April 2021

life. money. probability.

APRIL 2021

THE

TRUTH

UFOs, extraterrestrial life, space exploration and billionaires’ ambitions

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April 2021

Aliens, Space & UFOs 12 Are We Alone?

Luckbox checks in on this planet’s progress in space exploration and the search for extraterrestrial life

14 Alien Artifact or Just Another Rock?

Scientists debate whether extraterrestrials may have created a mysterious object visiting us from outside the solar system

PHOTOGRAPH: NASA, ESA, AND THE HUBBLE HERITAGE TEAM (STSCI/AURA)

21 If You Follow the Math, We Are Probably Not Alone

Two U.K.-based scientists came up with a new method for estimating the number of intelligent civilizations in the galaxy

24 Earth 2.0

NASA’s former head scientist says humans may soon discover signs of life elsewhere in the solar system and eventually on exoplanets

26 Space Junk

Ignoring the debris that’s orbiting Earth could have dire implications

28 Astro Photophile

Col. Terry Virts spent more time in space than everyone else featured in this issue combined, and he has pictures to prove it

The Bubble Nebula, a cloud of gas roughly 7,000 light-years from Earth, measures about six light-years across.

April 2021 | Luckbox

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editor in chief ed mckinley managing editor yesenia duran associate editor mike reddy editorial intern kendall polidori technical editor mike rechenthin Don’t space out!

These books cover everthing extraterrestrial.

p. 42

contributing editors vonetta logan, tom preston creative director jacqueline cantu contributing photographer garrett roodbergen editorial director jeff joseph

tactics

LIQUID ASSETS

NORMAL DEVIATE

37 Outer Spirits

actionable trading ideas

CHEAT SHEET

Outsmarting INSERT

the Machines

38 Beware of Two Mental Traps

BASIC

INTERMEDIATE

THE PREDICTION TRADE

40 Open-Minded Forecasting in a Polarized World BOOKSHELF

42 The Luckbox Bookshelf TRADER

44 TikTok Dough

trades

essential trading strategies

49 Short Side of the Moon 51 GameStop Games Stop

CHERRY PICKS

57 Options With Futures

advertising inquiries advertise@luckboxmagazine.com subscriptions & service support@luckboxmagazine.com

58 Space Stocks Have Limitless Upside

DO DILIGENCE

media & business inquiries publisher: jeff joseph jj@luckboxmagazine.com

THE TECHNICIAN

Luckbox magazine, a tastytrade publication, is published at 19 n. Sangamon, Chicago, IL 60607

FAKE FINANCIAL NEWS

60 Failure to Launch

ADVANCED

54 How Much Volatility Is Too Much?

contributor’s guidelines, press releases & editorial inquiries editor@luckboxmagazine.com

10 Not the “Billions” Sagan Was Referring To

Editorial offices: 312.761.4218 ISSN: 2689-5692 Printed at Lane Press in Vermont luckboxmagazine.com

THE LAST PICTURE

64 Coming Home

Luckbox magazine

REASON’S EDGE

46 New Kids, Old Crimes; Bad Cops, Good Times CALENDAR

47 April 2021

@luckboxmag Pictured on the cover: The NASA Hubble infrared image of the Pillars of Creation, a stellar nursery composed of gas and dust slowly eaten away by massive stars. A blue-colored glow shows the edges of the cloud that are partly illuminated by the stars that surround them.

The pillars are about five light-years tall in this image.

2019 & 2020 Best New Magazine Folio Award for Custom Content

Luckbox magazine content is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities and futures can involve high risk and the loss of any funds invested. luckbox magazine, a brand of tastytrade, Inc., does not provide investment or financial advice or make investment recommendations through its content, financial programming or otherwise. The information provided in luckbox magazine may not be appropriate for all individuals, and is provided without respect to any individual’s financial sophistication, financial situation, investing time horizon or risk tolerance. luckbox magazine and tastytrade are not in the business of executing securities or futures transactions, nor do they direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. luckbox magazine and tastytrade are not licensed financial advisers, registered investment advisers, or registered broker-dealers. Options, futures and futures options are not suitable for all investors. Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any securities or futures transaction or trade. For simplicity, the examples and illustrations in these articles may not include transaction costs. Nothing contained in this magazine constitutes a solicitation, recommendation, endorsement, promotion or offer by tastytrade, or any of its subsidiaries, affiliates or assigns. While luckbox magazine and tastytrade believe that the information contained in luckbox magazine is reliable and make efforts to assure its accuracy, the publisher disclaims responsibility for opinions and representation of facts contained herein. Active investing is not easy, so be careful out there!

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PHOTOGRAPH: (BOOKS) GARRETT ROODBERGEN; (COVER) NASA, ESA, AND THE HUBBLE HERITAGE TEAM (STSCI/AURA)

trends life, luxury & the pursuit of happiness

comments, tips & story ideas feedback@luckboxmagazine.com

Luckbox | April 2021

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MARS ATTRACTS It landed in a field in Idaho Where it came from, I don’t know It did not look like it came from Japan And out of the dark walked a strange man If you think it’s a pack of lies, I saw it happen with my own eyes A million miles from the milky way A hundred years, a month and a day —Zero Zero UFO, Ramones (1989)

This past Feb. 18 was packed with news.

While many news outlets were focused on the passing of conservative radio firebrand Rush Limbaugh or the ill-advised trip Ted Cruz took to Mexico, Luckbox was locked in on two other big stories that day.

As NASA’s Perseverance Rover was touching down on Mars, reddit.com forum WallSteetBets trader Keith Gill (aka DeepF*cKingValue and RoaringKitty) was taking his seat before the House Financial Services Committee.

Gill’s testimony confirmed that he was “not a cat.” He also argued that he wasn’t a Pied Piper leading legions of fledgling traders to their financial demise.

Cat, rat or something else, juxtaposing GameStop and Mars, we noticed some unseemly similarities between the red planet and the red-ink retailer.

Life definitely existed at GameStop in the past and may have once existed on Mars, but neither exhibits many signs of life these days.

Just the same, nothing has prevented scientists or investors from spending billions

to confirm that lifelessness.

Reddit message boards beckoned new traders to dream of achieving the impossible—conquering Wall Street. At least the NASA scientists pursued the more likely theory that life may have arisen and died out on Mars.

Perseverance, which cost $2.4 billion to build and launch, will require another $300 million to operate during its first year on Mars. GameStop, on the other hand, lost $673 million in fiscal 2018 and took an estimated $20 billion away from hardcore short-sellers and newbie traders this past January alone.

Which brings us to another point of comparison. Nearly all of the water on Mars today is frozen. That’s the same lack of liquidity that traders on Robinhood and other brokers experienced when they were iced out of GameStop.

What we did learn from the GameStop hearings is that putting Maxine Waters in charge of the House Financial Services Committee is like putting Ted Cruz in charge

of public relations during a brand crisis.

Meanwhile, Mars explorers hope to learn more about the existential impact major shifts in climate pose to our planet.

While we have viewed Mars and GameStop stores only from a distance, we are not aware of sentient beings occupying either one lately. If we had to predict, we would expect far more people will visit Mars than GameStop in the decades to come. Our guess is that most of Gen Z would tell you the same.

The inexperienced trader taking-it-tothe-man revolution that the financial press romanticized about has already come and gone. Once again, new investors should heed the fundamentals we teach in these pages, including understanding your options.

GameStop is a story of the past. This issue of Luckbox looks ahead, and above.

Outer space is back, baby!

Ed McKinley Editor in Chief

Jeff Joseph Editorial Director

Your thoughts on this issue? Please take the next reader poll at luckboxmagazine.com/survery

Thinking Inside the Luckbox

Luckbox is dedicated to helping active investors achieve skill-derived, outlier results.

1 Probability is the key to improving outcomes in the markets and in life.

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2 Greater market volatility brings greater opportunity for traders and investors.

3 Options are the best vehicle to manage risk and exploit market volatility.

4 Don’t rely on chance. Know your options because luck smiles upon the prepared.

Two ways to send comments, criticism and suggestions to Luckbox Email feedback@luckboxmagazine.com Visit luckboxmagazine.com/survey A new survey every issue.

Luckbox | April 2021

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Reader Survey

Open Outcry

*Percentages rounded to the nearest whole number

Should Earth attempt to contact extraterrestrial life?

Are UFOs real or imaginary?

ANSWER

LUCKBOX READERS

GALLUP POLL

Real

66%

56%

Imaginary

23%

39%

No opinion

11%

5%

We clearly should not because their technological capabilities would most likely surpass ours, meaning the outcome would most likely be similar to Columbus arriving in America, which did not turn out to be good for the local population. There is no way to be certain that any alien life would be eager to help us or share anything. The kind of help we believe we might get from them says a lot about us and not them. If the cosmic telephone rings, we shouldn’t pick it up.

—Daniel Stanean, Romania

Which comes closer to your view? Some UFOs have been alien spacecraft visiting Earth from other planets or galaxies, (or) all UFO sightings can be explained by human activity on Earth or natural phenomena.

LUCKBOX READERS

GALLUP POLL

Some have been alien spacecraft

60%

33%

All human activity/natural phenomena

30%

60%

No opinion

10%

7%

ANSWER

Pros: Cultural mingling, intellectual advancements, proof of concept. Cons: Earth enslaved or destroyed. Worse possibilities.

—Nick Rossie, Denver

I enjoyed the interview with Chris Langan (The Smartest Man in America), especially his descriptions of “the danger zone” IQ and the “30 point rule.”

—Marc Townsend, Sheridan, WY

Does the U.S. government know more about UFOs than it’s telling us?

ANSWER

LUCKBOX READERS

GALLUP POLL

Yes

75%

68%

No

12%

29%

No opinion

13%

3%

Love it! It is the only magazine that I read cover to cover.

—James Pierson, Ingleside, IL As an inactive member of MENSA, I liked the IQ issue. I like the design of your magazine very much. Props to the designers!

I would suggest that you use sans-serif fonts because they are easier to read. And NEVER use gray fonts or screen-colored fonts. They are difficult to read, also.

—Laird Ehlert, Jersey City, NJ

Are beings somewhat like ourselves living on other planets?

ANSWER

LUCKBOX READERS

GALLUP POLL

Yes

53%

49%

No

26%

48%

No opinion

21%

3%

WHAT IS THIS THYNG? Take the reader survey.

Luckbox may publish your comments!

THYNG, an augmented reality app, links Luckbox magazine articles to additional digital content. Simply scan any page with a THYNG icon to view video footage on a digital device.

1 Download the free THYNG app

2 Select the “Targets” mode, scan any Luckbox page that contains the THYNG icon

Laird, you call yourself inactive?

In October 2020, Luckbox asked readers which NFL team would win Super Bowl LV. The top four responses were …

Chiefs 29%

Steelers 13%

Seahawks 12%

Buccaneers 8%

HELP WITH THE NEXT ISSUE! Please take the reader poll at luckboxmagazine.com/survey

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3 Watch the page come to life with enhanced content!

2/26/21 2:34 PM

SHORT INTEREST

ALIENS & OUTER SPACE

The interstellar object Oumuamua is traveling 500 million miles per year—twice the speed of Voyager 1, the fastest human spacecraft.

The amount of debris orbiting the Earth —NASA, January 2020

SEE PAGE 26

SEE PAGE 14

—The Jet Propulsion Laboratory

8

8,000+ metric tons

“Right now, everybody is just focused on being able to get people into space on a regular basis.”

“We are going back to the moon. I’m doing this with about 2,000 people, instead of the 400,000 that was required in the 1960s.”

SEE

—Richard Branson

—Jeff Bezos

PAGE 10

“This visitor from afar has really brought home the point that our solar system isn’t isolated … we may even be surrounded by interstellar visitors and not even know it.”

—Karen J. Meech, The story of Oumuamua, TED Talk SEE PAGE 24

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It’s early in what could be a new era for space and space investors … the Space Force, as well as NASA’s plan to go back to the moon and eventually to Mars, isn’t hurting investor sentiment either.

“We just had something go right over the top of us … a long, cylindrical object that almost looked like a cruise missile type of thing moving really fast.”

SEE PAGE 12

SEE PAGE 60

—An American Airlines pilot reporting a close encounter with a UFO over New Mexico, Feb. 21

—Barron’s, January 2021

April 2021 | Luckbox

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FAKE FINANCIAL NEWS

Not the “Billions” Carl Sagan Was Referring To Musk and Bezos square off in a lopsided showdown to determine who can build a bigger payload for phallic-shaped rockets

By Vonetta Logan

A

mazon sold another $100 billion worth of Scrub Daddies, fitted sheet straps and other goods essential to life in the 21st century, the company reported in its fourth-quarter earnings statement.

But that wasn’t the big news—the world has been much more interested to learn that Jeff Bezos is stepping down from the lofty perch of Amazon CEO. It was a mic drop that could’ve been heard in space if, indeed, there was sound in space. “Being the CEO of Amazon is a deep responsibility, and it’s consuming,” Bezos said.

“When you have a responsibility like that, it’s hard to put attention on anything else.”

Bezos will still serve as Amazon’s executive chairman and plans to remain engaged in company initiatives. But he also hopes to have time and energy to devote to the Day One Fund, the Bezos Earth Fund, Blue Origin and The Washington Post.

“I’ve never had more energy, and this isn’t about retiring,” Bezos wrote in a farewell letter to Amazonians. “I’m super passionate about the impact I think these organizations can have.” Thus, he set up a rich guy showdown with Elon Musk to see which billionaire could build the best phallicshaped space rocket.

Origin story Blue Origin, which Bezos started in 2000 in Kent, Washington, now employs 3,500 people in manufacturing and launch facilities in Texas, Florida and Alabama, according to Reuters. “Its ambitious portfolio includes selling suborbital tourist trips to space, heavy-lift launch services for satellites

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and the lander—none of which is yet fully commercially viable,” the wire service says.

Conversely, Musk founded SpaceX two years later but already “has launched its Falcon 9 boosters more than 100 times, launched the world’s most powerful operational rocket—Falcon Heavy—three times, and transported astronauts to the International Space Station,” Reuters says.

Bezos’ ultimate goal: a spacetopian paradise where millions of people can reside in a space colony, sparing our precious Earth further destruction.

Musk’s ultimate goal: internet trolling and enabling people to live on Mars.

Bezos has been working just one day a week at Blue Origin but has been cashing in $1 billion of Amazon stock every year to fund the privately-held company. Three years ago, he characterized Blue Origin as “the most important work that I’m doing,” according to Reuters.

Meanwhile, SpaceX received a multibillion-dollar contract in 2008 to fly cargo to the International Space Station, or ISS, writes planetary.org. “The company was on the verge of bankruptcy and would likely have run out of money without NASA,” according to the site. These days, SpaceX receives a significant portion of its funding from flying crew and cargo to the ISS, launching NASA science spacecraft and transporting payloads for the U.S. Department of Defense, the site notes. In February, SpaceX completed an equity funding round of $850 million, sending the company’s valuation to a stratospheric $74 billion.

Space beef Just as Musk grew his hair plugs into a full head of hair, he has grown SpaceX into a lush and profitable enterprise. Bezos, known for steamy towel selfies, seems to be flexing his biceps more than his aeronautical engineering prowess. Reuters puts it this way: “Blue Origin has fallen far behind SpaceX on orbital transportation and lost out to SpaceX and United Launch Alliance on billions of dollars’ worth of U.S. national security launch contracts which begin in 2022.”

But the real fight comes in the form of teeny-tiny satellites.

“Musk’s SpaceX rocket company, Amazon and other rich companies are working on networks of relatively small satellites that beam internet access to the ground,” writes The New York Times. “These networks orbit at lower levels than conventional satellites and are cheaper to make and launch.”

SpaceX has been sending Starlink satellites into orbit since 2019. Eventually, it expects to have up to 42,000 satellites circling the globe to provide internet access to even the most remote spots on the planet.

“For 2021, in particular, it is planning up to two dozen Starlink launches that will add more than 1,500 satellites to its current constellation,” writes Entrepreneur magazine.

Amazon is working on a similar endeavor called Project Kuiper. It hopes to place 3,236 satellites in low-Earth orbit, the lowest at 367 miles above the surface.

Kuiper would compete directly with Starlink, as it works to deliver high-speed, low-latency broadband internet to paying

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PHOTOGRAPHS: (BEZOS) REUTERS/ISAIAH J. DOWNING; (MUSK) REUTERS/STEVE NESIUS/FILE PHOTO

Amazon and Blue Origin founder Jeff Bezos (left) settles into the driver’s seat of a space vehicle before taking reporters’ questions in Colorado Springs, Colorado.

SpaceX founder and chief engineer Elon Musk (right) makes do with a desk, mic and rocket-themed backdrop at the Kennedy Space Center in Cape Canaveral, Florida.

customers, gizmodo.com notes. “Amazon has yet to launch a single Kuiper satellite, but the FCC authorized the project in July 2020,” it says.

The fight brings to mind sharing the back seat with a sibling during a long road trip. “Moooooom, he’s touching meeeee!”

“Hahaha. I’m not touching you. Stop hitting yourself.” But, you know, in fancy space terms. The New York Times writes that “SpaceX wants permission from the U.S. government to move some of its satellites to lower orbits. Amazon said that would interfere with its satellites. Musk got angry.

