What follows below is basically a collage of comments from a good friend.
First, a very useful definition of AI: https://x.com/BrianRoemmele/status/1765033319916531828?s=20
Now, Cathie Wood's amazing talk:
https://www.ted.com/talks/cathie_wood_why_ai_will_spark_exponential_economic_growth?hasProgress=true
Here's a summary of Cathie Wood's TED Talk on AI and economic growth in point form:
- *Emergence of Five Innovation Platforms*: Cathie Wood highlights the simultaneous evolution of five major innovation platforms: artificial intelligence (AI), robotics, energy storage, blockchain technology, and multi-omic sequencing. This convergence is unprecedented and is expected to significantly change growth dynamics.
- *Investment Challenges and Opportunities*: Wood discusses the historical skepticism around sustained growth rates for companies, citing Amazon as an example of a company that defied these expectations with its consistent growth (25%) over decades.
- *AI Training Costs and Exponential Growth: The cost of training AI is decreasing by 70% per year, accelerating the shift from linear to *exponential growth. This shift is largely driven by advancements in generative AI.
- *Convergence and Growth Opportunities: The convergence of the five innovation platforms, especially through generative AI, is creating explosive growth opportunities. Wood uses *autonomous taxi platforms as an example, predicting a revenue opportunity of $8 to $10 trillion in the next 5 to 10 years.
- *Impact on Global GDP: The convergence of these platforms and the productivity gains they will bring are expected to *accelerate global GDP growth from the current 2-3% range to a 6-9% range, driven by productivity.
- *The Potential of Knowledge Workers: Wood believes that the productivity of the world's approximately one billion knowledge workers will quadruple, leading to *rapid growth gains, lower-than-expected inflation, and significant wealth creation.
- *Distribution of Productivity Gains: Productivity gains are expected to result in *increased profits, higher wages, and lower prices, leading to a deflationary period contrary to current inflation concerns.
- *Financial Markets and Monetary Policy*: Wood criticizes current monetary policy focused on combating inflation, arguing that we are entering a period of deflation driven by innovation and productivity gains.
- *Future Prospects and the Role of the Fed*: She expresses optimism for the next five to ten years, suggesting that the Federal Reserve may need to adjust its approach to reflect the deflationary impact of real growth and productivity.
- *Conclusion: The Future of Global Equity Markets: Wood predicts that *the valuation of disruptive or transformative innovation in global equity markets will increase from $13 trillion to over $200 trillion, driven by the convergence of the five innovation platforms.
- *Impact of Creative Destruction*: The talk concludes with a discussion on the transformative impact of these technologies across various sectors, emphasizing the importance of embracing change and the significant opportunities it presents.
Who is she?
"Since fonding ARK Invest in 2014, Wood has grown the firm to manage nearly $24 billio in total assets. Her flagship Ark Innovation Fund has delivered an average anual return of almost 45% over the past five years, showcasing her successfu investment strategy"
This is what I am mulling about intensively- trying to visualise is there REALLY a new reality unfolding? Is this really like the early 20th century when suddenly there was a breathtaking eruption & convergence of technologies: electricity & home appliances, radio & television, railways, refrigerations, automobiles, aviation (both propeller & jet turbines) not to mention plastics & material sciences, atomic physics & penicillin & countless medical innovations etc ? (Of course all that tech boom was rapidly followed by two world wars - but the underlying economics of the industries did not change). Are we at this era again after a century & the false promise of the disastrous tech boom
People like Cathie Wood says : we are at that point but exponentially more so.
A friend played devil'advocate/lawyer, and devised the following dialogue:
In this more aggressive cross-examination, Lawyer will confront Cathie Wood with the criticisms and concerns raised by Ray Dalio, Warren Buffett, and others regarding Bitcoin's reliability and risks. The script will reflect a more confrontational approach.
---
*Lawyer:* Ms. Wood, you've made some audacious claims about Bitcoin's future, suggesting it could reach astronomical prices. Yet, we've seen Bitcoin's value plummet from $45,000 to $20,000 in just a few months[1]. How can you defend such volatility as a feature of a reliable investment?
