If investors with $1T thought AGI soon, and therefore tried to buy up a portfolio of semiconductor, cloud, and AI companies (a much more profitable and capital-efficient strategy than betting on real interest rates) they could only a buy a small fraction of those industries at current prices. There is a larger pool of investors who would sell at much higher than current prices, balancing that minority.
Yes, it’s weighted by capital and views on asset prices, but still a small portion of the relevant capital trying to trade (with risk and years in advance) on a thesis impacting many trillions of dollars of market cap aren’t enough to drastically change asset prices against the counter trades of other investors.
There is almost no discussion of AGI prospects by financial analysts, consultants, etc (generally if they mention it they just say they’re not going to consider it). E.g. they don’t report probabilities it would happen or make any estimates of the profits it would produce.
Rohin is right that AGI by the 2030s is a contrarian view, and that there’s likely less than $1T of investor capital that buys that view and selects investments based on it.
I, like many EAs, made a lot of money betting in prediction markets that Trump wouldn’t overturn the 2020 election. The most informed investors had plenty of incentive to bet, and many did, but in the short term they were swamped by partisan ‘dumb money.’ The sane speculators have proportionally a bit more money to correct future mispricings after that event, but not much more. AI bets have done very well over the last decade but they’re still not enough for the most informed people to become a large share of the relevant pricing views on these assets.
2. You offer what is effectively a full general argument against market prices ever being swayed by anything—a bit more on this point here. Price changes do not need to be driven by volume! (cf the no-trade theorem, for the conceptual idea)
3. I’m not sure if this is exactly your point about prediction markets (or if you really want to talk about total capital, on which see again #2), but:
Sovereign debt markets are orders of magnitude larger than PredictIt or other political prediction markets. These are not markets where individual traders are capped to $600 max positions and shorting is limited (or whatever the precise regulations are)! Finding easy trades in these markets is …not easy.
But the stocks are the more profitable and capital-efficient investment, so that’s where you see effects first on market prices (if much at all) for a given number of traders buying the investment thesis. That’s the main investment on this basis I see short timelines believers making (including me), and has in fact yielded a lot of excess returns since EAs started to identify it in the 2010s.
I don’t think anyone here is arguing against the no-trade theorem, and that’s not an argument that prices will never be swayed by anything, but that you can have a sizable amount of money invested on the AGI thesis before it sways prices. Yes, price changes don’t need to be driven by volume if no one wants to trade against. But plenty of traders not buying AGI would trade against AGI-driven valuations, e.g. against the high P/E ratios that would ensue. Rohin is saying not that the majority of investment capital that doesn’t buy AGI will sit on the sidelines but will trade against the AGI-driven bet, e.g. by selling assets at elevated P/E ratios. At the moment there is enough $ trading against AGI bets that market prices are not in line with the AGI bet valuations. I recognize that means the outside view EMH heuristic of going with the side trading more $ favors no AGI, but I think based on the object level that the contrarian view here is right.
It’s just a simple illustration that you can have correct minorities that have not yet been able to grow by profit or imitation to correct prices. And the election mispricings also occurred in uncapped crypto prediction markets (although the hassle of executing very quickly there surely deterred or delayed institutional investors), which is how some made hundreds of thousands or millions of dollars there.
If investors with $1T thought AGI soon, and therefore tried to buy up a portfolio of semiconductor, cloud, and AI companies (a much more profitable and capital-efficient strategy than betting on real interest rates) they could only a buy a small fraction of those industries at current prices. There is a larger pool of investors who would sell at much higher than current prices, balancing that minority.
Yes, it’s weighted by capital and views on asset prices, but still a small portion of the relevant capital trying to trade (with risk and years in advance) on a thesis impacting many trillions of dollars of market cap aren’t enough to drastically change asset prices against the counter trades of other investors.
There is almost no discussion of AGI prospects by financial analysts, consultants, etc (generally if they mention it they just say they’re not going to consider it). E.g. they don’t report probabilities it would happen or make any estimates of the profits it would produce.
Rohin is right that AGI by the 2030s is a contrarian view, and that there’s likely less than $1T of investor capital that buys that view and selects investments based on it.
I, like many EAs, made a lot of money betting in prediction markets that Trump wouldn’t overturn the 2020 election. The most informed investors had plenty of incentive to bet, and many did, but in the short term they were swamped by partisan ‘dumb money.’ The sane speculators have proportionally a bit more money to correct future mispricings after that event, but not much more. AI bets have done very well over the last decade but they’re still not enough for the most informed people to become a large share of the relevant pricing views on these assets.
1. We would welcome engagement from you regarding our argument that stock prices are not useful for forecasting timelines (the sign is ambiguous and effect noisy).
2. You offer what is effectively a full general argument against market prices ever being swayed by anything—a bit more on this point here. Price changes do not need to be driven by volume! (cf the no-trade theorem, for the conceptual idea)
3. I’m not sure if this is exactly your point about prediction markets (or if you really want to talk about total capital, on which see again #2), but:
Sovereign debt markets are orders of magnitude larger than PredictIt or other political prediction markets. These are not markets where individual traders are capped to $600 max positions and shorting is limited (or whatever the precise regulations are)! Finding easy trades in these markets is …not easy.
But the stocks are the more profitable and capital-efficient investment, so that’s where you see effects first on market prices (if much at all) for a given number of traders buying the investment thesis. That’s the main investment on this basis I see short timelines believers making (including me), and has in fact yielded a lot of excess returns since EAs started to identify it in the 2010s.
I don’t think anyone here is arguing against the no-trade theorem, and that’s not an argument that prices will never be swayed by anything, but that you can have a sizable amount of money invested on the AGI thesis before it sways prices. Yes, price changes don’t need to be driven by volume if no one wants to trade against. But plenty of traders not buying AGI would trade against AGI-driven valuations, e.g. against the high P/E ratios that would ensue. Rohin is saying not that the majority of investment capital that doesn’t buy AGI will sit on the sidelines but will trade against the AGI-driven bet, e.g. by selling assets at elevated P/E ratios. At the moment there is enough $ trading against AGI bets that market prices are not in line with the AGI bet valuations. I recognize that means the outside view EMH heuristic of going with the side trading more $ favors no AGI, but I think based on the object level that the contrarian view here is right.
It’s just a simple illustration that you can have correct minorities that have not yet been able to grow by profit or imitation to correct prices. And the election mispricings also occurred in uncapped crypto prediction markets (although the hassle of executing very quickly there surely deterred or delayed institutional investors), which is how some made hundreds of thousands or millions of dollars there.