Amazon said that SpaceX was trying to ‘smother competition in the cradle.’”

“The facts are simple,” Amazon declared in a statement. “We designed the Kuiper System to avoid interference with Starlink, and now SpaceX wants to change the design of its system.”

In a recent presentation to the Federal Commerce Commission, SpaceX director David Goldman claimed that Amazon has organized “30 meetings to oppose SpaceX” but none to “authorize its own system,” reports CNBC. Is sending dirty space laundry into orbit really worth it? Or is this just a technocratic fever dream where the dude with the most billions and biggest space phallus wins?

$424 B

Earth’s annual spending on space

$1 T

Earth’s annual spending on space in the next decade

Space streams Bezos maintains that he witnessed firsthand how computing power and bandwidth combined to create multi-trillion-dollar markets for online businesses. “Once space is cheap and safe, entrepreneurs will rush to the market just like they did when they felt confident the internet was mature enough,” writes ZME Science. Thus, a Bezos “hobby” company becomes an actual viable business.

And that means a lot. The space industry could grow by $1 trillion in the next decade, according to Ron Epstein, aerospace analyst at Bank of America Merrill Lynch. He foresees a turning point as technological improvements and capital combine to support space tourism and manufacturing in space.

As for Musk’s Starlink, the company launched in beta last year, and its space internet service would cost $499 for the initial dish and setup, then $99 a month.

Forbes estimates that Starlink could eventually be valued at around $30 billion.

Here’s what CNN had to say: “With the latest SpaceX launch last week, which carried 60 more internet-beaming satellites into space, the company’s Starlink internet constellation grew to include about 1,000 active satellites—by far the largest array in orbit. SpaceX now owns about one third of all the active satellites in space.”

80%

Portion of space spending controlled commercially

Black holes Commercial companies now account for about 80% of the $424 billion global space industry, according to Loizos Heracleous of Warwick Business School.

What could go wrong when private companies funnel billions of dollars into a single sector? “Silicon Valley’s libertarian, technocratic ideals could extend the darker aspects of hyper-capitalism,” says The Guardian. “SpaceX wants to shuttle settlers to Mars for $500,000 a ticket, with loans available that could be worked off.” That sounds a lot like indentured servitude.

“Indeed, just like other sectors of the economy during the global pandemic, we’re learning that the whole of our future is being planned by the elite and wealthy few.” The Guardian continues, “Ultimately, they will define how society functions.” After all, Amazon Web Services, Facebook and Robinhood already control much of the economy.

Luckbox is all for heading off beyond the wild blue yonder, but we hope it benefits the whole of society and not just a select few.

Watching villains compete to build the next “ethnic space laser” is only fun in movies and certain Facebook chat rooms.

Vonetta Logan, a writer and comedian, appears daily on the tastytrade network and hosts the Connect the Dots podcast. @vonettalogan

1,000

The number of active Starlink satellites in orbit

$74 B

How much SpaceX is worth

April 2021 | Luckbox

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UT

PA

CE

AL O

S IEN &

ER S

ARE WE

ALONE? The quest to conquer space and link up

with whatever intelligent life might reside out there

Time & Space 1514 1609 Copernicus places the sun at the center of the solar system

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Galileo invents the telescope

1957

The first artificial satellite, Sputnik 1, enters Earth’s orbit

1961

Yuri Gagarin becomes the first person in space

1962

John Glenn becomes the first American to orbit Earth

1969

Apollo 11: Neil Armstrong takes the first walk on the moon

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Humans have never wanted to feel alone in the universe. In ancient times, they looked to the heavens and imagined a realm teeming with magnificent but fallible gods. Later, they came to believe a single omnipotent god resided there and welcomed the spirits of ordinary but deserving believers. As humankind developed technological prowess, many came to regard the heavens as home to beings not unlike Earth dwellers, just smarter and in possession of better machines—like flying saucers, mother ships and death rays. As humans came to understand their own planet, they learned that life can abide in extreme conditions. The bacteria living and multiplying in heat of 482 degrees Fahrenheit near volcanic vents in the ocean floor indicate life could also arise on inhospitable exoplanets and moons.

In this special section, Luckbox checks in on this planet’s progress in space exploration and the search for extraterrestrial life.

Contents

14 19 21 24 26 28

Oumuamua as an Artifact Is this object the product of alien intelligence?

Oumuamua as a Rock The case against a space object’s artificial origin

PHOTOGRAPH: NASA, ESA, AND E. SABBI (STSCI)

Follow the Math—We Are Probably Not Alone Calculating the number of civilizations in the galaxy The Search for Life Will Earthlings discover microbes on Mars?

Space Junk Earth’s orbital traffic jam doesn’t get much press Astro Photophile The astronaut who photographed the cosmos

The Tarantula Nebula, the stirringly beautiful array of stars and stardust that fills these two pages, resides in the Milky Way—the same galaxy that’s home to the planet Earth.

1976

Viking 1 becomes the first spacecraft to land on Mars

1981

The first space shuttle mission orbits Earth

1982

Voyager 2 passes Neptune, the solar system’s most distant planet

2000

The first crew arrives at the International Space Station

2017

Astonomers detect Oumuamua, an interstellar object

2021

Perseverance Rover searches for ancient life on Mars

April 2021 | Luckbox

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S IEN &

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Alien Artifact or Just Another Rock?

Scientists debate whether extraterrestrials may have created a mysterious object visiting us from outside the solar system

BY ED MCKINLEY

The world may someday remember 2017 as one of those years that changed everything—like 1492 or 1776. It’s the year astronomers detected a mysterious object tumbling through space and gave it the Hawaiian name “Oumuamua.” How big a deal was it? Well, for the first time, humankind had discovered an object that entered the solar system from interstellar space. Yet it may prove even more significant. Some serious intellectuals say they’re open to the possibility that Oumuamua was crafted by an extraterrestrial civilization. In other words, intelligent creatures on another planet may have designed Oumuamua as a probe or a cosmic signpost. Or it coud be a hunk of manufactured space junk resulting from an accident or conflict and doomed to hurtle through the vacuum of space almost forever. Abraham “Avi” Loeb, an Israeli-American theoretical physicist who’s the longserving chair of Harvard’s Department of Astronomy, has made himself spokesman for one side of what seems like an Oumuamua debate. He maintains that the object may not be a natural phenomenon. He’s written a book on the subject (see p. 42) and granted dozens of interviews to make his point. Meanwhile, many in the scientific community seem convinced that nature, not alien life forms, spawned Oumuamua. Skeptics choose to believe that it’s an asteroid, a comet or a member of some hitherto undiscovered category of celestial bodies. They just don’t think sentient beings built it. Naturally, Luckbox wanted to hear from both sides. So members of the editorial team sat down with Loeb for a lengthy interview (right), while also enlisting science writer Keith Cooper to address the concerns of the suspicious (pg. 19).

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THE FIRST SIGN OF LIFE?

A

little more than three years ago, something scientists can’t explain happened here in the solar system. An object called Oumuamua paid a visit but didn’t come off like a regular guest.

“It doesn’t look like anything we have seen before,” declared Avi Loeb, a Harvard professor deeply involved with studying the strange visitor from outer space.

For one thing, Oumuamua didn’t look or behave like the comets and asteroids that so often streak across the skies, Loeb maintained. Ice on the surface of comets and asteroids evaporates when they get close to the

Luckbox | April 2021

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ILLUSTRATION: ESO/M. KORNMESSER

sun, forming a tail. But Oumuamua had no tail. What’s more, it wasn’t surrounded by the gasses that typically accompany comets.

Oumuamua got a push away from the sun that declined inversely with the distance squared, which the tail of a comet produces, but it happened without a tail, Loeb emphasized.

What’s more, based on the way it reflected light as it tumbled, Oumuamua measured at least 10 times as long as it was wide, he continued. That made it flat, like a disc or a pancake, not like an asteroid or comet, he said.

Oumuamua was shining brightly, too, according to Loeb. In fact, only one in 500 stars looks as bright from Earth as the mystery object appeared.

Then, in September of last year,

something a bit similar to Oumuamua appeared. Another object without a tail got a boost from the sun that was somewhat like the push Oumuamua received. This time, however, it turned out to be a rocket booster shot into space in 1966. It appeared the boost occurred because the booster was hollow and thin, thus giving it a lot of surface area relative to its weight.

“This one we know is artificial because we made it,” Loeb said of the space vehicle launched from Earth a generation ago. “The question is who made Oumuamua?”

The prevailing view Mainstream astronomers have tried to describe Oumuamua as a natural phenomenon, but every explana-

tion includes the admission that the object exhibits qualities never seen before, Loeb says.

For example, some scientists have proposed that Oumuamua might contain frozen hydrogen. Hydrogen’s transparent, so when it evaporates it would not leave a visible trail.

However, no one has ever observed that kind of hydrogen iceberg, and it’s likely that if one existed, it would evaporate quickly on its journey through interstellar space, according to Loeb.

Others suggested Oumuamua might be a cloud of dust, somewhat akin to dust bunnies around the house, Loeb says. Except it’s the size of a football field, spins rapidly and is 100 times less dense than air.

“I found it unlikely that such an

Oumuamua’s shape remains open to interpretation, with some labeling it a shard and others likening it to a pancake. An artist provides the interpretation above.

April 2021 | Luckbox

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ER S

object would preserve its integrity as it travels through interstellar space for millions of years,” Loeb says.

Still, others thought Oumuamua might be a fragment from the collision of heavenly bodies. Loeb finds that unlikely because of the rarity of such events and because the resulting object would be cigar-shaped, not flat like Oumuamua.

“These scenarios do not make more sense to me than an artificial object,” he says of his colleagues’ explanations for the nature of Oumuamua.

In 2016, Avi Loeb (right) took the stage at the announcement of the Breakthrough Starshot initiative.

With him at the New York event were Stephen Hawking (front), Yuri Milner (left) and Freeman Dyson (back).

Following the science Scientists who decline to consider the chance that aliens made Oumuamua aren’t doing their jobs in Loeb’s view. “I’m trying to use my common sense and then follow the lines of the evidence—not have a prejudice,” he says.

He tells a tale to illustrate his point. A colleague pulled him aside at a Harvard seminar on Oumuamua and confessed emotionally that he wished the object didn’t exist because it doesn’t align with his life’s work of studying rocks in the solar system.

“To me, that is something that scientists should never say,” Loeb laments, “because the whole point about collecting evidence and data is that we are allowing nature to

educate us and to tell us what reality is like. Often nature is more imaginative than we are.”

What’s extraordinary?

Many cite the Sagan standard as a reason for doubting that aliens constructed Oumuamua. The standard, first set forth in 1980, posits that “extraordinary claims require extraordinary evidence.” It originated with the late Carl Sagan, an astronomer who introduced a generation of television viewers to the wonders of the universe with a series called Cosmos. He stated the standard in an attempt to popularize critical thinking.

But Loeb is having none of it.

“That makes no sense,” he says of the standard. No one can say what constitutes the extraordinary, he maintains, noting that some might regard black holes and dark matter as exotic while others would consider them basic.

“We should do it just the way Sherlock Holmes did—put all possibilities on the table until we exclude all but one, and whatever remains must be the truth,” Loeb says of the scientific approach.

Simply assuming Oumuamua can’t have artificial origins reminds Loeb of the closed-minded 17th century philosophers who refused to look through the telescope that Galileo invented. They declined because they mistakenly “knew” the sun revolves around the Earth.

Better telescopes Rapidly improving telescopes, each better than its predecessor, have enabled astronomers to greatly increase knowledge of the universe.

Pan-STARRS, the Panoramic Survey Telescope and Rapid Response System, which is located in Hawaii, detected Oumuamua.

It couldn’t have happened without that system, which has enabled scientists to view a large portion of the sky, Loeb says.

A well-developed sense of

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survival gave birth to Pan-STARRS. Congress had assigned NASA the task of detecting 90% of the objects that are more than a few hundred feet long and come close enough to Earth that a collision could occur.

After all, crashing into an object about the length of Manhattan caused the extinction of the dinosaurs. “They looked in the sky and saw this rock getting bigger and bigger, and the fun stopped when the rock hit the ground,” Loeb says.

But those ever-improving telescopes may warn of apocalypse. The Vera C. Rubin Observatory, under construction in Chile, will use the Large Synoptic Survey Telescope, or LSST, to bring astronomers two-thirds of the way to the Congressional mandate, according to Loeb.

And, the more-sensitive LSSTs should find more objects like Oumuamua, he predicts. If Oumamua belongs to a population of objects on random trajectories, then the LSST should find one every month, according to mathematics based on current knowledge.

That could result in finding such objects when they’re approaching Earth—not just when they’re moving away, as was the case with Oumuamua. If they’re discovered earlier, NASA would have enough time to send a camera to take a photograph, Loeb says.

Calculating the number of visits Estimating how many Oumuamua-like objects are sailing past harkens back to the Drake equation, a method of projecting the number of civilizations in the galaxy that Frank Drake developed in 1961. The equation “organizes our ignorance into a number of factors that multiply each other and could be known if we had the means to detect them,” Loeb maintains.

Scientists know some of the variables, he continues, including the rate of formation of stars in the Milky Way and the fraction of those stars that have habitable

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planets. Observers define planets as habitable if they’re rocky instead of gaseous, they have atmospheres containing the right gases to support life and they’re at the “Goldilocks” distance from their suns to remain warm enough but not too hot for life.

But if life were to arise on such planets, would it evolve into beings capable of transmitting radio signals? Plus, no one knows how long civilizations that achieve that status can last or how frequently such civilizations might arise.

In fact, more remains unknown than the public might suspect. Scientists talk about dark matter, for example, but don’t really know what it is, Loeb notes. It’s called “dark” simply because it doesn’t interact with light, and the term “matter” might not really apply, he says.

Still, estimates of the number of civilizations in the galaxy are becoming more refined, and researchers have arrived at a possible total of perhaps 36 (see p. 21). They’ve calculated that count based on reasonable assumptions, Loeb says, noting that the only way to know for sure is to keep searching with telescopes.

Conversely, listening for radio signals limits the hunt to the time when scientists are searching—the civilization would have had to have been alive to transmit the signals at the time they reached receivers on Earth. But scanning the sky for debris could detect material—such as industrial chemicals or relics from nuclear war—from civilizations that died thousands or millions of years ago.

Lessons learned Whatever position one takes on the source of Oumuamua, experts can agree that Earth will be better prepared for the next sighting of anything similar. Astronomers now concede that they missed the opportunity to study Oumuamua as closely as they might have.

After the object was detected, it remained observable for at least a month, but astronomers compiled

The Seed of Civilization’s Destruction Enrico Fermi was one of the giants of twentieth-century physics. Among his accomplishments is the development of the first nuclear reactor and, as he was instrumental in the Manhattan Project and the production of the first nuclear bomb, he can claim some credit for the prompt ending of hostilities with Japan at the conclusion of World War II. Toward the end of his storied career, during a lunch with his colleagues, Fermi raised a simple, provocative question: How do we explain the paradox that, given the vastness of the universe, the probability of extraterrestrial life seems high, yet there is no certain evidence for anything but terrestrial life? If life is common in the universe, he asked, “Where is everybody?”

Over the years, many answers have been formulated. One is especially arresting and especially pertinent to the unfolding mystery of Oumuamua and its implications for us.

In 1998, the economist Robin Hanson published an essay titled “The Great Filter — Are We Almost Past It?” Perhaps the answer to Fermi’s paradox was, Hanson argued, that throughout the universe a civilization’s own technological advancement overwhelmingly predicts its destruction.

The very moment when a civilization reaches our stage of technological advancement—the window where it can signal its existence to the rest of the universe and begin to send craft to other stars—is also the moment when its technological maturity becomes sufficient for its own destruction, whether through climate change or nuclear, biological or chemical wars.

Hanson’s thought exercise has sufficient plausibility that humanity would do well to consider the question in his article’s title: Is human civilization nearing its own filter?

It would be no small irony if Fermi is the solution to his own paradox, for, with Fermi’s help, we developed nuclear weapons seven decades ago. But even without nuclear weapons, we are moving to destroy ourselves by permanently changing the climate. The rise of antibiotic resistance, due to many factors but certainly including the largely indiscriminate use of antibiotics in industrial agriculture and livestock, also poses a threat. So do pandemics, accelerated and exacerbated by our industrialized assault on our planet’s ecosystem.

It is quite conceivable that if we are not careful, our civilization’s next few centuries will be its last. If that’s the case, the emissions we’ve been sending out into the universe from our radios and televisions — that outward expanding bubble of noise humankind started to generate only a century ago — and the five interstellar craft we have already launched could well end up the equivalent of dinosaur bones here on Earth, evidence of something once formidable and extraordinary that is now only material for other civilizations’ archaeologists.

We need not look far to appreciate how the great filter might work. The small filter of our own mortality and the context of recent history provide useful data.

Excerpted from Extraterrestrial by Avi Loeb

only partial data at first, Loeb recalls. “They thought, ‘Oh, it’s a rock,” he says. “‘Let’s just try to get the basic parameters of the comet or the asteroid.’”

