Reality is nonlinear, involving higher dimensions than anything simplistic statistical techniques can model correctly. If you want to model reality you need to use high-dim approaches that can adequately approximate #complexity #coronavirus

THE RECKONING Michael Burry just bet $1.1 billion that the AI revolution is a lie. Not the technology. The valuation. Eighty percent of his entire portfolio now sits in put options against Nvidia and Palantir … the twin gods of the machine age. This is not hedging. This is conviction. The same conviction that made him $700 million when he shorted the housing bubble while the world called him insane. Burry sees it again. The same fever. The same math that doesn’t work. Nvidia trades at 54 times earnings. Historical baseline: 20. Palantir at 449 times. These are numbers that require perfection forever. Numbers that have never survived reality. In 1999, tech stocks drove 80% of market gains before surrendering 78% in the crash. Today, AI commands 75% of S&P 500 returns. The script hasn’t changed. Only the costume. Global AI spending has exploded to $200 billion annually … up 120% … yet productivity gains crawl below 20%. We are building cathedrals before we’ve proven the god exists. Fifty-four percent of fund managers now call this a bubble. Not pessimists. The people managing the money. The energy math alone is apocalyptic. AI will consume 1% of global electricity by 2027. That’s $100 billion in costs against $200 billion in spending … before a single dollar of proven return. Michael Burry isn’t betting against artificial intelligence. He’s betting against human nature … our willingness to mistake momentum for permanence, narrative for numbers, revolution for immunity from gravity. Every transformative technology reaches this moment: where promise becomes price, where believers stop calculating and start crusading. Electricity was real. The market crash of 1929 was real. Both were true. Palantir’s CEO calls Burry’s position “batshit crazy.” Of course he does. When you’re the priest, the skeptic is always the heretic. But Burry has already been the heretic once. He bought credit default swaps when Wall Street laughed. He walked out with generational wealth when Wall Street walked out with nothing. This is $5 trillion in AI market value balanced on one assumption: that exponential curves never flatten, that competition never arrives, that margins never compress, that reversion to the mean died with the old economy. It didn’t. If Q4 earnings crack, if Nvidia’s 75% margins slip, if adoption stalls or chips supplies fracture … the unwind will reshape markets for a generation. Not because AI fails. Because math finally matters again. Burry may be early. He usually is. But early and wrong are separated only by time. And time has never lost. The machine gods will endure. The question is whether their disciples will survive the fall. Watch the margins. Watch the energy. Watch what happens when faith collides with physics. History doesn’t repeat. But it rhymes. And this verse sounds disturbingly familiar.

America's Sixth Default Is Coming - What It Means For Gold And Your Wealth zerohedge.com/precious-metal…

Forgive me for sounding like a broken record, but today’s market action is so illustrative of something I've been trying to convey for a while now. The notable thing about gold today isn’t just that its price hit yet another record high, but how it has done so: Gold is surging on the same day that US stock indices have over 1%. This simultaneous climb in both a classic safe haven and risk assets is a powerful illustration that the drivers of the current gold rally are different from historical patterns. (For a deeper dive into this, please see my conversation on CNBC from early this morning--linked posted earlier.) #economy #markets #gold

Some important context for the $800 gold peak in 1980 that Jim Simons talks about in the great 5-minute clip below (h/t @BenjamDavies): Gold would have to be $48,000/oz to equal its 1980 valuation relative to US foreign held USTs of 135%. Today that % is 12%👇

In FooledbyRandomness, I stressed that to understand the world you need to nurture the skill in separating the anecdotal from the statistical, the noise from the signal, & the salient from the representative. I am now adding the difference between information and propaganda.

The Classical Turkey Problem. The fragility of a system isn't measured by its past stability, but from the opposite, its tolerance to variability. From the Black Swan (2007): Syria less volatile than Italy, but much more fragile. That idiot @JakeSullivan46 was fooled by Gaza.