*Cathie Wood:* The volatility we see in Bitcoin is not unlike the early days of other transformative technologies. It's a sign of a maturing market and the growing pains that come with it[1].
*Lawyer* "Growing pains"? Is that what you call a collapse that wiped out $60 billion in value, Ms. Wood? Ray Dalio has serious doubts about Bitcoin's viability as a currency or store of wealth[6]. Warren Buffett won't even dignify it as an investment, calling it a "gambling token"[3][19][27]. Are they just old-fashioned, or could it be that your optimism is blinding you to the glaring flaws of Bitcoin?
*Cathie Wood:* I have great respect for Mr. Dalio and Mr. Buffett, but Bitcoin is a new kind of asset. Its unique properties, like a fixed supply, are what make it so promising[5].
*Lawyer* "Promising"? Let's talk about the environmental disaster that is Bitcoin mining. It's an energy hog, contributing significantly to the climate crisis[4]. How can you reconcile your support for Bitcoin with the irreversible damage it's causing to our planet?
*Cathie Wood:* The energy consumption of Bitcoin is an issue, but it's also an area where innovation can lead to more sustainable solutions[4].
*Lawyer* Innovation? Or wishful thinking? And what about the regulatory minefield that awaits Bitcoin? The IMF warns of the challenges in regulating this rapidly evolving space[2]. If governments decide to crack down, what happens to your rosy predictions then?
*Cathie Wood:* Regulation is indeed a complex issue, but it can also bring stability and growth to the cryptocurrency market[2].
*Lawyer*: Stability? Growth? Or perhaps a spectacular downfall? And let's not forget the elephant in the room – Bitcoin's use in illicit activities. Even the Treasury Secretary has expressed concerns about cryptocurrencies being used for criminal purposes[3]. How do you justify promoting an asset that could be undermining our financial system?
*Cathie Wood:* The data shows that the majority of cryptocurrency transactions are not used for criminal activity. It's a narrative that's been disproven time and again[3].
*Lawyer:* Disproven? Or conveniently overlooked? Your faith in Bitcoin is commendable, Ms. Wood, but it seems to fly in the face of reality. The risks are massive, the criticisms are mounting, and yet you remain unshaken. One has to wonder if your confidence is based on evidence or mere speculation.
---
This script takes a more aggressive stance, challenging Cathie Wood's views on Bitcoin by emphasizing the potential downsides and aligning with the critical perspectives of Ray Dalio and Warren Buffett.
Sources
[1] What Skeptics Get Wrong About Crypto's Volatility - Harvard Business Review https://hbr.org/2022/07/what-skeptics-get-wrong-about-cryptos-volatility
[2] Regulating Crypto - International Monetary Fund https://www.imf.org/en/Publications/fandd/issues/2022/09/Regulating-crypto-Narain-Moretti
[3] The False Narrative Of Bitcoin's Role In Illicit Activity - Forbes https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity/?sh=58d990b83432
[4] Bitcoin is terrible for the environment – can it ever go green? - The Guardian https://www.theguardian.com/technology/2023/apr/26/bitcoin-mining-climate-crisis-environmental-impact
[5] What drives volatility in Bitcoin market? - ScienceDirect.com https://www.sciencedirect.com/science/article/pii/S1544612322004378
[6] Why Governments Are Wary of Bitcoin - Investopedia https://www.investopedia.com/articles/forex/042015/why-governments-are-afraid-bitcoin.asp
[7] Cryptocurrency Research Firms Vastly Underestimate Illicit Payments ... https://www.moneylaundering.com/news/cryptocurrency-research-firms-vastly-underestimate-illicit-payments-critics-claim/
[8] Fact-Checking 8 Claims About Crypto's Climate Impact - Time https://time.com/6193004/crypto-climate-impact-facts/
[9] The volatility of Bitcoin and its role as a medium of exchange and a store of value | Empirical Economics - SpringerLink https://link.springer.com/article/10.1007/s00181-020-01990-5