Objects similar to Oumuamua but smaller might be streaking by right now, undetected because they don’t reflect enough sunlight to register on today’s telescopes. Plus, such objects might be moving too fast

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for astronomers to see them. “You could imagine a lot of things flying by, and we just are not aware of it,” Loeb observes.

He provides an example. He’s involved in a project to reach Proxima Centauri, a small star more than four light-years away. The craft would travel at a fraction of the speed of light, fast enough to reach the star in a couple of decades.

That’s too fast for telescopes to see it. What’s more, the craft will use a light sail about the size of a person, which would not reflect enough light to show up on a telescope.

Back on Earth While work continues on that effort to reach another star, Loeb doesn’t let up in his efforts to lobby the scientific community to keep an open mind about the possibility someone out there somewhere designed and built Oumuamua.

To do otherwise, he contends, reflects to a larger problem with the way academia practices science.

Researchers should look to the evidence, not serve their prejudices.

In his view, evidence forms the

Are we humans even interesting?

If we can accept that we are very likely less advanced than civilizations that have come before us, this might well lead to our finding ways to speed up our own plodding evolution—a psychological transformation that might allow humanity to leap forward by thousands, millions or even billions of years.

Evidence is omnipresent for the real probability that humanity has not set the intelligence bar particularly high and that other civilizations have likely cleared it. It is as close as your newspaper, your nearest screen and your endlessly refreshing newsfeed. The true marker of intelligence is the promotion of one’s own wellbeing, but too often our behavior does the opposite. I have found that paying close attention to the world’s most pressing news stories provides ample evidence that we cannot be the smartest species out there.

Excerpted from Extraterrestrial by Avi Loeb

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nucleus of his side of the discussion.

He didn’t begin by making statements about aliens and then searching for information to back them. “I had no agenda,” he insists.

Loeb then proceeds to take his colleagues to task but lays out his complaints in such a calm and good-natured way that it would be impossible to take offense.

“There are these echo chambers in academia where people repeat the same mantra again and again,” he says. “It’s just like the herd of lions in Africa: If they go together, they’re more powerful, but that’s really not what science is about.”

The message isn’t intended just for professors and grad students.

“Science is available to everyone,” Loeb says. “It’s not an occupation of the elite.”

Key elements of a clean approach to science lie in maintaining ideals and rejecting careerism. The need to spread those ideas has prompted him to take leadership positions in his field. He feels he’s among the few in such roles who remain free to express themselves openly.

“There needs to be a correction—we need to restore reliance on evidence rather than on intellectual gymnastics,” he implores. “A lot of my colleagues just try to show off that they’re smart.”

It’s a matter of seeing life through what many might call “fresh eyes.”

“I’m not an outlier in the sense that I still maintain my loyalty to the principles I had as a kid. I don’t care much about my labels,” Loeb insists.

“The worst thing that can happen is they strip me of these titles, and then I’ll have more time for research.”

Good science also requires looking to the future, not the past, he says.

That’s why he shows little interest in reviewing the formerly classified UFO documents that the federal government was releasing as Luckbox went to press. He advocates using the best available instruments to study space instead of poring over reams of paper that he says have

Going Beyond Prejudice If we assign a zero probability for finding evidence of artificial objects, as some scientists did in the case of Oumuamua, if human civilization organizes its efforts and its funding and its scholars by declaring, “It’s never aliens,” then we guarantee that we will never find evidence of extraterrestrial civilizations. To move forward, we must think outside of the box and avoid prejudice about what we expect to find based on past experience.

Excerpted from Extraterrestrial

by Avi Loeb

been sitting in a drawer somewhere.

But whaver the method, it’s a pursuit Loeb considers well worth the effort. “If we find evidence for an alien civilization,” he says, “it will give us a good sense of being part of the same team because humanity as a whole shares a fate. We should work together toward a better future, rather than fighting each other and wasting resources on suspicion and on disagreements.”

Still, it shouldn’t surprise humanity if other civilizations find Earth uninteresting and choose not to engage with the inhabitants. With billions of solar systems in the galaxy, some being might find Earthlings no more significant than ants on a sidewalk. “It’s presumptuous of us to believe that we are worthy of a visit,” Loeb cautions.

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SKEPTICAL SCIENTISTS REMAIN UNCONVINCED PHOTOGRAPH: NASA/JOHNS HOPKINS UNIVERSITY APPLIED PHYSICS LABORATORY/SOUTHWEST RESEARCH INSTITUTE/ROMAN TKACHENKO

BY KEITH COOPER

A

palpable buzz of excitement swept through the astronomical community following the discovery of Oumuamua late in 2017. This faint yet fast-moving speck of light was something genuinely new—a visitor from another star system.

At the time, astronomers joked about how Oumuamua’s elongated shape drew comparisons with the alien spacecraft in Arthur C. Clarke’s classic novel Rendezvous With Rama. Naturally, some people asked if it could really be a spacecraft.

Many hoped it would be. But the universe doesn’t bend to how people want or hope things to be. They can wish Oumuamua was a spaceship all they want, but ultimately the truth is in what scientific observations indicate.

There’s an unwritten rule in SETI, the search for extraterrestrial intelligence. Before shouting from the treetops that some unusual phenomenon is aliens, first exhaust every possible natural explanation.

The discovery of pulsars in 1967

by Jocelyn Bell-Burnell represents a classic example. Sober-minded scientists at Cambridge, U.K., genuinely wondered whether pulsars could be alien signals, until they dug a little deeper into the scientific literature and found that pulsars are spinning neutron stars.

Despite Avi Loeb’s insistence, scientists have not exhausted all the natural possible explanations for Oumuamua. Far from it. Consider the thoughts of astronomers who’ve

spent their careers studying comets and asteroids. They observed Oumuamua while it was still visible for that short spell in the fall of 2017 and compared it with what we know of objects native to this solar system.

They say Oumuamua is a natural object and that even its most bizarre properties can be explained.

So, let’s consider three of Loeb’s arguments for his spaceship hypothesis: that Oumuamua had a shape never seen before; that it accelerated when moving away from the sun; and that it was reflecting more sunlight than a comet or asteroid its size would.

Oumuamua was so small and far away that even the mighty Hubble Space Telescope could resolve it only as a point of light. Despite that, astronomers figured out that Oumuamua was elongated, as opposed to spherical, based on how its brightness changed as it spun.

Early estimates suggested that Oumuamua was 10 times longer than it was wide, which would be extraordinary. More conservative calculations followed, with the consensus now that it had a minimum size ratio of 6:1.

That would make Oumuamua pretty weird—like a large, flat cigar tumbling through space. Loeb points out that some scientists have suggested a disc-shaped appearance for Oumuamua. Surely there’s nothing as bizarrely shaped native to our solar system, is there?

Actually, there is! On New Year’s Day 2019, NASA’s New Horizons

spacecraft flew close to, and took pictures of, Arrokoth, which is an icy, comet-like object lurking with trillions of similar objects in the Kuiper Belt at the edge of the solar system.

Arrokoth is two objects touching end-to-end. Taken as a whole, it has dimensions of almost 4:1.

So it’s not quite as elongated as Oumuamua, but the twist in the tail was that as New Horizons flew past, it saw that Arrokoth’s two lobes were not spherical, but flattened discs, like two plates touching.

Arrokoth was chosen at random, indicating other objects in the Kuiper Belt might be even weirder, perhaps weirder than Oumuamua.

Oumuamua seemed to accelerate as it moved away from the sun, but that’s ordinary behavior for a comet.

The odd-shaped Arrokoth, which orbits far from the sun in the Kuiper Belt, demonstrates that natural objects in space can have artificial-looking shapes

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If Oumuamua was outgassing, as seen in this artist’s impression, it was doing so at a very low level.

TED Talk: Oumuamua

As a comet warms while passng near the sun, pockets of gas vent out, and that can give the comet an extra push.

The problem was no outgassing on Oumuamua was actually detected. To Loeb, that became the smoking gun that Oumuamua is actually a spacecraft deploying a solar sail to catch the sunlight and accelerate.

To astronomers who study comets every day, this was just a sign that Loeb doesn’t actually understand comets the way they do.

If there was outgassing, it must have been at a low level if observers failed to detect it. To achieve the observed acceleration, Oumuamua would need to vent just one kilogram of gas per second. This outgassing should have blown dust off Oumuamua’s surface, which would scatter sunlight, but no dust was seen. That’s

not the end of the story though, because the observations were sensitive only to fine-grained dust. Some comets expel larger grains or none at all, as is occasionally the case for the well-studied comet Encke.

So, applying Ockham’s razor, the idea that the simplest explanation is the most likely, the comet hypothesis remains the best way of explaining Oumuamua. Besides, Oumuamua reflects only 10% of the sunlight that falls upon it, while a solar sail, which would provide a push from the momentum of reflected sunlight, would be far shinier.

Astronomers predict that thousands of Oumuamua-like objects pass through the solar system at any given time. Already a second interstellar interloper, called Borisov, was found by amateur astronomer Gennadiy Borisov in 2019. But

Borisov displayed clearly comet-like behavior.

Starting in 2022, when the 8.4-meter telescope at the Vera C. Rubin Observatory in Chile begins the most detailed survey of the night sky ever undertaken, astronomers should find many more of these objects passing through.

However, just because Loeb is probably wrong this time doesn’t mean he’ll be wrong next time. The idea of technological aliens sending probes is not new. Plus, space is big, and it would take decades for a probe to reach the closest star system, and millennia—or longer—for more distant stars. Maybe one day a probe will be found among all those thousands of interstellar interlopers.

Even if ET isn’t sending probes, Earth dwellers might discover technological aliens by other means.

SETI is in the middle of the 10-year, $100 million Breakthrough Listen program, conducting an intensive search for intelligent life. Astronomers are also refocusing their searches for technosignatures— everything from atmospheric pollution to city lights on other worlds.

The truth is, SETI is a stab in the dark. Scientists still don’t fully know how life began on Earth, or how exactly complex, multi-cellular life evolved from single-celled organisms.

Telescopic abilities are increasing, and astronomers are discovering thousands of planets around other stars. There’s a good probability that if life exists on a planet within 50 light-years of Earth, humanity will have found it before the end of the 21st century. Now that really would be exciting!

Keith Cooper, a science journalist from the U.K., is the author of The Contact Paradox: Challenging Our Assumptions in the Search for Extraterrestrial Intelligence (see p. 42.). He has edited Astronomy Now magazine since 2006. @21stcenturyseti

IF LIFE EXISTS 50 LIGHT-YEARS FROM EARTH, HUMANS MAY FIND IT BEFORE 2100.

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ILLUSTRATION: ESA/HUBBLE, NASA, ESO, M. KORNMESSER

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PHOTOGRAPH: NASA, ESA, N. SMITH (UNIVERSITY OF CALIFORNIA, BERKELEY), AND THE HUBBLE HERITAGE TEAM (STSCI/AURA)

If You Follow the Math, We Are Probably Not Alone Two U.K.-based scientists came up with a new method for estimating the number of intelligent civilizations in the galaxy, and the future of human civilization serves as an important indicator

BY MIKE REDDY

Are humans alone in the galaxy? The question A 50-light-yearis far from new and its answer remains wide view of the Carina Nebula unknown. But breakthroughs in astrophysics, which contains paired with what is known about how life at least a dozen began on Earth, enable scientists to devise brilliant stars estimated to be calculations estimating what—or who—could at least 50 to 100 be out there. Two such scientists are times the mass of our sun.

U.K.-based Christopher Conselice and Tom Westby, who in June of last year published a scientific paper called The Astrobiological Copernican Weak and Strong Limits for Intelligent Life. In that paper, they describe their investigation into the possible number of communicating extraterrestrial intelligent (CETI) civilizations based on differing scenarios. Utilizing the latest astrophysical information, the pair rederived a new version of the Drake equation, which astronomer and astrophysicist Frank Drake developed in 1961 to estimate the number of CETI civilizations. They concluded there could be as many as 211 and as few as four in the Milky Way galaxy, with the most likely number around 36. Should such civilizations exist, the research indicated, the nearest one to Earth is probably too far away to detect or communicate with, given the technology currently available. But despite the remoteness of the nearest likely neighbor, public excitement— and media attention—have abounded. Luckbox sat with Conselice and Westby to ask them about their research, the attention it garnered and its bigger-picture implications that many may have missed.

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The following Q&A has been edited lightly for style and brevity.

It seems that interest in extraterrestrial life has been gaining traction. Would you say that’s accurate?

Westby: Whilst this has probably

been one of the fundamental questions of humanity for millennia, it is true that just in recent years it’s taking on a new footing. Obviously, our work is initially anchored in the Drake equation from the 1960s, and prior to that any question about the number of civilizations in the galaxy would have been completely outside of the realm of scientific inquiry. But it was Drake’s work about a half a century ago that first set it on some scientific footing.

The Drake Equation Formulated in 1961 by astronomer and astrophysicist Frank Drake, the Drake equation seeks to estimate the number of active, communicative extraterrestrial civilizations in the Milky Way galaxy. The equation reads:

= number of civilizations with which humans could communicate = mean rate of star formation = fraction of stars that have planets = mean number of planets that could support life per star with planets = fraction of life-supporting planets that develop life = fraction of planets with life where life develops intelligence = fraction of intelligent civilizations that develop communication = mean length of time that civilizations can communicate

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How does the Drake equation compare with your research?

Conselice: Well, the Drake

equation is really a very general equation that predicts the number of active civilizations in our galaxy. And it’s very simple in the sense that you have a star formation rate, multiply that by the number of stars with planets, the number of planets that have life, the number of those that form intelligent life, etc., etc., etc.

The problem with that is the Drake equation has these terms which are impossible to ever know until we know what’s going on with life in our galaxy.

For example, one of the terms in the Drake equation is the fraction of intelligent life which communicates, or the fraction of life which turns into intelligent life. These are things you could never know based on a computer simulation, based on anything you can do on Earth. You have to actually explore the galaxy to find out how many there are, and then you can calculate that number.

So, it’s useless in some ways of actually knowing something reasonable because that number could be from zero to one for those few terms. But there are terms in the Drake equation that we do know now, like the fraction of stars that have planets in the habitable zone, for example.

Those are the kinds of things that we use, but the other assumption that we make is using the astrobiological Copernican principle, which essentially says that a star which has an evolution in a lifetime similar to the sun will produce life like ours within a certain amount of time, which actually doesn’t change the results that much. But if you take just four-and-a-half billion years or

so, which is how long it took for intelligent life to form on our own planet, then you can calculate how many you would expect throughout the galaxy.

That depends strongly on what’s in both of these equations, the Drake equation and the one we derived, the CETI equation, which is the lifetime of these civilizations.

So that’s a big unknown. What Tom and I did was look at this and say, ‘Well, let’s take as a limit how long on Earth we’ve had a communicating intelligent civilization,’ which has been about 100 years (by radio waves).

We don’t know for sure how long our civilization will last, so we just take the lower limit, which is about 100 years. Well, if you have other planets around other stars in the habitable zone, and you have stars which can survive for five billion years or so, then if you assume that the lifespan is 100 years for the civilizations as a minimum, you get a minimum amount of expected communicating intelligent civilizations that you would have in the galaxy.

So it’s informed by what we know about life and the origin of life here on Earth?

Westby: Yes, and I would agree

that obviously the greatest problem of the extraterrestrial question, of course, is trying to extrapolate from a single data point that we know of here on Earth. And that’s always the problem that haunts any investigation of this kind.

In a sense, what our equation is doing is really a great simplification, where it’s taking away a lot of that unnecessary speculation and centers on a much more modern framework of known astrophysics. We really just approached the question

The Copernican principle, named after Polish astronomer Nicholas Copernicus, states that humans aren’t specially privileged observers situated on a planet located at the center of the universe with other heavenly bodies revolving around it.

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“THERE’S TOO MUCH FOCUS ON 36 AS THE ESTIMATED NUMBER OF CIVILIZATIONS IN THE MILKY WAY.” of the development of life—and indeed intelligent life—as if it is just a natural byproduct of stellar processes. We really just want to know the fraction of all the stars in our galaxy which are old enough, rich enough in terms of chemical complexity, and long-lived enough with stable enough environments to potentially yield the same environment that we’ve had here.

PHOTOGRAPH: NASA, ESA, AND THE HUBBLE HERITAGE TEAM (STSCI/AURA)

What does the media miss or overemphasize when they report on your research?

Conselice: Well, I would say that

there’s too much focus on the number 36 in some cases. The Guardian in the U.K. published that in the title of their article about this research. Thirty-six is just the most-likely number, but there’s a distribution of possible numbers.

The context of that is very hard to explain in the news media—and that’s why I understand why it happened—but that’s a little frustrating when people focus on just one single number.

Westby: And, of course, that’s at the end of the scale in which we assume the average lifetime of a civilization like our own is just 100 years—beyond the point at which we became radio communicating, as it were. So, of course the 36 number would be expected to grow and grow as a function of L if we can assume that a lifetime is actually much longer than we’ve

had currently. But as you say, Chris, that became the headline figure. And in reality, it’s not really a number that we found at all. It is a new method to try and attack this problem.

