How to Think Like a Genius 1 — Mid-Future
Author(s): Scott Douglas Jacobsen and Rick Rosner
Publication (Outlet/Website): Medium (Rick Rosner)
Publication Date (yyyy/mm/dd): 2017/06/02
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Scott Douglas Jacobsen: We have external devices to calculate, to compute. These assist in numerous ways such as cats fighting dogs or Mathematica to help mathematicians to figure out theorems. How might the future look in mid-future to far future?
Rick Rosner: All of human history up to now has been the Age of Low-Hanging Fruit. We have been able to find relationships among things that are fairly easily expressed and don’t have that many variables. In massive computer networks like all the computers who are connected to do flash trading on the stock market, you can have unpredictable events, flash crashes, that remain somewhat inexplicable after the fact, even after people try to analyze them. Although, I’m not sure how inexplicable. We will, as our technology increases, begin to exploit less simple sets of relationships among potential variables and find new things in the world whose relationships aren’t as clear and apparent. We’ll find new relationships in the world that aren’t as simple or obvious as the relationships that we’re used to in math and physics and analyzing human behavior.
In the 80s, Wall Street was invaded by the quants. I think they’re called that, which are fairly large numbers of people with thorough and sophisticated mathematical training. People who are post-docs in physics and math, who hadn’t been on Wall Street before and were able to come up with algorithms. Before the 80s, in Wall Street, trading was done by ballsy guys that just went with their guts, but the 80s come in and the quants come in in the 80s and they tease out mathematical relationships, trends, algorithms, to detect trading patterns. Wall Street became mathematicized. The early quants and the companies that hired them made a bunch of money as they got out ahead — because they were using trading techniques that were more sophisticated than the rest of Wall Street and then the rest of Wall Street caught up without becoming more predictable because as things became computerized and I don;’ know what the volume of trading has increased by in the 70s and now, but it is probably 500-fold because of all of the computer trading. Shares change hands in thousandths of a second.
So, the easy math has been done, and now it’s the advantages coming up with the slightly faster algorithms or the fiber optic cables that give gains of a few microseconds faster than the other people, but over the next 30 years the informational capacity of humans and their artificial intelligent or engineered assistants will lead to a second wave of find more complicated and subtle relationships in the financial markets and probably in the fields of science, math, and other human endeavours.
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