In this comment, you are decisively rejecting the semi-strong form of the EMH, or at least carving out an exception where AI is concerned. Specifically, the semi-strong EMH states that “ because public information is part of a stock’s current price, investors cannot utilize either technical or fundamental analysis, though information not available to the public can help investors.”
The OP is explicitly and carefully written as an argument aimed at people who do subscribe to the (semi-strong or strong) EMH. For those people, it is correct to ascribe “semi-mystical” powers of prediction to the market. You can make a separate argument that the EMH is false, or that the reasoning of this article is flawed. But your comment makes it sound like it’s not the same thing to reject the EMH as it is to deny that “cognition is there” on this issue. I say that rejection of the EMH and denial of market cognition are the same belief.
It’s only an argument against the EMH if you take the exploitability of AI timeline prediction as axiomatic. If you unpack the EMH a little, traders not analyzing transformative AI can also be interpreted as evidence of inexploitability.
The OP described how a trader might exploit AI timeline prediction for financial gain if they believed in short timelines, such as by borrowing. Are you saying they are wrong, and that it’s not possible to exploit low real rates in this manner? I have to point out that this is not the argument you were making in the comment I responded to. Markets certainly are thinking very hard about AI, including the immediately transformative possibilities of LLMs like ChatGPT for search. Even if markets ignored the possibility of doom, it seems like they’d at least be focusing heavily on the possibility for mega-profits from controlling a beneficial AI. And it’s not like these ideas aren’t out there in the world—advances in AI are a major topic of world conversation.
At the very least, if markets were considering the possibility of AI takeoff and concluding it was inexploitable, that would not look like “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.” It would look like firms thinking very hard about how to financially exploit AI takeoff and concluding explicitly that it is not possible.
In this comment, you are decisively rejecting the semi-strong form of the EMH, or at least carving out an exception where AI is concerned. Specifically, the semi-strong EMH states that “ because public information is part of a stock’s current price, investors cannot utilize either technical or fundamental analysis, though information not available to the public can help investors.”
The OP is explicitly and carefully written as an argument aimed at people who do subscribe to the (semi-strong or strong) EMH. For those people, it is correct to ascribe “semi-mystical” powers of prediction to the market. You can make a separate argument that the EMH is false, or that the reasoning of this article is flawed. But your comment makes it sound like it’s not the same thing to reject the EMH as it is to deny that “cognition is there” on this issue. I say that rejection of the EMH and denial of market cognition are the same belief.
Source: https://www.investopedia.com/ask/answers/032615/what-are-differences-between-weak-strong-and-semistrong-versions-efficient-market-hypothesis.asp
It’s only an argument against the EMH if you take the exploitability of AI timeline prediction as axiomatic. If you unpack the EMH a little, traders not analyzing transformative AI can also be interpreted as evidence of inexploitability.
The OP described how a trader might exploit AI timeline prediction for financial gain if they believed in short timelines, such as by borrowing. Are you saying they are wrong, and that it’s not possible to exploit low real rates in this manner? I have to point out that this is not the argument you were making in the comment I responded to. Markets certainly are thinking very hard about AI, including the immediately transformative possibilities of LLMs like ChatGPT for search. Even if markets ignored the possibility of doom, it seems like they’d at least be focusing heavily on the possibility for mega-profits from controlling a beneficial AI. And it’s not like these ideas aren’t out there in the world—advances in AI are a major topic of world conversation.
At the very least, if markets were considering the possibility of AI takeoff and concluding it was inexploitable, that would not look like “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.” It would look like firms thinking very hard about how to financially exploit AI takeoff and concluding explicitly that it is not possible.