What’s the value in trying to attack this problem in the first place?

Conselice: It’s of vast interest to

people in general about our origins and what’s going to happen to us as a species on Earth in the long term, and by looking for these CETIs, we will actually be answering—potentially—some of these questions about where we came from.

There are many ways you can look at the implications of finding life, or especially intelligent life, in another part of the galaxy or another part of the universe. It could tell us that we’re not unique and that there is a scientific way in which life and intelligent life develops, and that can have profound implications for how we understand our own origins—and about where things are going for us in terms of how we should look at the basis of our own existence.

Westby: With all new developments

in any scientific realm, the change can be societal and philosophical.

For instance, the transition into Newtonian mechanics just changed the way that we thought about our position on the Earth and changed the way that we thought about our potential to understand and utilize the laws of physics on the Earth.

It might be the next step along that process, really, where we start to think of our own life, our evolution, our intelligence, our ability to communicate, as just a natural byproduct of scientific processes. And we start to understand that in a more profound sense rather than thinking of it as something mysterious and mystical.

Really, we understand that it’s just within the realm of other laws of physics.

And of course, as you’re saying, Chris, where the conditions are right, we can expect it to be repeatable. And where we learn more about where those conditions are right in our galaxy, we’ll know better where to look and what will be the signs for intelligent life elsewhere.

Part of the Veil Nebula—the remains of a massive star that exploded about 8,000 years ago— are captured here

by NASA’s Hubble Space Telescope.

Astronomers are comparing this picture, taken in 2015, to images Hubble shot in 1997 to study how the nebula has expanded in the intervening years.

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2.0

Earth

NASA’s former head scientist says humans may soon discover signs of life elsewhere in the solar system and eventually on exoplanets

BY ED MCKINLEY

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ix years ago, a noted scientist predicted researchers would find definitive proof of extraterrestrial life in the next 20 to 30 years. Does the projection still hold true? Maybe.

Ellen Stofan, director of the National Air and Space Museum at the Smithsonian Institute and former NASA chief scientist, based her expectations on three projects.

• One was the Perseverance Rover that landed on Mars in February to study the planet for signs of ancient microscopic life.

Microbes may have existed there in the distant past, when water flowed on the surface beneath a relatively thick atmosphere.

Besides evaluating rocks and soil while on Mars, Perseverance is scheduled to return to Earth in 2031 with samples scientists can examine in more detail.

• The second opportunity for discovery comes with further sampling of chemicals in the watery plumes that arise from Europa, one of Jupiter’s 79 moons, and from Enceladus, one of Saturn’s 53 moons. The right chemicals could indicate the conditions necessary for life, and they could be there because of interactions between water and rock. Under a covering of ice, both moons in question have salty liquid oceans that make contact with rocky cores. A probe called Europa Clipper is slated for launch in 2024.

• Third, scientists could determine once and for all if life has ever existed on Mars by visiting the planet in person.

It’s an especially compelling question because life may have arisen on Mars and traveled to Earth on meteorites. But the timing has been called into question.

Stofan has her doubts about humans setting foot on Mars in the next decade—a once-accepted timeframe that was a factor in her prediction that proof of extraterrestrial life would emerge in the next few decades. Still, overall, space exploration is going to the right places, taking the right measurements and gathering the right samples, she says.

“The idea that we could go to Enceladus, Europa and Mars and not find any evidence of either living life or past life doesn’t make sense,”

As director of the Smithsonian’s National Air and Space Museum, Ellen Stofan shares her profound knowledge of the cosmos.

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3.5 BILLION YEARS AGO, EARLY MARS HAD CONDITIONS SIMILAR TO THOSE ON EARLY EARTH.

PHOTOGRAPH: DANIEL SONE / SMITHSONIAN NATIONAL AIR AND SPACE MUSEUM

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Stofan says. “I still remain incredibly optimistic about it.”

Better telescopes Earth’s outreach to the heavens doesn’t end with those three orbs, Stofan notes. The James Webb Space Telescope that’s expected to launch late this year will examine the atmosphere of planets outside this solar system, she says, continuing research that began with the Hubble Space Telescope and earthbased observatories.

Scientists want to know if the atmosphere surrounding those distant planets contains methane, carbon dioxide and other gases associated with life, Stofan says. But the presence of those substances won’t guarantee that life exists on a planet.

“We will be able to identify exoplanets where we think the environment is habitable, but we won’t be able to say that they’re inhabited,” she laments.

That determination may come with time as the telescopes detect changes in exoplanet atmospheres that indicate the presence of life. On Earth, for example, carbon dioxide decreases in the air during the spring when plants come to life, Stofan says.

But even with such strong indicators, scientists won’t conclude they’ve discovered life until they have the technology to produce pictures of exoplanets, Stofan continues.

In images of Earth, for example, changes in color—like continents turning green in the spring—are a sign of life. That capability could come within 40 years, she says.

Astronomers are also looking for exoplanets that give off electromagnetic waves like the ones emitted by Earth. The waves protect life from radiation that can destroy living cells, but they haven’t been found yet on other planets, Stofan says.

Meanwhile, back on Mars While telescopes that could detect life on distant planets keep improving, scientists continue to search for evidence of ancient life on Mars,

Stofan says. They’re encouraged because 3.5 billion years ago, early Mars had conditions similar to those on early Earth.

Mars and Earth both had water and had similar temperatures and chemistry. Amino acids, the building blocks of life, were arriving on both planets, carried there by comets and asteroids, Stofan says. With all of that in place, simple life arose quickly on Earth, and the same could have occurred on Mars.

If it did, a multitude of questions ensue. Was life on Mars similar to or different from early life on Earth?

Was it based on RNA or DNA? How complex did it become? How widespread was it? How long did it last?

Did it become extinct or migrate underground when Mars lost its magnetic field and most of its atmosphere and surface water?

If simple life forms did find a home a few feet below the surface, they could survive to this day. “That’s the million-dollar question,” Stofan says. “Perseverance can get us closer by drilling down.”

But discovering evidence of life— ancient or contemporary—may require human exploration. “We need scientists breaking open a lot of rocks on Mars to find fossils,” Stofan says.

Earth as an example The persistence of life under the harshest conditions on Earth encourages scientists to think life occurs on other planets or moons.

Microbes live kilometers below the surface of the Earth. They’ve adapted to survive in radioactive waste that tends to break up organic cells.

They’re in the hottest and coldest spots on Earth.

If simple forms of life find a home under similar conditions in other parts of the solar system, it’s natural to believe there’s life in the far reaches of the universe. “That gives us a lot more confidence that the Earth is not a one-off,” Stofan declares. “Given there are billions of planets out there, there’s got to be an Earth 2.0.”

Thriving in a Man’s World Ellen Stofan, director of the National Air and Space Museum at the Smithsonian Institute, served as NASA’s chief scientist from 2013 to 2016 and has led a long list of projects that deepened humankind’s understanding of the physical universe.

In some ways, her achievements came naturally.

With a father who worked as a NASA rocket engineer and a mother who taught science, she grew up discussing space exploration at the dinner table. Her earliest memory is of a rocket launch she witnessed at the age of 4 on a trip to Florida’s Cape Canaveral. By the end of her freshman year in college, she knew she wanted to become a planetary geologist.

In other ways, her accomplishments have been anything but natural. Stofan recalls a meeting early in her career where she was ensconced in a conference room with 20 men and no other women. One scientist had the habit of lacing together a string of profanities every so often as he addressed the group. When he did, he invariably paused and apologized to Stofan.

“What’s wrong with that?” Stofan asks. “He was reminding everyone in the room that I was different, and if you’re different, you have to wonder if this is where you belong.” But she didn’t give in to the pressure women felt then and still feel today in the sciences. “I had to work twice as hard to be taken half as seriously,” she says.

The Profit Motive in Space Look for public-private partnerships to dominate the future of space travel, says Ellen Stofan, director of the Smithsonian’s National Air and Space Museum.

Governments will seek knowledge or military advantage, while companies pursue space tourism, lunar mining and zero-gravity manufacturing.

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It’s not so lonely in space after all.

Everything from zombie satellites to nuts, bolts and flecks of paint are stuck in what NASA calls an “orbital junkyard.” The detritus is traveling at 18,000 mph—fast enough to wreak havoc, the agency warns.

Space Junk Ignoring the debris that’s orbiting Earth could have dire implications

BY MIKE REDDY

Odds are, orbital debris seldom tops the list of pressing issues occupying most people’s minds. But those privy to the possible consequences of growing debris fields feel differently. “It’s an area of huge concern,” said Director of the National Air and Space Museum Ellen Stofan. “It’s the biggest threat to humanity that nobody’s talking about,” said astronaut and Air Force Col. Terry Virts, who manually steered the International Space Station around debris. But what exactly is space debris? How did it get there? And why should Earthlings care about it? To answer those and other questions, Luckbox spoke with Brian Weeden, a space debris researcher and the director of program planning for the Secure World Foundation.

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IMAGE CREDIT: NASA ODPO

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n the Academy Award-winning sci-fi thriller Gravity, Sandra Bullock and George Clooney are sent hurtling through space after being struck by a cloud of space debris.

They were upgrading the Hubble Space Telescope when the debris cloud hit, the byproduct of a Russian missile strike intended to shoot down a defunct satellite. The satellite’s debris sparked a chain reaction, colliding with other satellites and increasing the debris field. Before long, most satellites were down and telecommunications were dead.

“Half of North America just lost their Facebook,” Clooney’s character, astronaut Matt Kowalski, remarked.

While fictional, the events that unfold in Gravity illustrate an all-too-real threat known as the Kessler Syndrome, or the theoretical scenario in which Earth’s low-orbit space debris field becomes so dense that collisions become inevitable, in turn creating more debris and triggering more collisions.

Brian Weeden, a space debris researcher and director of program planning at the Secure World Foundation, said Gravity demonstrates the most dramatic representation of Earth’s space debris problem.

While the Hollywood rendition of the Kessler Syndrome is somewhat dramatized, he said it nonetheless has a lot of factual basis.

“The events that it shows happening in a matter of mere minutes are things that, in reality, we’re looking at happening over decades,” Weeden told Luckbox. “So in that sense, the threat of space debris is a lot like the issue of climate change, where you have things that are happening today which may result in significant challenges and consequences years or even decades down the road.”

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Because few people become astronauts—and there are more than enough terrestrial issues to grapple with—it can be difficult to contextualize the space debris problem in a way that the general public cares about it. It’s one of the reasons, Weeden said, Secure World Foundation doesn’t do a lot of public communication on the topic.

That’s not to say the effects of space debris-related collisions wouldn’t be felt on Earth. They would. In fact, plenty of satellites operating in low-Earth orbit are critical to climate science, weather monitoring and compiling data used to detect severe weather events.

“It’s one of those things where, day to day, the average person sees it show up a little bit in the weather forecast,” Weeden said. “But really, the impact is, over the longer term, we would just have a lot less data monitoring what’s happening on Earth—what’s happening with the climate, what’s happening with the environment—and that could have huge repercussions.”

Weeden reiterated that those repercussions probably wouldn’t manifest in people’s day-to-day lives now, but he said the longer-term implications could represent a regression in technology for climate science.

While satellites in low-Earth orbit are most at risk, collisions in space aren’t exactly clean or confined.

Depending on how objects shatter, how many pieces of debris that shattering causes and how energy is transferred among those pieces, some can venture into higher altitudes, potentially threatening satellites in higher orbits.

In 2008, for example, the United States conducted an anti-satellite test, Weeden said. After destroying a dead satellite at an altitude of roughly 225 kilometers, the orbital

0.5 miles per second Average speed of a bullet

velocities of some of the pieces increased, throwing them nearly 2,000 kilometers in apogee, or at their highest point in orbit.

For context, the Hubble Space Telescope orbits at an altitude of roughly 560 kilometers, whereas communications and GPS satellites fly at altitudes of roughly 20,000 kilometers to 23,000 kilometers.

Pieces of debris can decrease in velocity, too, resulting in re-entry to Earth’s surface.

But where did the orbital debris come from? Just how much stuff is up there, and is it possible to get it down?

According to the European Space Agency, Earth’s orbit is home to roughly 26,000 monitored debris objects, including nearly 2,000 discarded rocket stages, 3,000 defunct satellites and an additional 21,000 unidentified fragments.

As for smaller objects not monitored on Earth, statistical models estimate there are 34,000 fragments larger than 10 centimeters in diameter, 900,000 fragments between one centimeter and 10 centimeters in diameter, and as many as 128 million fragments between one millimeter and one centimeter in diameter.

“In the very early days, NASA was focused on natural space debris,” Weeden said. “As we moved through the sixties and had the space program going in full swing—we started putting up a lot of satellites, a lot of space objects—people started becoming more concerned about those human-generated debris objects.”

And as more countries and companies pursue ventures in space, the number of debris objects continues to rise.

What about bringing debris down? Where does Earth stand in its battle to clean its orbit?

“So we’re, frankly, not very far

THERE’S NOT MUCH COMMERCIAL INCENTIVE TO REMOVE ORBITAL DEBRIS. along at all,” Weeden said, particularly in the Unuted States.

“In 2010, the U.S. issued the National Space Policy that said NASA and the Defense Department should jointly develop the technology to remove debris, and neither has done that. And it’s because they don’t have the money, and it’s not really their mission to do so.”

Elsewhere, Weeden noted the European Space Agency hired a company to remove a piece of European debris, and the Japanese government contracted yet another company to characterize a piece of debris and formulate a plan to remove it.

Those efforts alone won’t make a major dent in the overall problem, Weeden said, but they’re important proofs of concept that such pursuits are possible. The key issue lies in the lack of commercial incentive to remove debris, given its lofty cost.

But before taking to the streets and shouting that the sky is falling, Weeden offered the sobering reminder that space is still really, really big. Even the densest fields of debris comprise a very small density of objects per square meter. That said, unless the issue is addressed, it’s only going to get worse.

“We need to think about space debris like we do climate change,” Weeden said. “And consider the impact the actions we’re taking now could have on our ability to get benefits from space in the future.”

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Astro Photophile Col. Terry Virts spent more time in space than everyone else featured in this issue combined, and he has pictures to prove it

BY MIKE REDDY

Col. Terry Virts in his offical NASA portrait.

Cameras in space NASA gives all astronauts training in photography—a handy skill considering the ISS is loaded with some of the

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best camera equipment available. But not all astronauts share Virts’ passion for taking pictures. In fact, unless they’re required to take pictures of equipment or other things as part of their day-to-day duties, it’s largely left to the astronauts’ discretion whether they take advantage of the cameras onboard.

But Virts took full advantage. He shot more than 300,000 photos from space—more than any astronaut before him. He brought

PHOTOGRAPH: NASA/BILL STAFFORD

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ver the course of his life, U.S. Air Force Col. Terry Virts has worn many helmets.

Having served as a test pilot, fighter pilot, space shuttle pilot, NASA astronaut and as commander of the International Space Station, Virts may be the reallife embodiment of the astronaut so many children hoped they would grow up to become.

In total, Virts spent a little more than seven months in space, flying a two-week mission and a 200-day mission. But before he took to the skies, he took pictures.

“When I was a kid, my parents bought me a Konica SLR camera,” Virts told Luckbox. “It was a 35-millimeter. You had to drop the roll of film in and wind it manually.”

His parents weren’t really into photography themselves, so Virts had to teach himself about exposure, aperture size, film, ISO, focus and everything else that goes into quality picture-taking. The photography bug bit him, and it latched on tightly.

“They just got me this camera, and I think ever since then I’ve had a camera around my neck,” he said.

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GoPros with him on spacewalks.

He even helped film for the IMAX movie A Beautiful Planet.

Some of his more than 300,000 shots culminated in National Geographic’s View From Above: An Astronaut Photographs the World, a 300-page photography book that includes the pictures in this Luckbox photo spread.

Asked if he had a favorite shot, Virts understandably said it was really hard to choose. He loved the

ones he took of the aurora borealis and of the Bahamas, but one photo did stand out as particularly memorable.

“We were getting ready to come home, and I wanted to take one more,” he said. “So I put the wide-angle fisheye lens on and went down to the Cupola, and the sun was setting, and I took this picture at F22 with a really small aperture, and it made a starburst pattern.

“When I saw it on the camera,

I went, ‘All right, that’s the best picture I’m ever going to take in my life.’ I took the card out, I put it in the computer to download and flew back to Earth.”

(Check out that shot in “The Last Picture,” p. 64.)

Earthbound Back on the ground, Virts doesn’t necessarily miss being in space. If he could go back to make a movie, he would, but the glamor and excite-

One of Virts’ favorites among the photos he took in space is the aurora borealis over the U.K. PHOTOS BY TERRY VIRTS, COURTESY OF NATIONAL GEOGRAPHIC/ VIEW FROM ABOVE: AN ASTRONAUT PHOTOGRAPHS THE WORLD

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ment that come with launches and spacewalks account for only a few of an astronaut’s experiences. In Virts’ words, “99% of it is just running on the treadmill, fixing things that are broken, plugging in experiments and unpacking cargo ships.”

Still, he’ll never say never. But as it stands, he doesn’t expect to return anytime soon.

