So, Nonlinear-affiliated people are here in the comments disagreeing, promising proof that important claims in the post are false. I fully expect that Nonlinear’s response, and much of the discussion, will be predictably shoved down the throat of my attention, so I’m not too worried about missing the rebuttals, if rebuttals are in fact coming.
But there’s a hard-won lesson I’ve learned by digging into conflicts like this one, which I want to highlight, which I think makes this post valuable even if some of the stories turn out to be importantly false:
If a story is false, the fact that the story was told, and who told it, is valuable information. Sometimes it’s significantly more valuable than if the story was true. You can’t untangle a web of lies by trying to prevent anyone from saying things that have falsehoods embedded in them. You can untangle a web of lies by promoting a norm of maximizing the available information, including indirect information like who said what.
Think of the game Werewolf, as an analogy. Some moves are Villager strategies, and some moves are Werewolf strategies, in the sense that, if you notice someone using the strategy, you should make a Bayesian update in the direction of thinking the person using that strategy is a Villager or is a Werewolf.
Lots of the comments here are pointing at details of the markets and whether it’s possible to profit off of knowing that transformative AI is coming. Which is all fine and good, but I think there’s a simple way to look at it that’s very illuminating.
The stock market is good at predicting company success because there are a lot of people trading in it who think hard about which companies will succeed, doing things like writing documents about those companies’ target markets, products, and leadership. Traders who do a good job at this sort of analysis get more funds to trade with, which makes their trading activity have a larger impact on the prices.
Now, when you say that:
I think what you’re claiming is that market prices are substantially controlled by traders who have a probability like that in their heads. Or traders who are following an algorithm which had a probability like that in the spreadsheet. Or something thing like that. Some sort of serious cognition, serious in the way that traders treat company revenue forecasts.
And I think that this is false. I think their heads don’t contain any probability for transformative AI at all. I think that if you could peer into the internal communications of trading firms, and you went looking for their thoughts about AI timelines affecting interest rates, you wouldn’t find thoughts like that. And if you did find an occasional trader who had such thoughts, and quantified how much impact they would have on the prices if they went all-in on trading based on that theory, you would find their impact was infinitesimal.
Market prices aren’t mystical, they’re aggregations of traders’ cognition. If the cognition isn’t there, then the market price can’t tell you anything. If the cognition is there but it doesn’t control enough of the capital to move the price, then the price can’t tell you anything.
I think this post is a trap for people who think of market prices as a slightly mystical source of information, who don’t have much of a model of what cognition is behind those prices.