You and I have been exchanging messages since July 2005 (I justHiggenbotham wrote: > I'm not the best human trader in the world, or even close. Even
> the fact that I can beat the average bot is notable. It's even
> more notable that I beat the average bot playing their own game of
> day trading individual stocks, which I have never done. You're
> insinuating in the rest of this post that I'm an uninformed
> idiot. Yet even an uniformed idiot can beat an average bot. That's
> incredible when you think about it. The journalists and silicon
> valley really should come calling to investigate.
> The original premise in starting this discussion were articles
> talking about what AI can do and giving trading as the primary
> example of what computers can now to better than humans. It
> doesn't really look to me like they can. I can't speak to the
> other examples cited, like computers can diagnose illnesses better
> than doctors, but I'm quite skeptical given that the primary
> example that was pointed to is bunk.
checked), and you know very well that I value your opinion and
don't consider you an uninformed idiot.
But your position on this issue makes absolutely no sense to me. You
keep using the argument that since you're beating the bots, therefore
no bot can ever be better than you are. You must know that argument
doesn't make sense. You made that argument several times, and I
ignored it, but the last time I felt I had to answer it by saying that
you're beating the average bots, not the best bots.
OK, that's one decision by Buffett, based on intuition and insideHiggenbotham wrote: > This demonstrates some of the the intangibles Buffett relies on to
> value equity.
knowledge, involving one company, Nebraska Furniture Mart. Let me
give you a hypothetical example on the other side.
There are hundreds of stock markets, bond markets, commodities
markets, and other kinds of public markets in the world, with data
available online in real time. Data on perhaps millions of different
stocks, bonds and other financial instruments are available online.
In addition, there are hundreds of thousands of media sources
available online, many publishing financial data.
So let's suppose that there's a small mining company in Mongolia whose
stock price suddenly falls sharply. And suppose the same thing
happens with a small mining company in Australia. An AI machine sees
that, and also sees from publicly available media records that a
factory in Bulgaria is a major customer of both those mining
companies, and that the likely reason that the two mining companies'
stocks fell is because the factory had canceled large orders, but
those cancellations hadn't yet become public, and that once they did
become public, the factory's stock price would fall sharply. The AI
machine issues trades to short the Bulgaria factory stock, and makes a
bunch of money.
By monitoring millions of transactions worldwide each day, the AI
machine can reach conclusions that you can't reach and Warren Buffett
can't reach, and could make trades that no human could match. Buffett
could make one valid decision about one company, Nebraska Furniture
Mart, but in the same amount of time, the AI machine could make
thousands of equally valid decisions about hundreds of companies.
What I would like is completely beside the point. I no longer live inHiggenbotham wrote: > You would like to believe that's what I'm saying, but it's
> not. What I'm saying is that a situation will arise (like the
> flash crash only a lot worse) where it will be once again
> demonstrated that computers don't know how to value equity and
> Humpty Dumpty will not be able to be put back together. While the
> periphery breaks down rather slowly at first, the capital cities
> of the hegemon should collapse suddenly and violently.
a world where what I would like or would like to believe has any
relevance to the real world. I've become a pathetic insane pariah who
is no longer part of the real world in any sense, but merely an
observer counting down the minutes.
So, first off, I had no idea you were alluding to the flash crash.
You were talking about something being "disruptive," and that word is
used a lot these days, such as in, "Amazon is being disruptive to the
grocery business and the prescription business." I was assuming you
meant something like that.
But I completely agree that computers doing trades will be disruptive
in the sense that you mean, and could turn any ordinary financial
crisis into a global financial crisis on steroids. However, that
doesn't mean that computers shouldn't be permitted to do trades. It's
impossible to stop that kind of technological progress, though there
will be people who don't like it. And there's no reason to believe
that there will be fewer or less severe financial crises if some
particular regulation is put in place blocking certain kinds of bot
transactions (assuming that's what you're suggesting), even if such a
regulation were possible, which I doubt. What's going to happen is
going to happen, and putting one's faith in some great
regulation-in-the-sky isn't going to change things.