That said, space still plays a role in his life. Besides delivering guest lectures at Harvard Business School, authoring How to Astronaut: An Insider’s Guide to Leaving Planet Earth (See p. 42) and making motivational speeches, Virts recently joined the board of advisors for Varda, a space manufacturing startup.

“The way these guys want to do it is very promising, and it makes a lot of economic sense,” he said of Varda.

“Once you can start making stuff in space, that’s really going to open up a segment of the economy to help everything else in space grow.”

Virts’ resume is undeniably impressive, and given how long he’s lived in space, Luckbox had to ask: Do you believe there’s life beyond Earth?

“I have two maybe conflicting views on this,” he answered. “One is there’s so many planets out there.

At nighttime from the space station, when you turn the lights off, let your eyes adjust, and you look out away from Earth, there’s just billions of stars—I could never pick out a constellation, there were so many stars. So, if there’s that many planets, you would think if there’s life here, there must be life somewhere else.

“But then, one of my main jobs was to do experiments on my own body, and I did ultrasounds of my brain and my heart and my eyeball … and life is so incredible. I mean, it’s amazing. Just everything about life is amazing, right? The simplest one-cell organism is more amazing than the most complicated thing people can build. And so, I don’t think life just happens on its own.”

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Virts on Space Force I was at the White House speaking at the “Flying feels National Space Council, actually, and I was 10 more at home feet in front of President Donald Trump at the for me than time when he announced that there was going being on solid ground. to be a Space Force. So, I’ve had this kind of Sometimes I’ll connection with the Space Force. I think it snap a selfie makes a lot of sense because space is not air. from the pilot’s seat—the Having been an airplane pilot and a view’s not bad space shuttle pilot, I can say that the kind of from up here!” people that are required to launch airplanes and launch rockets are very different, the engineering is very different—just everything about space and air is different. Same with water and the oceans, and same with land and the ground, right? That’s why we have an Air Force, an Army and a Navy.

And so, it makes a lot of sense to me to have a Space Force where you have all the people who are focused on launching rockets and operating GPS satellites and doing all the other things that we do anyway. The military space budget is about twice what NASA’s budget is, so there’s already a Space Force. It was just embedded in the Air Force and the Army and Navy to a lesser extent.

It makes sense to have the organize, train and equip function in one organization. And hopefully it can be more efficient. Rather than having it spread out among the different services, put them all in one and, if we do it right, it can be more efficient.

Taking photos from the space station’s Cupola (the observatory module) was Virts’ favorite pastime in space.

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“There was so much work and such limited time during spacewalks that I almost never had time to enjoy the view. It would be amazing to conduct one with no mission other than photography.”

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View From Above: An Astronaut Photographs the World

PHOTOGRAPH: (BOOK) GARRETT ROODBERGEN

By Terry Virts

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For seven months, NASA astronaut and space photographer Col. Terry Virts orbited the Earth, capturing aerial images of its surface and the vastness of space around it. With a camera always nearby, he was ready to snap a picture at any moment.

The resulting book, View From Above: An Astronaut Photographs the World, holistically captures the world from a perspective few have had the pleasure of witnessing with their own eyes. The book includes many of Virts’ most captivating shots, many accompanied by stories that show what it’s like to live in a cosmically different atmosphere.

Readers get a glimpse of daily life in orbit and learn how it shaped one astronaut’s life and spirit. #8 in Aerial Photography —Amazon

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On the Endeavor’s flight deck, Virts assumed the righthand pilot’s seat for reentry and landing.

Astronaut Nicholas Patrick took a spacewalk during the STS-130 mission.

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Talking heads.

Their time is up.

It’s our time now.

Explore your financial curiosity. dough.com dough is a registered broker dealer offering self-directed brokerage services. *regulatory & other fees apply. member FINRA/SIPC. ©2020 dough.

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trends life, luxury & the pursuit of happiness

LIQUID ASSETS

Outer Spirits A stellar space race for potables is underway

By Jeff Joseph

PHOTOGRAPH BY GARRETT ROODBERGEN

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hile the billionaire bosses of Blue Origin, Virgin Galactic and SpaceX battle for space tourism bragging rights (see p. 10), other astral entrepreneurs are exploring marketing and maturation opportunities by marrying the moon with moonshine.

In 2015, Japanese distiller Suntory sent whisky to mature in the International Space Station to see if microgravity would result in a mellower finish. The results proved less than stellar, with one reviewer characterizing the aftertaste as “pungent, intense and long, with hints of wood, antiseptic lozenges and rubbery smoke.”

Undaunted, experimenters are continuing their work in space. This past January, SpaceX brought back 12 bottles of red wine that had been aging for a year on the ISS. The reviews are still pending.

Jim Denoon, creator and co-owner of Outer Space Vodka, conceived of his product while working for a glass manufacturer that made bottles for spirits brands. Denoon “learned what not to do” from the mistakes his customers made, and he found the inspiration to create his own brand. “I saw massive margins made by the creators behind Crystal Head Vodka and thought of building a bottle and brand around a cultural icon that was radically different and without fear of IP infringement,” he said.

With a distinctive style in place, Denoon moved on to putting some substance behind the brand by buying a couple hundred grams of “mongrel everyday meteorites” from a “meteorite broker.” He uses the 4-billion-year-old space stones to filter his French vodka. To date, he’s sold more than a million bottles globally, with his biggest U.S. sales volume in Texas and Florida.

Luckbox was skeptical, but Outer Space Vodka did pass the taste test. Beyond the appeal of the packaging, the product’s nose and palate exude a distinctive mineral presence that provided a welcome departure from a traditionally “tasteless” spirit—a visionary vodka.

Outer Space Vodka outerspacevodka.com, $29

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trends

Beware of These Two Mental Traps What can we learn from the possibility of alien life or the idea that we live in a massive simulation?

By Tom Preston

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f someone wanted to make the Hawaiian language a larger part of our lexicon, the word “oumuamua” would be a good start.

When astronomers spotted a smallish (by astronomical standards) object back in 2017, it entered the scientific literature as comet C/2017 U1. A short time later, it was

promoted to asteroid A/2017 U1.

But upon further observation, astronomers noted characteristics unike those of the icy rocks that zip past us, and more like, well, something else. A new classification was created for it: “I” for “Interstellar Object.” And in a nod to the Haleakala Observatory where it was spotted, it got the name “Oumuamua.” That’s Hawaiian for “messenger from afar.”

Plus, it sounds cool.

Oumuamua is one of the latest in a string of encounters with unidentifiable objects that are pushing scientists and the general public toward accepting the existence of alien life.

For decades, Tic Tacs, cubes and saucers have been seen performing feats that shame Newtonian physics, and now developments in our own radar and video technology have made these “encounters” more vivid. And that’s just what our modern brains—thirsty for entertainment—love.

Beware the trap Every piece of UFO news grabs our attention and pulls us into a mental trap. The lack of empirical data points A moon called Io casts a shadow on the surface of Jupiter in this image captured by the Hubble Space Telescope. The planet was named for the king of the gods in ancient Roman religion and mythology.

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makes it hard to make any determination except the theoretically statistical. The universe is so big, the odds that there isn’t some life form outside of Earth are as close to zero as you can get. So, each UFO event becomes paramount in our assessment of alien life. A sighting might not be representative, but our brains make it so. Our imaginations helpfully play along.

One idea of our interaction with aliens would be The War of the Worlds sort, where a hostile force descends on Earth to wreak destruction. Another is the ET sort, where a benevolent being teaches a new way of thinking or shares technology that would bring peace and prosperity to our planet. Notice how the descriptions rely on hugely successful books, movies or radio programs.

Imagination takes over when data is so sparse. But what if the development of extraterrestrial life forms was normally distributed? And what if the mean development was somewhere south of ours? Maybe most of the other life forms have absolutely nothing to offer us. And maybe other more advanced ones just flew on by.

But what if neither is true? As long as we’re talking about theoretical statistics, what about the possibility that the UFO sightings are bugs in an Asimovian simulation that we’re living in? The objects violate Newtonian physics? A simulation could do that. To be rare enough to be special but not so rare that we forget about them? Sounds like bugs in a computer program. Play with our minds for a predictable response? Who better to do that than the programmers who put those responses there in the first place?

The possibility that we’re in a simulation doesn’t mean there isn’t also a possibility of alien life, but if you think the simulation has a lower probability, what do you think the odds are of two life forms finding each other in an infinite universe?

But this speculation about aliens also points to another major issue in trading—that one big, momen-

PHOTOGRAPH: JOHN SPENCER (LOWELL OBSERVATORY) AND NASA

THE NORMAL DEVIATE

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L n i t

t s t

trends

tous observation both 1) informs all other future observations and 2) will be repeated. These are mental traps that manifest themselves in trading in a couple of ways.

Following false flags Traders who have big wins early in their careers tend to lean on whatever strategy generated that win, even if the trade had a low probability of success. Becoming “married” to a particular strategy regardless of market conditions is not conducive to long-term success.

Another problem occurs when traders focus on the times a stock or index has had huge price changes of four, five or more standard deviations from the norm. When traders look at charts, their eyes focus on the highest of highs and the lowest of lows, or the big gaps higher or lower.

That ignores the fact that most of the time, most stocks and indexes don’t move much at all. The daily and weekly price changes are usually pretty small in statistical terms. Yes, over several months or years, a stock can have a big price change, but traders can build high-probability trading strategies for shorter time frames to take advantage of the smaller moves.

As traders, we need to break free from these mental traps. Yes, recognize winning strategies, but be flexible and respond to changes in market volatility. Yes, some symbols have huge black swan moves, but recognize that it’s impossible to predict them, and traders who try to capture them typically have lower probabilities of success than those who benefit from the times when stocks don’t do that. Mental traps don’t have big consequences when it comes to

debating UFOs, but for traders, they can make the difference between long-term success or failure.

There’s a common element in all of this. Three huge mental challenges— the possibility of alien life, the idea that we live in a massive simulation and the prospect for success in trading—should each fill us with humility.

It’s true of trading in particular.

Traders can do everything right— high probability, positive theta— and still make a losing trade. If that doesn’t make a trader feel humble, I don’t know what would. The market, just like the universe, is bigger than any one of us. Approach it the right way, and you just might be able to squeeze money out of it.

One momentous observation informs all future observations.

Tom Preston, Luckbox contributing editor, is the purveyor of all things probabilitybased and the poster boy for a standard normal deviate.

Looking for a new way to invest for the long haul?

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trends

THE PREDICTION TRADE

Open-Minded Forecasting in a Deeply Polarized World Superforecasters share three strategies for making accurate predictions

By Warren Hatch

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mericans are more polarized than ever, and their split along two ideological extremes complicates a forecaster’s job.

Polarization stresses feelings over facts, confounding the separation of signal from noise that’s essential to forecasting accuracy. Also, the forecaster’s own biases and preferences can be harder to recognize— and set aside—when society at large is polarized and the outcomes are personally consequential.

When Good Judgment Inc, a forecasting company, asked its professional Superforecasters to predict the outcome of the 2020 U.S. election cycle, these challenges were front and center. Many Superforecasters live in the United States and feel deeply about political issues in the country. Some of them worried this could cloud their

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forecasting judgment. Here’s what they did, and what you can do to improve the accuracy of your own predictions in a polarized world.

U.S. election 2020 The Superforecasters predicted in March 2020 that the Democrats would win the White House and never looked back. As early as June, they began predicting both the House and Senate would go to the Democrats. They accurately called:

• the long-delayed concession • the record voter turnout, and • the Democrats’ presidential fundraising edge as of Sept. 30 But getting it right is only half of the picture. Good Judgment strives to be right for the right reasons. To calibrate their thinking, Superfore-

casters use three simple strategies that consistently result in more accurate predictions.

Consider alternatives While the Superforecasters as a group assigned high odds for a Democratic sweep, individual Superforecasters predicted a variety of outcomes. A diversity of views is essential for good forecasting, but on issues you hold dear, considering other views is easier said than done.

Over the week before the election, Good Judgment asked the Superforecasters as a group to imagine they could time-travel to a future in which the Republicans retained both the White House and the Senate. Regardless of their individual forecasts, they were then asked to explain why a “blue wave” election failed to occur in such a future.

This is called a pre-mortem, or “what if” exercise. Thinking through alternative scenarios ahead of the actual outcome accomplishes several goals. It forces the forecaster to consider other perspectives and to rethink the reasoning and evidence supporting their forecasts.

It also tests the forecaster’s level of confidence (over-confidence being far more common than under-confidence) and helps forecasters avoid hindsight bias when evaluating the forecasts later.

Because Superforecasters already weigh multiple alternatives in making forecasts, this pre-mortem produced little change in the over-

On issues you hold dear, considering other views is easier said than done.

Tune in for Season 2 of The Prediction Trade podcast from Luckbox. It features all-new ways to make money by forecasting the financial markets, politics, crypto, sports and other events where it’s legal to wager.

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all forecasts. Even after several days of internal debate on the “what if” scenarios, their aggregate probabilities barely moved.

But the exercise was useful. It showed that the Superforecasters’ predictions were well-calibrated. It also produced multiple scenarios with detailed commentary, some of which proved clear-eyed in light of the actual events following the election.

Kjirste Morrell, one of Good Judgment’s leading Superforecasters, was among the participants in the exercise. She says she didn’t make large changes to her forecasts but underscores the value of the discussion.

“In retrospect, I should have placed more credence on the possibility of violence after the election, which was mentioned during the pre-mortem exercise,” she said.

Keep it civil A wise crowd encompasses diverse views. Studies based on the Good Judgment Project found that being an “actively open-minded thinker” correlates with being an accurate forecaster. That’s no mystery. Exposure to views with which we disagree can inform our understanding of the world. But Superforecasters don’t simply agree with everything.

They know how to “disagree without being disagreeable.” All forecasters can master this trait, as witnessed on our public forecasting platform, Good Judgement Open, at gjopen.com.

Throughout the 2020 election cycle, moderators observed very few comments that fell outside the bounds of reasonable civil discourse. This relative civility on GJ Open may surprise those accustomed to the rough-andtumble of the Twitterverse. But it comes as no shock to Good Judgment’s co-founder Barb Mellers, whose research suggests that forecasting tournaments can reduce political polarization. As the election cycle intensified and the public debate grew more heated and personal elsewhere on social media, GJ Open continued to emphasize facts and reasoned

argument. It showed that forecasters can learn to remain focused on what matters to the accuracy of their predictions and block out the noise of inflammatory rhetoric.

Keep score Keeping score is essential to good forecasting, says Good Judgment’s co-founder Philip E. Tetlock. Superforecasters are not the only professionals who recognize this. Weather forecasters, bridge players and internal auditors all know that tracking prediction outcomes and getting timely feedback are strategies that improve forecasting performance.

Superforecasters use quantifiable probabilities to express their forecasts and Brier scores to measure accuracy. Keeping score enables forecasters and companies to learn from past mistakes and calibrate their forecasts in the future.

No single forecast is truly right or wrong unless it is expressed in terms of absolute certainty (0% or 100%). If the probability of President Donald Trump being re-elected were 13% (Good Judgment’s forecast as of Nov. 1), he would win the election 13 out of 100 times if we could re-run history repeatedly. That’s why forecasting accuracy is best judged over large numbers of questions.

The Superforecasters’ accuracy has been scrutinized over hundreds of questions, and a forecasting method that can beat them consistently has yet to be found. The Superforecasters know what they know—and what they don’t know.

They know how to think through alternative scenarios, and they know the importance of keeping score. When it comes to calculating the odds for even highly polarized topics, their process shows how best practices deliver the best accuracy.

Warren Hatch, a former Wall Street investor, is CEO of Good Judgment Inc, a commercial enterprise that provides forecasts and forecasting training based on the expertise and research of the Good Judgment Project. @wfrhatch

FAR-OUT FORECASTS When will SpaceX’s satellite internet service, Starlink, begin offering commercial service in North America?

123 Forecasters on gjopen.com 581 Forecasts* Before March 31, 2021

0%

Between April 1, and June 30, 2021

41%

Not before July 1, 2021

59%

*As of Feb. 25, 2020

Will SpaceX and/ or Virgin Galactic complete a successful space tourist flight before Jan. 1, 2022?

95 Forecasters on gjopen.com 116 Forecasts* Yes, only SpaceX

Yes, both

Yes, only Virgin Galactic

No

31% 5%

3%

61%

*As of Feb. 25, 2020

To forecast these and many other questions, visit gjopen.com

April 2021 | Luckbox

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BOOK VALUE

Exploring space without leaving home Far too often, book reviews drive away readers. But reviews present just one stranger’s view, and taking them to heart leaves great books undiscovered. The Luckbox Bookshelf offers profiles instead of reviews. Don’t look to these pages for opinions. Think of Bookshelf as a place to discover books that educate, entertain and challenge entrenched beliefs.

Book rankings are accurate at press time and subject to change.

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Dreamland

By Bob Lazar

Decades ago, American conspiracy theorist Bob Lazar blew the whistle on Area 51 when he alleged that the government was using the base to store alien space vehicles.

