mentioned

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he just pointed it out that is
is your quality of life. It's your

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bottom line, because what happens to
jet out on the farm definitely has effects

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on you when you're bringing in food
to go on the table for your family

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or even for yourself. Right there, So think about it the next time

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in what would you like the audience
to walk away or leave with? Noah,

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I think we're at an important point
in human history with computers. They

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give us a lot of capacities which
not merely couldn't have been imagined, but

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couldn't really even have been expected people's
people's expectations were in the opposite direction of

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imagining what was now possible. And
so, in addition to my system,

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which I would hope to bring to
everyone who hears this, there are opportunities

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at every level in our society and
across our entire society to simplify and increase

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the intelligence of virtually everything that we
do. And look for those opportunities and

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seek them out, because you know, the world's a competitive place, and

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if if you aren't finding these things, then someday your lunch will be eaten

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by the people that do very well. Put right there, and Noah,

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how can people find out more information
regarding your system? So there's a website

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at chorddisc dot com c O R
D I s C. You can also

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reach out to me directly. Please
do Noah peheely at yahoo dot com.

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We'll find me quite readily, or
you can find me on LinkedIn. I'm

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the Noah Heally on LinkedIn. Okay, well again, thank you for sharing

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valuable information with it's Noah. Thanks
for listening to Nightbeat Media's Living the Dream.

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If you enjoyed this podcast, please
live a comment or hit follow and

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00:35:47.079 --> 00:35:52.880
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next time. When writing the story
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