The Financial Modelers' Manifesto by Emanuel Derman and Paul Wilmott Preface @EmanuelDerman & Paul Wilmot

#WeaponsOfMathDestruction @mathbabedotorg Veri bilimcileri de modellerinin olası yanlış kullanımları ve yorumlanmalarına dair bir hipokrat yemini etmeli! Piyasaların 2008’deki çöküşünden sonra finans mühendisi #quant @EmanuelDerman & Paul Wilmot bir yemin kaleme alıyorlar👏

Bugün, yarın ve daima Cumhuriyet’in ışığında...🫶🫶🫶 #29EkimCumhuriyetBayramımızKutluOlsun 🇹🇷🇹🇷🇹🇷 #Cumhuriyet101Yaşında 🇹🇷🇹🇷🇹🇷

"Bozulduğu zaman insandan daha korkunç bir yaratık yoktur." Tolstoy Yoğun Ölüm Ünitesi.!! #bebekkatilleri

Haftanın Yatırım Sözü: “Geri bakınca, şurası net ki, tarih ve felsefe okumak, borsaya hazırlanmak için istatistik okumaktan çok daha isabetli oldu. Yatırım bilimden ziyade bir sanattır ve herşeyi salt rakamlara dökmeye çalışanlar ciddi dezavantajlıdır.”  — Peter Lynch

What is probability really? Nassim Taleb (@nntaleb) explains to me how he understands it:

No author has shaped my worldview more than Nassim Taleb (@nntaleb). I stumbled on The Black Swan eight years ago, then inhaled the rest of the Incerto. I've increasingly come to appreciate the importance of its ideas to prolonging the human story. Was an honour to speak with Nassim on the podcast. Hard to summarise our conversation, but the timestamps below capture the gist. Enjoy! Timestamps: (0:00:55) - Heuristics for knowing when you're in Mediocristan versus Extremistan. (0:06:06) - Are certain tail exponents intrinsic? (0:10:30) - Why hasn't Universa's tail hedging strategy now been fully priced in? (0:11:52) - Does the power law distribution of startup returns mean VCs should concentrate their bets, or spray and pray? (0:15:20) - Nassim's 30-minute take on the field of behavioural economics. (0:48:57) - Nassim's 20-minute take on superforecasting. (1:11:03) - The Precautionary Principle and AI. (1:17:28) - What are LLMs doing? (1:23:10) - War, violence, & "the empirical mean is not the real mean". (1:39:17) - Covid, & how Western governments think about tail risk. (1:43:38) - What's the most important thing people in social science get wrong about correlation? (1:52:58) - How does Nassim explain the perspicacity of the Russian school of probability? (1:55:56) - Why doesn't Hayek's knowledge argument extend to prediction markets? (1:58:26) - If mean absolute deviation is a better measure than standard deviation, why has the latter become commonplace? (2:01:09) - Nassim's next book, and what he's up to at the moment.

ASYMMETRY As we keep repeating, things are "unexplained" when using the "normal", at best semi-sedentary person, as control. A lot wd be suddenly "explainable" if we used the hunter-gatherer or someone w/energy expenditure >3500 calories as control. (#KLdivergence, #entropy)

“Orta gelir tuzağına düşmek kural, tuzaktan kaçabilmek istisna.” @ussal Dünya Bankası Kalkınma Raporu’nda “demlenme” (infusion) v “inovasyon” sürecine işaret ediyor. Yatırımdan demlenmeye, demlenmeden inovasyona geçebilen ülke sayısı maalesef çok az. ekonomim.com/kose-yazisi/dun…

Bol bol gulduren, dusunduren ve ogreten bir Peter Lynch konusmasi. Tam da bugunlerde gulmeye ihtiyaci olan ciddi yatirimcilara gore: ) Absolutely brilliant and utterly funny speech by Peter Lynch. A must-see by serious investors with a need for a big laugh nowadays :)

Nearly 33 years of (near) Zero Interest Rates (ZIRP) and 23 years of Quantitative Easing come at a price you eventually must pay. (Japan was always mentioned by the QE fools as a place where the strategy worked).

🚀🌐 Stanford İnsan Merkezli Yapay Zeka Enstitüsü'nün 2024 Yapay Zeka Endeksi Raporundan Heyecan Verici Bilgiler! 🌟 aiindex.stanford.edu/report/ #AI #ArtificialIntelligence #AITrends #TechInnovation #FutureOfAI #AutoML #FeatureStore #AutoTrain #MachineLearning #DataScience #TechNews

The world is a large theater with a small exit door. The definition of the sucker is someone who focuses on the size of the theater, not the size of the door.

Looks like I will update Fooled by Randomness, now 23 years old, by adding a lot of medical stuff, disinformation (playing on anecdotes), & pseudoempiricism (misuse of the law of large numbers). New Title? Fooled by Randomness: The Hidden Role of Chance in Medicine, the Markets, & in Life