Lazar’s claims captured the public imagination but also stirred controversy and fueled the fires of conspiracy theories. Since then, ufologists have kept him under unrelenting scrutiny, and universities say they have no record of the degrees he claims to have earned. This is his story.

After long, stressful hours working at Area 51 in the desert outside Las Vegas, Lazar found himself exhausted, and he worried

PHOTOGRAPH: GARRETT ROODBERGEN

The Luckbox Bookshelf

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constantly about his safety.

Under close watch at the base, he spent most of his time studying an unearthly propulsion system, one he was told had powered an advanced vehicle from outer space.

In unguarded moments, Lazar confided in his wife and a few close friends about the work he was doing. His activities weren’t supposed to be disclosed to anyone outside his workspace—but like many secrets, these were not something he could hide. His employers found out and stationed operatives outside his home.

Lazar got help from John Lear, a ufologist, who encouraged him to tell his story to George Knapp, an award-winning investigative journalist at KLAS-TV, a CBS affiliate in Las Vegas.

In partnership with Knapp, Lazar made it his mission to prove he was telling the truth, which included taking a group of people into the desert to witness the test of a “flying saucer.” The police stopped the entourage and notified the base, causing Lazar to lose his job. But the episode opened doors for him to become known in print, on television and, more recently, on podcasts. The notoriety gave rise to the “Storm Area 51” event in 2019.

That’s when a crowd of about 150 unsuccessfully attempted to force their way into the compound to expose what they believed were the site’s alien artifacts.

Despite countless interviews and plenty of national and even international attention, Lazar has not previously had the chance to tell his story the way he wanted and in his own words. With his autobiography, Dreamland, he describes what it was like to be an insider at Area 51, reputedly the world’s largest military research base, and the impact it had on his life outside the job. #7 in Aviation & Nautical Biographies —Amazon

The Contact Paradox: Challenging Our Assumptions in the Search for Extraterrestrial Intelligence

By Keith Cooper

Nearly 50 years ago, a group of researchers in Puerto Rico sent a radio wave message into space through what was then called the Arecibo Telescope. They were in search of the answer to a question humankind still ponders today: Are we alone?

Although the researchers didn’t receive a response to their radio transmission, they’ve subsequently dedicated their time to finding out if civilization exists somewhere beyond Earth. Their quest is known as the search for extraterrestrial intelligence (SETI).

Their motivation for exploring the universe to locate extraterrestrial life runs deeper than just the possibility of seeing two civilizations coming together.

As Keith Cooper says in The Contact Paradox: Challenging Our Assumptions in the Search for Extraterrestrial Intelligence, those researchers from Puerto Rico wanted to enjoy the benefits and learn the lessons of alien contact.

But Cooper also notes the trouble contact could bring. It’s all part of his dive into how SETI developed and where it’s heading. (See Cooper’s take on Oumuamua, p. 18) Extraterrestrial: The First Sign of Intelligent Life Beyond Earth

By Avi Loeb

In 2017, researchers at an observatory in Hawaii caught sight of a peculiar object making its way through the inner solar system, moving with an accelerated speed. It wasn’t like anything they’d ever seen before, but they still assumed it was some kind of rock—at least that’s what they thought at first.

Theoretical physicist Avi Loeb was not convinced. In his book Extraterrestrial: The First Sign of Intelligent Life Beyond Earth, Loeb debunks the theories that the object might be an asteroid or comet because there was no evidence of trails of gas or debris left behind—despite how quickly the object was moving.

Loeb concludes that a logical explanation is that an alien civilization created the object. In his book, he encourages readers to think beyond the usual confines of science and religion to contemplate the future of humankind on Earth.

(For more from Loeb, see p. 14.)

Are we alone?

Researchers are dedicated to finding out if civilizations exist somewhere beyond Earth.

#1 in Astrophysics & Space Science and Aeronautics & Astronautics —Amazon

How to Astronaut: An Insider’s Guide to Leaving Planet Earth

By Terry Virts

Reading Terry Virts’ book How to Astronaut: An Insider’s Guide to Leaving Planet Earth feels like sitting next to him for the entirety of a space mission, experiencing each moment yourself.

Virts, a former astronaut, space shuttle pilot and International Space Station commander, invites readers to accompany him as he prepares for space travel. Then he brings them along for the ride of a lifetime in orbit. Along the way, he even describes the tribulations of putting on a spacesuit.

Although they offer an otherworldly experience, his stories sometimes mirror Earthbound life. He experiences highs and lows, enjoys humor, endures routines, and sometimes discovers something worthy of wonder.

Virts makes the life of an astronaut feel real by managing to simplify the complexities of science for a general audience. (For Virts’ vivid photography, see p. 28.)

April 2021 | Luckbox

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TRADER

TikTok Dough

1

Luckbox sponsors a new tastytrade network segment to teach two young influencers the trade 2

T

wo Gen Z TikTok influencers are learning the fine art of trading stocks and options from a seasoned pro—and they’re doing it in real time, with real money on a live webcast.

The students, Kayla Kilbride and Errol Coleman, are getting seed money and tutoring from legendary trader Tom Sosnoff, co-CEO of the tastytrade network and the tastyworks brokerage.

The timing seems right for Kilbride, Coleman and perhaps a whole generation of young investors to join the movement in retail trading with today’s commission-free trading and app-based platforms.

Kilbride and Coleman embody the phenomenon. Both have dabbled in trading, and both have amassed significant followings on TikTok, a medium that attracts a billion users every day—70% of them under the age of 24.

Those users aren’t coming to TikTok in those numbers just for dance challenges and funny cat videos. Many consider the app an important tool for bite-sized learning and life hacks.

In fact, Gen Z—people age 24 and younger—is already turning to the app for information on personal finance, banking, mortgages and investing. “Fin-influencers” are emerging. The hashtag #investing has garnered a billion views, while #stocktok has attracted more than 254 million views.

Those visitors have money to invest. American Gen Z-ers wield $143 billion in spending power, more than enough to catch the attention of financial institutions.

There’s also a certain open-mindedness about the young cohort.

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Some 44% of Gen Z would consider using fintechs instead of traditional brands, which is almost twice the rate of previous generations.

About 35% of Gen Z has attended a financial education seminar or lecture, according to Fanbytes, an influencer marketing platform. The generation has good reason to seek that financial help, studies indicate. Many consider money a major stressor, and 33% cite personal debt as a huge source of anxiety.

That’s where Sosnoff can help.

Before his efforts to educate and empower investors at tastytrade and tastyworks, he co-founded the thinkorswim trading platform and served as senior vice president of trading and strategic initiatives at TD Ameritrade. He later helped start the dough trading app and the Small Exchange to make futures more accessible to retail traders. Luckbox is also an offshoot of the tastytrade financial network.

Sosnoff advocates options trading as a long-term strategy for small investors, contrary to experts who claim that options are too risky.

Using call options and put options can reduce the risk of owning stocks, he maintains. On the tastytrade network and in seminars, he demonstrates the mechanics and strategies of options trading.

Now, Sosnoff is sharing his knowledge and expertise with Kilbride and Coleman. Their progress in learning to trade is on display in a Luckbox Presents show on the tastytrade network called The Two Yutes. Catch it live Mondays and Fridays at 1:30 p.m. Central Time.

Meanwhile, here’s an introduction to Kilbride and Coleman.

3

5

4 1. 34” MSI Non-Glare Ultra Wide Screen Curved Gaming Monitor Displaying TradingView stock market technical candlestick charts 2. Google Nest Hub Max Clock display 3. Razer Blackwidow Elite

Mechanical Gaming Keyboard Chroma RGB Lighting 4. Logitech G903 Lightspeed Wireless Gaming Mouse w/ Hero 25k Sensor 5. Corkcicle Corey Wilson Palm Design water bottle

3

1

2

4

5

1. 15-minute timeframe to view intraday trend, thinkorswim 2. 1-minute timeframe to view short-term price action, thinkorswim

4. Books: Think and Grow Rich, by Napoleon Hill; Atomic Habits, by James Clear; and The Biggest Bluff, by Maria Konnikova 5. Samsung speaker

3. Liverpool Football flag

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KAYLA KILBRIDE Age 24

School Vanguard University of Southern California, B.A. Sociology TikTok @girlstalkstocks Twitter @robinhoodkid Instagram @kaykilbride @girlstalkstocks

ERROL COLEMAN Age 22

School Adams State University in Alamosa, Colorado.

Left to pursue entrepreneurial path Instagram @errol_colemann YouTube Errol Coleman TikTok @errol_coleman

On a scale of 1-10, (1 = no knowledge, 10 = expert), how would you assess your knowledge of options trading?

4

How did you start trading?

I’ve had a general interest and basic understanding of the stock market since middle school. After struggling to find work this year during the pandemic, I wanted to learn about something that would keep my brain active during the in-between. I had a conversation with my father, who teaches about the stock market to high school students and on YouTube, and discovered that my interest in statistics paired with my risk-tolerance would be a good fit to begin learning a bit more about the market. I didn’t imagine I would make a career of it, but the more I trade, the more I find it to be incredibly enjoyable. I feel like there’s always a concept or lesson to learn right around the corner, which keeps it engaging and interesting. I recognize that I’m only a few months in, but I feel very confident in my ability to learn quickly. If this were something I planned on

On a scale of 1-10, (1 = no knowledge, 10 = expert), how would you assess your knowledge of options trading?

3

How did you start trading?

My interest in trading started when I was 18. My dad took me to a very basic trading seminar, and then I researched everything I could on YouTube and Google because I thought it was such a great opportunity, despite the risk. My goal is to become an efficient trader so I can help others coming into the market for the first time.

How long have you been trading?

How often do you trade? What instruments have you traded?

I have been trading in the stock market for roughly three years. I typically trade stock equities in the small-cap space of the market.

I will usually trade anywhere between three to five times a week, but it varies depending on the opportunities. I will mainly short

doing to make a quick buck, I would have given up much sooner. But because this process for me is much more about learning, the losses are just as insightful as the gains.

I look forward to learning with Tom and alongside everyone at tastytrade.

How long have you been trading?

How often do you trade? What instruments have you traded?

I’ve been learning about trading since November 2020. My first real-time trade was the first market day of 2021. I have traded stocks, crypto and options (buying only calls so far).

Tell us more about yourself.

I like to go by Kay, but people on TikTok only know me as Robinhoodkid. My recent hobbies have included anything outdoors, especially walking near the ocean where I live or hiking in Crystal Cove. I also enjoy improv, but it’s difficult to maintain that hobby during a global pandemic, which is why TikTok has been such a creative outlet for me.

Watch Kalya & Errol on tastytrade

small-cap stocks using statistics as my trading approach.

More about you?

Family and friends like to call me “E.” My hobbies include football, reading, FIFA (the international governing body of football) and criticalthinking games. My favorite artist would have to be J. Cole. One of my biggest goals is to be able to show people that, with enough perseverance, you can turn your passion into profit.

FAVORITE TRADING BOOK Trading in the Zone

By Mark Douglas

April 2021 | Luckbox

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REASON’S EDGE

New Kids, Old Crimes, Bad Cops, Good Times The scrappy little guys who have overrun the markets provide cover for sophisticated Wall Street players who are exercising the digital pump and dump. Get used to it. By Dylan Ratigan

P

ornography made the internet, but the story doesn’t end there.

Since its inception, the internet has been expanding and distorting our world in the most magnificent and horrific ways possible.

Young men build web platforms that monetize lies, and then they use their newfound wealth to fuel violent revolutions and murder. At the same time, young doctors use the internet to deliver world-class medical treatment to remote mountain villages in rural Peru.

Inevitably, the internet is altering the markets forever. Investors are coming together in a ragtag crowd to manipulate stock prices by combining the internet’s instant global communications with its power to distort reality.

they scoff at by adding to the crowd size and increasing the speed.

Let’s look at some examples.

The crowd judges Tesla to be the company of the future, so its stock price explodes ten-fold. The crowd views bitcoin as the currency of the future, and they launch its value to the moon.

When the crowd locks onto an idea, no price is too high, even though it’s not based on fundamental analysis. Trading with the crowd is risky, but trading against it is even more challenging because personal bias warps our perception of what drives other people’s behavior. Moreover, the crowd may share an opinion that’s difficult to contemplate because it’s untethered to reality.

The crowd Call them what you will—the crowd, the masses, the rabble, the mob— hordes of small-scale retail traders have been rushing to take positions in the markets. Their numbers are larger than ever and growing every day.

This new and permanent market variable is emerging with the help of modern communications technology that enables influential members of the crowd to coordinate their followers’ activities.

Professional investors say they won’t abide the madness that the stampede of proletarian traders can induce into the marketplace. Yet, the pros contribute to the momentum

Criminal intent?

It’s illegal to conspire to promote a stock in an effort to run up the price and sell it for a profit, but if your views are untethered to reality, is that a conspiracy or are you simply a nutjob?

Sure, stock prices are intended to reflect a company’s potential for revenue and profit. But where does society draw the line between enthusiasm for a company that has a great idea and the promotion of stocks whose only merit is that the price will go higher with enough enthusiasm?

On the regulatory side, the government should err on the side of wellplaced enthusiasm. From a trading

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standpoint, one has to assume that enthusiasm is rampant. And while fraught with risk, wild volatility abounds in the market these days, and the digital chatter that distorts those prices can be unrelenting.

Regulatory relief?

Whatever the motives of the crowd might be, the only regulatory change that should result from dramas like the GameStop affair should be the elimination of delayed clearing of stock trades—not investigations of social media, short-selling or payment for order flow. To remedy the problem, the government should discard the last vestiges of 20th century Wall Street and mandate all stock trading is cleared on the same day it’s executed.

It’s time to bring stock settlement into the 21st century and stop unnecessary and damaging capital calls that punish small traders and upstart brokers simply because the exchanges and big banks don’t want to change their back-office operations.

Meanwhile—whether they like it or not—every player in the markets has to come to terms with a new and powerful dynamic. The crowd will surely bring magnificence and horror to the stock market.

“SKEPTICISM IS THE FIRST STEP TOWARD TRUTH.” ― Denis Diderot, 16th century French philosopher

Dylan Ratigan, veteran CNBC and MSNBC commentator and best-selling author of Greedy Bastards, serves as tastytrade global market strategist and co-host of the Truth or Skepticism podcast. @dylanratigan

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CALENDAR

MARCH

17 Saint Patrick’s Day

19 Conjunction of the Moon and Mars

25 Atlas V Rocket Launch Cape Canaveral, FL

APRIL

4 Easter

5 NCAA Championship Game Indianapolis 5-11 The Masters Tournament Augusta, GA

7 National Beer Day

6-8 Satellite 2021 LEO Digital Forum

PHOTOGRAPHS: (BEER) SHUTTERSTOCK.COM; (SAPCEX) NASA

15 Tax Day

20 SpaceX Crew Dragon Launch NASA’s Kennedy Space Center, FL 20 World Summit AI Americas Online global meet-up

National Beer Day Evidence of beer production dates back nearly 5,000 years to the Sumerians of ancient Mesopotamia in the form of ceramic vessels from 3400 B.C. that were sticky with beer residue.

Although still based on ingredients such as malted barley, wheat, maize and rice, beer has matured.

Today, it’s one of the most commonly consumed drinks in the world. The more than 100 distinct styles of beer include ales, lagers and other mixtures like porters and stouts. From the bitterness of IPAs to the sweet citrusy taste of fruity sour ales, there’s a beer for just about anyone.

SpaceX Crew Dragon Launch NASA’s SpaceX Crew-2 mission will launch a Crew Dragon spacecraft on a Falcon 9 rocket from the United States to the International Space Station with four astronauts squeezed shoulder to shoulder on board.

It will be the first mission that’s part of NASA’s Commercial Crew Program—a partnership to develop and fly human space transportation systems—including two international partner crew members—setting the tone for future launches. The mission comes after a successful test flight last May, the Crew Dragon Demo2, which was the first crewed test flight of the Crew Dragon spacecraft The SpaceX Dragon cargo craft approaches the with two astronauts International Space Station in 2016 aboard.

8-29 Space Tourism Conference 2 Los Angeles 28 Spring Awakening Excursions Cancun, Mexico

Spring Awakening Excursions After a year of lonesome parties in the comfort of individual homes, revelers will soon have the opportunity to enjoy EDM (electronic dance music) in person, surrounded by other people. Despite the pandemic, the Spring Awakening Music Festival, which is usually held in Chicago, is making its way to Cancun for its 10th anniversary with “safety in mind.” Besides all-inclusive parties, boat parties on the Caribbean Sea, unlimited food and drinks, and open-bar pool parties, the Spring Awakening Excursions will feature five days of techno, electro house and trap artists. The festival will be covered by a 100% COVID-19 refund policy if Spring Awakening cancels the trip because of the pandemic, and a 75% refund for canceling for any other reason.

April 2021 | Luckbox

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tactics

Cheat Sheet #13

Rem o and ve s this ave page !

Outsmarting the Machines Be prepared when the algorithms switch from BUY to SELL. By Mike Hart

I

n his cutting-edge 1950s I, Robot science-fiction stories, Isaac Asimov created a world where robots gained more than a bit of world-wise experience and insight.

The stories center on how the robots’ knowledge, intelligence, understanding and wisdom affect their relationships with humans. Have Wall Street’s robotic trading algorithms crossed such a milestone, and do the machines know more than they let on?

Probably not. However, thousands of servers and computers networked across the globe are causing an explosion of access to data and analysis. The markets aren’t immune to the profound impact.

During the last year or so, despite historic countervailing forces, the invisible hand of the market (which includes significant AI-trading) has turned on the “BUY” machines, and a bull market has driven up the markets ever since.

Complacency lingers, but concerns about the downside will inevitably develop, even while new market highs are purchased and printed nearly every day. In a sci-fi tale, this might constitute a brilliant but sinister plan directed by a robot without rules, but this isn’t science fiction.

When the BUY turns into SELL, traders should know what to do. That’s why this issue’s cheat sheet was built with a market downturn in mind and covers strategies to soften the blow of a market blowout. The first and most important strategy is the covered call, which turns a long stock position from a passive trade that makes money on direction into an active trade that makes money with direction, time and volatility.

Next, look at what happens when traders add downside protection by generating long volatility positions. If the market is selling off, volatility increases, making calendar spreads and diagonal spreads great candidates for trades.

Finally, look to add a negative delta and build options trades so that profit potential favors the downside.

Mike Hart, a former floor trader at the Chicago Stock Exchange and a proprietary futures trader, specializes in energy markets and interest rates. He’s a contributing member of the tastytrade research team. @mikehart79

COVERED CALL

For every 100 shares of stock, sell one call Use the 30-delta level for a strike Duration of the call should range from 30 to 60 days

TIME SPREADS

Both calendars and diagonals benefit from a rise in IV Sell a short duration option with 45 days or fewer Buy a long duration option of between 60 and 90 days

NEGATIVE DELTA

Some positions benefit from movement to the downside Long volatility (VIX) Long “flight to safety assets” (precious metals, bonds) Short call strategies and long put strategies

Active Investor Alert!

Follow @mikehart79 on Twitter for daily trading ideas and tactics.

April 2021 | Luckbox

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tactics essential trading strategies

BASIC

Short Side of the Moon Feeling bearish? Options and futures can beat short-selling. Here’s how. By Michael Gough

T

here’s something suave about shorting the market, whether it’s fading an earnings pop, selling a pandemic rally or jumping into a long squeeze. It’s risky, contrarian and sometimes highly profitable.

As the adage goes, markets take the stairs up and the elevator down. While short-selling provides an obvious and direct way to profit from a decrease in a market’s price, it’s not the most capital-efficient or strategic approach.

So, before short-selling the next moon stock, consider alternative bearish strategies with futures or options.

Short-selling often comes with sneaky costs. Unlike long stock positions, short-selling exposes traders to unlimited risk, as the price could theoretically rise to infinity. That potential risk prompts many brokerage firms to require a margin account and substantial initial capital outlay to enter the short.

Some firms, for example, charge as much as 150% of the size of the short. In other words, they require traders to post $150 to short $100 worth of stock. Then, when the market becomes more volatile—or, more interesting— the broker can declare it hard-to-borrow and either limit further short-selling or increase the capital required to trade it.

Capital is a trader’s most valuable asset, and these costs can really add up. But futures contracts can serve as a lower-cost alternative to gain short market exposure.

Say it with futures Futures, like options, are derivatives contracts, and they enable traders to express a market opinion much more easily and cheaply than

Choose your weapon Traders have a number of short-selling options strategies.

Long Put

Long Put Spread

Short Call

Short Call Spread

Limited risk

Limited risk

Unlimited risk

Limited risk

High profit potential

Low profit potential

Low profit potential

Low profit potential

Low probability of profit

High probability of profit

High probability of profit

High probability of profit

they can with stocks. Because futures are contracts, there is no borrowing and it’s just as easy to go long a market as it is to go short.

Plus, futures have no hard-to-borrow designation that can stop trades when things get interesting. Not only is there no borrowing cost, but for an equivalent amount of exposure, futures require just a fraction of the amount stocks or ETFs would require because of their efficient margining methodology, which calculates gains and losses that could occur.

One drawback of shorting with futures is the lack of choice. While there are stock index futures, there aren’t futures for single stocks.

Thus, traders who want to short a moon stock like Tesla (TSLA) would have to sell an index future that contains Tesla stock, like the Small Stocks 75. For both capital efficiency and direct exposure, traders might consider options contracts.

stocks and futures. Traders can use options to short a market in many ways, but the simplest is to buy a put option.

Another way to get short with options is to sell a call, which has a similar risk profile to shorting stock but a higher probability of profit because of positive time decay.

Combining the two types of options, traders can also construct bear put spreads (put debit spreads) or bear call spreads (call credit spreads), which have defined profit and loss amounts, high probabilities of profit, and low capital requirements.

Thinking beyond stocks affords traders more flexibility when deciding to get short.

Don’t miss out on the next big short because of the hard-to-borrow restrictions of prohibitive capital requirements. Instead, consider more capital-efficient or strategic choices with futures and options.

The options option Options bring pure exposure and an element of strategy to trading that’s inaccessible through

Michael Gough enjoys retail trading and writing code.

He works in business and product development at the Small Exchange, building index-based futures and professional partnerships. @small_exchange

April 2021 | Luckbox

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tactics

INTERMEDIATE

GameStop Games Stop— A Post-Mortem A short primer on short interest and the short squeeze

By Anton Kulikov and Tom Preston

G

PHOTOGRAPH: STEPHEN ZENNER / SOPA IMAGES VIA REUTERS

ameStop (GME) caused quite a commotion in the markets early this year when its historic rally became headline news for nearly every major media outlet. In fact, play-by-play coverage of the electronic game retailer’s seesawing stock prices pushed news of the markets’ substantial volatility off the front page of The Wall Street Journal.

The articles chronicled the adventures of traders who made or lost millions, depending on which side of the trade they chose. Hedge funds blew up, and for the first time in recent history, the Street recognized retail investors as a “force to be reckoned with” in finance.

But why GameStop? Thousands of small stocks languish unnoticed, many of them smaller in market

value than the video game chain. Yet GameStop spiked from $20 on Jan. 12 to a record high of $483 on Jan. 28.

How is that possible?

Short interest Luckbox will refrain from exploring the reasoning behind the spike, such as who pushed the stock up and why. Instead, let’s study how this came about and why it happened to GameStop in particular.

The short answer is high short interest. The short interest percentage is the number of shares held short, divided by the shares in the “float.” A stock’s float is how many shares traders can buy or sell in the open market. It’s defined as shares outstanding (total number of shares in existence), minus restricted and

treasury stock (stock that cannot be sold, usually because it’s held by executives or employees of the company, or held by the company).

In January, GameStop had a float of around 50 million shares. That matters because the number of shares that were sold and that investors held short in mid-January was around 60 million. That’s not a typo. Some 60 million shares sold short with only 50 million shares available to trade. How is that possible?

Because many institutional investors were bearish on GameStop, they had a lot of short positions on the stock. In fact, short interest peaked at around 120% of the float (60 million share short interest, divided by 50 million shares in the float) in mid-January.

Stock is traded anonymously, so no one knew who was buying stock to cover shares that were “shorted” (borrowed from an investor and then sold) or who was buying from someone who actually owned the stock (the owner of record).

However, the clearing firms and brokers know which shares are being loaned and available for shorting, and which orders to sell are closing or short. That information is reported to the stock transfer agent (a separate organization) that keeps track of the owners of record.

Coverage of GameStop’s seesawing stock prices pushed other big financial news off the front page.

More than 100%?

The key to understanding why short interest can be greater than

$20 on Jan. 12 $483 on Jan. 28

The GME Squeeze

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100% of the float is that the person who owns stock and lends it to be shorted is no longer the owner of record. The owner of record is eligible to receive dividends paid by the company and has the right to vote in corporate elections.

The person who loaned the stock can’t vote the shares, and instead of the dividend receives a “cash-in-lieu” paid by the trader who’s short the stock to the trader who loaned the stock. It’s important to understand that the owners of record do not own more shares than the float.

Here’s an example: Bob, the owner of record of 100 shares of GameStop, allows his broker to lend those shares as part of the short-selling process. Percy, who’s bearish on GameStop, borrows Bob’s 100 shares to short them. When he lends the 100 shares, Bob is no longer the owner of record, even though he has the same risk and potential reward of being long those 100 shares. Alice, who’s bullish on GameStop, buys the 100 shares from Percy when he shorts them.

Alice becomes the owner of record and allows her 100 shares to

be loaned. Mike, who’s bearish on GameStop, borrows the shares from Alice to short them. Ed is bullish on GameStop and buys the 100 shares from Mike when he shorts them.

Ed becomes the owner of record of 100 shares of the stock. However, both Percy and Mike are short 100 shares, for a total of 200 shares.

That’s two times greater than the 100 shares of the owner of record (the float).

But add the 200 shares loaned by Bob and Alice to Ed’s 100 shares, and the 200 shorted shares of Percy and Mike do not exceed that number. The issue of short interest exceeding the float is really about the lack of reporting and suggests the float isn’t the proper denominator for the equation to calculate short interest.

Percy and Mike eventually need to close their short positions, so they each need to buy back the shares they borrowed. If a lot of traders are short the same stock in a short period of time, that creates a potential short squeeze. It’s where traders who are short the stock have to deliver long stock against the stock

they borrowed, causing everyone to buy the stock at the same time.

Combining that phenomenon with outsiders who suddenly have an interest in the stock sets off a perfect storm where not only the short sellers are trying to buy stock all at once, but also retail traders are crowding out the supply for the existing short sellers. The stock jumps up in price, and traders call away even more short positions. Suddenly, everyone and their mother is buying GameStop.

Because institutional investors were bearish on GameStop, they had a lot of short positions on the stock.

The upshot What’s the lesson here? Don’t worry too much when the short interest rises above 100%—just understand that it’s very high. Short sellers should monitor the stock’s short interest relative to the float.

If the number of shares short is a large percentage of or larger than the float of the stock, traders have higher risk of a short squeeze, forcing them to buy back the stock at an unfavorable price.

Anton Kulikov is a trader, data scientist and research analyst at tastytrade. @antonkulikov97

Precipitous The rise and fall of GameStop stock prices makes Mount Everest look flat by comparison.

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ADVANCED

How Much Volatility Is Too Much?

Risk increases if a stock is too volatile or makes price moves far outside of what’s expected

By Michael Rechenthin

O

ptions traders often gravitate toward highly volatile stocks.

With volatility, they have greater expectations for the stock price and, if played correctly, a greater expectation of profitability.

But if a stock is too volatile or makes price moves far outside of the expectation, that can increase risk substantially. That was true at the end of January and beginning of February, when traders worried about “risk to the upside” instead of the normal “risk to the downside.”

And while the severity of the GameStop (GME) affair shocked everyone, it shouldn’t come as a surprise that smaller-capitalized stocks have a tendency toward increased volatility compared with larger-capitalized stocks. After all, it takes less to increase the value and thus capitalization of a $1 billion company than one that’s 100 times larger. Traders often overlook capitalization and volatility.

An online search will reveal the capitalization of any stock. A megasized company has a capitalization of $200 billion or greater. The median volatility is 33%, which means that a company this size has a tendency to increase or decrease by 33% over the next year. Now look at the ranges of the volatilities: 95% of mega-sized stocks have volatility between 21% and 58%.

Compare that to micro-sized companies. The smaller-capitalization stocks have volatility between 63% and 440% with a median of

54

155%. With smaller sizes, traders can expect not only a lot of movement but also a larger range of movement.

“More is less,” right, shows that none of the mega-cap stocks have a volatility over 100%, whereas 82% of microstocks have volatilities that high. The market is undoubtedly placing significantly more risk on the latter segment.

Because of the greater possibility of swings, many traders prefer to define their risk when trading mid-sized, small and micro-sized stocks—especially to the upside.

Suppose, for example, that a trader has a short strangle in Alcoa (AA).

According to the risk profile, this position would have unlimited risk above the short call strike. To define the risk—especially in such mid-cap or smaller stocks—buy a call above the short strike.

Short the 20 put and the 25 call.

Now, define the risk by buying the 26 or above call. That gives the posi-

More is less The higher the company’s valuation, the less likely it is to have volatility of greater than 100%, according to a study of 3,700 stocks.

Company Size

Capitalization

Percentage of companies with volatilities currently above 100%

Mega

$200 billion+

0%

Large

$10 billion+

6%

Mid

$2 billion+

16%

Small

$300 million+

47%

Micro

$50 million+

82%

tion minimal or no risk to the upside.

The profitability may be smaller when a trader buys protection to define the risk, but the account will be more likely to absorb a larger move to the upside.

Michael Rechenthin, Ph.D., aka “Dr. Data,” is the head of data science at tastytrade. @mrechenthin

The importance of high-implied volatility in small accounts

On the move Compared with large-capitalization stocks, those with small capitalization tend to move more and have a greater range of volatility. This table is based on a study of 3,700 stocks.

Company Size

Capitalization

Median Annualized Volatility

95% of Companies Have Volatilities Between

Company Count

Mega

$200 billion+

33%

21% — 58%

51

Large

$10 billion+

42%

25% — 150%

921

Mid

$2 billion+

60%

31% — 214%

1,250

Small

$300 million+

95%

37% — 350%

1,279

Micro

$50 million+

155%

63% — 440%

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trades actionable trading ideas

CHERRY PICKS

R I PE & J U I CY T RADE IDEAS

Options With Futures

By Michael Rechenthin hy trade E-mini S&P 500 futures when Micro E-mini S&P 500 futures is also liquid and more appropriate for smaller accounts? Trading the /ES on the Chicago Mercantile Exchange (CME Group), for example, is the equivalent of holding $197,000 worth of stocks in the S&P 500, whereas the micro version of this symbol, /MES, holds 1/10th the stock, at $19,700.

The table below has smaller futures from both the CME Group and the Small Exchange.

Here are a few reasons for trading futures:

W

• No pattern day trading rules in futures.

Investors are considered “pattern day traders” when they trade more than four times within five days. They then risk a restriction for 90 days or until the account reaches $25,000.

• Five times greater leverage with futures.

Futures margin is based on the exchange’s margining, which enables higher leverage for market participants. It’s not unusual to have leverage of 20:1 with futures, whereas with stocks, it’s 2:1 (and intraday it’s 4:1). That can provide more trading opportunities for market participants.

• Futures have significantly reduced holding costs. Futures’ implied costs are closer to borrowing money at the “wholesale rate” (i.e., the three-month USD-LIBOR rate) with stock, and exchange-traded fund (ETF) margin is at the more expensive “retail rate,” while stock margin can be closer to 10% or more.

• Futures offer favorable tax treatment.

Whether a trader has owned futures for a second, a minute or a month, the gains

Sign up for free cherry picks and market insights at info.tastytrade. com/cherrypicks

and losses are marked-to-market and taxed at a blended rate of 60% long-term capital gains and 40% short-term rate (which is ordinary income). If a trader disposes of ETF shares within one year, the feds tax 100% of the income at the higher short-term capital gains rate.

Those are huge savings—but make sure to consult a tax advisor.

• Futures are neutral products and are as easy to buy as they are to sell. Futures have no uptick rules. The Securities and Exchange Commission’s alternative uptick rule governs securities that have experienced a large drawdown. It locks traders out during some of the most exciting times.

Michael Rechenthin, Ph.D. (aka “Dr. Data”), heads research and data science at tastytrade. @mrechenthin

Staying small Wise retail traders keep their investments small in any given stock or futures contract, and these products can help.

Equity indexes

Futures USD notional

0.25

$1.25

0.01

$1.00

Minimum tick size

S&P 500 (1/10th size)

/MES

Small Technology 60

/STIX

Approximate shares of ETF

Futures correlation with ETF

Buying power requirement

$19,710

50 SPY

0.98

$1,210

$7,000

20 QQQ

0.85

$484

Small Stocks 75

/SM75

0.01

$1.00

$7,000

30 IWM

0.85

$522

Small 30-Year U.S. Treasury Yield

/S30Y

0.01

$1.00

$2,059

-30 TLT

-0.95

$330

Small 10-Year U.S. Treasury Yield

/S10Y

0.01

$1.00

$1,257

-100 IEF

-0.95

$181

Small 2-Year U.S. Treasury Yield

/S2Y

0.01

$1.00

$116

-8 SHY

-0.70

$49

Gold (1/10th size)

/MGC

0.1

$1.00

$17,920

110 GLD

0.98

$1,210

Small Precious Metals

/SPRE

0.01

$1.00

$6,900

45 GLD

0.91

$462

Interest rates Metals

$ per tick

Futures

Description

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DO DILIGENCE

QU I E T FOU N DAT I O N HELPS P ROACT IV E INV ESTO RS U NDERSTAND T HEI R PORTFOLI OS

Space Stocks Have Limitless Upside

By James Blakeway

his year marks the 105th anniversary of Boeing (BA), a company known across the globe for its long history of unparalleled innovation and success. But the aerospace manufacturer’s story was also peppered with gut-wrenching hardship when its technology failed.

Through the rallies and falls, Boeing investors have seen it all the last few years, yet longterm stockholders have reaped nothing but reward. Boeing stock first traded on Jan. 13, 1978. A $1,000 investment on that date was worth more than $330,000 by the end of 2020, while the same $1,000 hypothetically invested in the S&P 500 index would have been worth approximately $42,000.

Boeing realized those gains as international flight matured from novelty to familiarity.

Now, Boeing and other companies are setting

T

their sights on the stars, and another period of runaway growth appears likely to ensue.

The case can be made that Boeing will replicate its own success in space travel. The company is largely responsible for the innovation and manufacturing that made the International Space Station a reality. As a long-time partner of NASA, Boeing already has skin in the space game.

But Boeing isn’t alone when it comes to creating space divisions or pursuing space projects.

Both Lockheed Martin (LMT) and Northrop Grumman (NOC) work with NASA and Blue Origin, Jeff Bezos’ space tourism firm.

Lockheed and Northrop both dropped around 15% in the first quarter of 2020 with the pandemic selloff, ending the year down 9% and 13%, respectively. Boeing, with its exposure to passenger aviation, dropped an

eye-watering 55% before recovering slightly, ending 2020 down 35%.

After the spring Covid-19 slump, the S&P 500 recovered for a 16% return on the year.

These aerospace stocks are clearly still lagging but could provide opportunity moving forward, especially if 2021 brings sector rotation and a reduction in capital flooding to Big Tech.

Buying into space Investors looking to add aerospace companies to their portfolios can stick with the big names already mentioned, but with a minimum of around $200 per share in Boeing, creating a diverse portfolio becomes expensive for those with smaller accounts.

Investors lacking positions in aerospace securities can look to exchange-traded funds (ETFs) for prepacked diversification. The

Galactic Ambitions Want a position in space exploration? An endeavor with potentially wild prospects for profitability? These companies operate space divisions.

Name Ticker

Lockheed Martin

Northrop Grumman

Boeing

Raytheon

Virgin Galactic

Maxar Technologies

Aerojet Rocketdyne

LMT

NOC

BA

RTX

SPCE

MAXR

AJRD

2-year return

41.08%

27.77%

-31.97%

10.36%

136.83%

211.19%

55.30%

5-year return

71.85%

65.38%

54.11%

25.40%

N/A

-24.07%

237.92%

Average historical vol

25.15%

28.03%

53.15%

34.34%

63.20%

91.11%

40.06%

Dividend yield

3.23%

2.02%

1.06%

2.85%

N/A

0.10%

N/A

Data as of 1/31/2021

Past performance is no guarantee of future results. Information provided in an EPI Report does not consider the specific profile, objectives or circumstances of any particular investor or suggest any specific course of action.

Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her investment professional. Investment suitability must be independently determined for each individual investor. QF does not make suitability determinations or investment recommendations for investors. EPI utilizes the S&P 500 as its benchmark given that the S&P 500 is considered a barometer of stock performance in the United States. Aspects of the analysis and information found in an EPI Report are based upon simulated and/or hypothetical performance. Simulated and hypothetical performance have inherent limitations and do not represent the actual performance results of any particular investment products. The EPI Report does not guarantee any results or outcomes in the financial markets. Investors should be aware of the methodology used to produce an EPI Report and the inherent limitations when placing reliance on the results. For additional information about EPI Reports, visit the QF website: quietfoundation.com.

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iShares U.S. Aerospace & Defense ETF (ITA) (see “Space funds,” below) is a strong candidate for a diverse aerospace investment. Its top 10 holdings include Boeing, Northrop and Lockheed, while providing exposure to 35 stocks in all. Boeing, the largest holding at 19%, may be attractive given its price is still lagging because of the pandemic’s interference with air travel.

Ethically minded investors may have qualms about investing in aerospace stocks or these ETFs, given their strong ties to defense and the military. However, the innovation these companies pioneer for military craft trickles down to civilian applications. With the advent of Space Force, it’s likely the U.S. government will award more contracts for space-bound technology.

Investors will have to weigh those factors when deciding whether to trade these stocks and funds.

Some may seek more direct ways to add space-exploration companies to their portfolios. Blue Origin and Elon Musk’s SpaceX are privately held and thus unavailable to retail investors. A third option, Richard Branson’s publicly traded Virgin Galactic (SPCE), is pursuing space tourism and scientific missions.

Thus, Virgin Galactic represents a direct space-exploration investment but lacks the steady revenue streams of the larger aerospace firms. Virgin Galactic’s stock price soared early this year, fueled in part by the WallStreetBets Reddit stock buying frenzy. Investors keen on jumping in may want to wait for a pullback in

the price before hopping on this rocket ship.

Investors who want a diverse ETF with exposure to Virgin Galactic and other spacefocused firms could look to the Procure Space ETF (UFO) or SPDR S&P Kensho Final Frontiers ETF (ROKT). Both of those ETFs hold more than 5% of their assets in Virgin Galactic (because of the 2021 price jump).

Other large concentrations in both ETFs include Maxar Technologies (MAXR), a manufacturer of Earth-orbiting satellites, and Aerojet Rocketdyne (AJRD), which will be acquired by Lockheed Martin later this year (likely increasing Lockheed holdings across the ETFs). Both the Procure Space ETF and the Final Frontiers ETF hold all three previously discussed aerospace and defense firms, as well as Raytheon (RTX), another large defense contractor with a space division.

The Procure Space ETF and Final Frontiers ETF both suffer from lower liquidity compared with iShares Aerospace and Defense fund. A fourth potential choice is the SPDR S&P Aerospace and Defense ETF (XAR), which also holds Virgin Galactic as its largest asset. Given the higher concentration in more stable and income-secure firms, the two aerospace and defense funds stand out as the better choices.

They also charge lower expense ratios than the Procure Space and Final Frontiers ETFs, which, at second glance, are strong marketing products with catchy names and symbols but

Several companies are operating potentially profitable space divisions and projects. lack some of the fundamental qualities of an investible ETF. Problematic ETFs Sadly, all four ETFs are weak candidates for options trades and would likely be best for longer-term purchases. Those looking for options plays would be better off sticking with the single stocks discussed earlier. Boeing, especially, has a deep options market with consistently high open interest. Traders can look to single options or spreads, provided they can execute trades at prices that match their goals and probabilities.

Regardless of investors’ chosen space (investing) vehicles, they should take care to perform their preflight checks and never skimp on the due diligence.

James Blakeway serves as CEO of Quiet Foundation, a data science-driven subsidiary of tastytrade that provides fee-free investment analysis services for selfdirected investors.@jamesblakeway

Space funds Space-oriented exchange-traded funds provide diversity for long-term investors but don’t offer the best options plays.

Name Ticker

Procure Space ETF

SPDR Kensho Final Frontiers ETF

iShares Aerospace & Defense ETF

SPDR S&P Aerospace & Defense ETF

UFO

ROKT

ITA

XAR

2-year return

1.07%

51.93%

12.34%

47.23%

5-year return

N/A

N/A

62.05%

124.50%

26.30%

24.54%

27.73%

27.71%

0.75%

0.45%

0.42%

0.35%

Average historical vol Expense ratio Dividend yield

1.00%

0.48%

1.07%

0.63%

Top 3 holdings

SPCE (6.54%) IRDM (6.30%) GILT (5.93%)

SPCE (6.65%) MAXR (6.01%) AJRD (5.56%)

BA (18.44%) RTX (18.43%) LMT (5.42%)

SPCE (5.56%) AXON (4.95%) AJRD (4.45%)

Data as of 1/31/2021

Evaluate any portfolio with Quiet Foundation

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THE TECHNICIAN

A V E T E RA N T RA D ER TAC K LES T EC HNICALS

Failure to Launch

By Tim Knight

t’s no secret that equity investors are always on the lookout for the “next big thing.” In years past, they’ve become fascinated with cannabis stocks, 3-D printing and the gig economy. Lately, thanks to the repeated pronouncements of a few astro-fixated billionaires, space exploration has been attracting a lot of attention, even though the sector offers precious few places to invest.

It wasn’t always this way with “fad” sectors.

Investors could find dozens of ticker symbols in categories like precious metals miners or pot stocks. The stocks may not have been traded in the United States, and they might not have been large—as measured by market cap—but at least investors had something to trade.

The space-exploration category, however, is nearly as empty as space itself. Just about the only “pure” space play is Virgin Galactic (SPCE), which managed to seize a very appropriate ticker symbol. Founded by the world-famous billionaire entrepreneur Richard Branson, Virgin Galactic is in the business of space tourism. At this point, its principal occupation is losing money (having recorded $138 million in losses on just above $3 million in revenue in the first nine months of 2020), but that’s to be expected. The only revenue stream flows from taking customer deposits for space flights scheduled to take place in the future.

I

What (expensive) fun!

No one is pretending this is anything but a fun adventure for the very rich. A deposit on a future flight costs $250,000 per seat, and the website cheerfully invites customers to book up to six seats—the spacecraft’s entire passenger capacity.

Journalists have mistakenly reported that a seat costs $250,000, but that’s merely a deposit, with the full price to be established later. The company asks website visitors how much they would be willing to pay and estimates the maximum price as “more than $1 million.”

Indeed, reserving a seat seems a bit like filling out a (simple) college application. It

60

Astrotech Corp.

ASTC – Astrotech Corp. 2.21 -0.08 -3.70% D: 12/06/2000 C: 175.00 Y: 724.13

800 600 400 200 100 50

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1997

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2001

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2019

Boeing Co. BA – Boeing Co. 210.70 6.38 3.12% D: 07/05/1983 O: 3.56 H: 3.60 L: 3.20 C: 3.36 Y: 382.04

400 250 150 50

1973

1977

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2017

7 BILLION

$

Iridium’s market capitalization

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isn’t merely about handing Branson a bunch of cash. Visitors to the site are asked what aspects of space flight appeal to them. The choices include: • • • • •

Iridium Communications Inc.

45 40

IRDM – Iridium Communications Inc. 48.42. 1.87. 4.02% D: 10/19/2010 O: 8.60 H: 8.70 L: 8.20 C: 8.51 Y: 48.08

35 30 25

The zero-g experience The view Fulfilling a dream Following my heroes Following a higher purpose (whatever that might mean)

Irrespective of the reasons for space travel—be they a higher purpose or bragging rights—Virgin Galactic hasn’t had trouble finding takers. The reservations sold out quickly, and the stock price has been doing sensationally well.

The company’s market cap has reached about $8 billion—no mean feat for a corporation that has scraped together only a few million dollars in revenue and will obviously be losing money for many years to come.

Clearly, this is an extroardinarily speculative instrument, based on the notion that space tourism will become a thriving, rapidly growing business.

The lessons of history As a historical footnote, dirigibles were a thriving, wildly successful industry until the Hindenburg exploded in the 1930s. It took only one disaster to snuff out the world’s love affair with that mode of transportation.

So, it will be crucial to the success of Virgin Galactic that no accident ever befalls it. A regretable event would warrant instantaneous worldwide news coverage. Hopefully, such a thing will never occur, and space tourists can climb aboard without (much) fear.

For those who do, their experience as astronauts will be relatively brief. First, they’ll board SpaceShipTwo, a reusable spacecraft tethered to WhiteKnightTwo, a large aircraft.

Then the plane will ferry the spacecraft to an altitude of 45,000 feet. Next, the spacecraft’s booster rockets will fire to propel it into the darkness of space.

For about 90 minutes, the six passengers can gaze upon the wonder of the cosmos and absorb the spectacular views of Earth below.

They’ll have the experience of a lifetime before returning to Earth and landing in much the same way any jet aircraft would.

Morgan Stanley predicts space-based tour-

20 15

10

2008

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2010

2011

2013

2012

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2018

2019

2020

Lockheed Martin Corp.

LMT – Lockheed Martin Corp. 341.63 -5.64 -1.62% D: 10/16/1985 O: 6.52 H: 6.58 L: 5.88 C: 6.10 Y: 394.75

400 300 200 100 50

1977

1981

1985

1992

1988

1996

2000

2004

2008

2012

2016

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Northrop Grumman Corp.

NOC – Northrop Grumman Corp. 298.04. -2.71 -0-90% D: 01/10/1990 O: 3.41 H: 3.69 L: 3.39 C: 3.51 Y: 347.24

360 280 220 160 120 80 60 40 20

1981

1985

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2001

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2017

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ism could be worth $800 billion a couple of decades from now. Maybe so, maybe not.

If it is—and “first mover advantage” applies— Virgin Galactic has a crucial toehold at the earliest stage of this new industry.

Long, long distance calls Artificial satellites have been zipping around Earth since before anyone had ever heard of The Beatles. Recent orbital ventures have focused on worldwide communications, such as Elon Musk’s Starlink project, which is placing more than 40,000 tiny satellites in orbit to provide global broadband internet access.

Like Musk’s other space venture, SpaceX, his Starlink project is a privately held enterprise. There is, however, one major publicly traded firm focused on space-based communications: Iridium (IRDM). It provides voice, data and IoT (Internet of Things) capabilities, principally to governments and corporations.

For example, cellular technology is useless to ships at sea except with the help of satellites.

Iridium has been fantastically successful and has a market cap approaching $7 billion. The company spent a decade building an enormous saucer base, but after pushing beyond that phase it has blasted to new highs almost without interruption.

SPDR Series Trust ROKT – SPDR Series Trust 40.27 0.59 1.49% D: 01/06/2020 O: 37.77 H: 37.77 L: 37.00 C: 37.18 Y: 40.30 40 38 36 34 32 30 28 26 24 22 Oct '19

Nov '19

Jan '20

Mar '20

May '20

Jul '20

Sep '20

Nov '20

Raytheon Technologies Corp.

RTX – Raytheon Technologies Corp. 69.36. 0.16. 0.23% D: 01/19/2021 O: 69.69 H: 72.37 L: 68.95 C: 69.36 Y: 81.14

99 65 45 35 25 15

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Nominally celestial The public is infatuated with the potential profits of space-based businesses, a fact that’s not lost on the financial services world. Two of the funds created to focus on space “plays” are Kensho Final Frontiers (ROKT) and Procure Space ETF (UFO). If nothing else, space ventures deserve credit for some very creative ticker symbols.

The issue with funds like these is that not many space businesses are publicly traded.

Most of these tiny funds focus on big aerospace and defense companies—Boeing, Lockheed and Honeywell—and other public firms somehow related to space exploration.

Traders seeking a “pure” space play can focus on Virgin Galactic (SPCE) 62

1970

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250,000

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Deposit for a ticket to space

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trades

Virgin Galactic Holdings Inc. SPCE – Virgin Galactic Holdings Inc. 31.65 1.22 4.01% D: 12/27/2019 O: 10.87 H: 11.70 L: 10.62 C: 11.56 Y: 41.48

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Procure ETF Trust II UFO – Procedure ETF Trust II 28.16 1.09 4.03% D: 08/22/2019 O: 24.45 H: 24.53 L: 24.45 C: 24.46 Y: 29.84

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130 MILLION

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$

Virgin Galactic losses in the first three quarters of 2020

Dec '20

But at a giant firm like Boeing, the portion of revenues directly related to space is minuscule. What’s more, supposedly space-related funds sometimes decide to purchase a stake in companies such as ExxonMobil (XOM) because rockets need fuel to get into space.

But having a product with some oblique relationship to space exploration doesn’t exactly make a company a space play.

These two funds have, however, been prospering. Still, that’s mostly because the stock market in general has been making lifetime highs virtually every day. If companies like Martin Marietta (MLM) and Raytheon (RTX) are pushing persistently higher, funds like Procure Space ETF will, too.

If, over time, more “pure” space plays have public offerings, it seems likely that the funds that purport to invest in space will likewise take positions there. Until then, the pickings remain slim for fund managers trying to craft a strategy around this sector.

Past as prologue?

This isn’t the first time in financial history that space exploration has become a hot sector. Orbital Sciences (ORB) merged with Alliant Techsystems (ATK) back in 2014.

Astrotech (ASTC) was founded way back in 1984 to provide NASA with space shuttle equipment.

The space shuttle has long since been mothballed, and Astrotech has virtually no revenue to report these days. Its stock is still publicly traded, but the company is worth only $20 million, and it has lost virtually its entire value, falling from a split-adjusted $800 to $2.

These grim results for earlier “pure space” equities don’t necessarily spell bad news for the present day because technology has advanced and opportunity has expanded.

On the other hand, it’s important not to get caught up in the hype and fantasy of a sector where imagination can run wild.

Humanity has gazed skyward since time immemorial and contemplated what life could be like if only we could conquer space.

For the numbers-based world of space equities, however, it’s useful to keep at least one foot planted on terra firma, even while monitoring some exciting ventures.

Tim Knight has been using technical analysis to trade the markets for 30 years. He hosts Trading the Close daily on the tastytrade network and offers free access to his charting platform at slopecharts.com.

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“A few hours before leaving space for the last time, I went to the Cupola to take a few final shots. After I shot this one, I looked at the preview screen on the camera and said, ‘OK, I’m done.

No more photos after this.’ After over 300,000 pictures, I had saved the best for last.”

—Col. Terry Virts

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PHOTOGRPAH: TERRY VIRTS

THE LAST PICTURE

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