[10] Crypto Contagion Underscores Why Global Regulators Must Act Fast to ... https://www.imf.org/en/Blogs/Articles/2023/01/18/crypto-contagion-underscores-why-global-regulators-must-act-fast-to-stem-risk
[11] Overstating Crypto Crime Won't Lead to Sound Policy | Cato at Liberty Blog https://www.cato.org/blog/overstating-crypto-crime-wont-lead-sound-policy
[12] Environmental effects of bitcoin - Wikipedia https://en.wikipedia.org/wiki/Environmental_effects_of_bitcoin
[13] [PDF] The Price Volatility of Bitcoin - DiVA portal http://www.diva-portal.org/smash/get/diva2:782588/fulltext01.pdf
[14] Regulating crypto: Why, how, and who | Brookings https://www.brookings.edu/collection/regulating-crypto-why-how-and-who/
[15] Bitcoin Welcomes All, But It's No Haven For The Naive Criminal https://www.forbes.com/sites/digital-assets/2023/08/17/bitcoin-welcomes-all-but-its-no-haven-for-the-naive-criminal/?sh=58d334863f0e
[16] Climate Impacts of Bitcoin Mining in the U.S. https://climate.mit.edu/posts/climate-impacts-bitcoin-mining-us
[17] Why Is Bitcoin Volatile? - Investopedia https://www.investopedia.com/articles/investing/052014/why-bitcoins-value-so-volatile.asp
[18] The Challenges of Regulating Crypto Assets - Sanction Scanner https://sanctionscanner.com/blog/the-challenges-of-regulating-crypto-assets-324
[19] Addressing Persisting Bitcoin Criticisms - Fidelity Digital Assets https://www.fidelitydigitalassets.com/research-and-insights/addressing-persisting-bitcoin-criticisms
[20] Why Bitcoin Is Bad for the Environment | The New Yorker https://www.newyorker.com/news/daily-comment/why-bitcoin-is-bad-for-the-environment
[21] Explaining Crypto's Volatility - Forbes https://www.forbes.com/sites/nicolelapin/2021/12/23/explaining-cryptos-volatility/?sh=58dcd85f7b54
[22] The Complete Argument Against Crypto - Stephen Diehl https://www.stephendiehl.com/blog/complete.html
[23] Is Bitcoin Used by Criminals? - Onramp Invest https://onrampinvest.com/is-bitcoin-used-by-criminals/
[24] The environmental impact of bitcoin mining explained - TechTarget https://www.techtarget.com/sustainability/feature/The-environmental-impact-of-bitcoin-mining-explained
[25] Is Bitcoin an Inflation Hedge? Here Are the Arguments on Both Sides - WSJ https://www.wsj.com/finance/currencies/bitcoin-inflation-hedge-84f6b840
[26] The Challenges of Regulating Cryptocurrency | The New Yorker https://www.newyorker.com/business/currency/the-challenges-of-regulating-cryptocurrency
[27] 2024 Crypto Crime Trends from Chainalysis https://www.chainalysis.com/blog/2024-crypto-crime-report-introduction/
[28] Bitcoin's Impacts on Climate and the Environment - State of the Planet https://news.climate.columbia.edu/2021/09/20/bitcoins-impacts-on-climate-and-the-environment/
[29] BTC price volatility: Fundamentals versus information - Taylor & Francis Online https://www.tandfonline.com/doi/full/10.1080/23311975.2021.1984624
[30] Compliance Issues in Cryptocurrency - Global Investigations Review https://globalinvestigationsreview.com/guide/the-guide-compliance/second-edition/article/compliance-issues-in-cryptocurrency
By Perplexity A.I. Here you see how LLM bordering on AGI can assist the process of thinking through complex issues & making an informed decision or judgment.
Lawyer can also debunk Wood’s case on energy storage.
Here I debunk Cathie Wood's (Ark Investment) massive prognostication of Energy (Battery) Storage as one of the 5 pillars of "super exponential" change.
Turns out that her entire case is built on the assumption that "climate change" is a great evil that will be averted by massive government regulation & it has NOTHING to do with energy cost & efficiency of fossil fuels
The (Perplexity) AI concedes honestly , "it's true that, in isolation, current energy storage solutions may not yet match the energy density and cost-effectiveness of fossil fuels", but then adds hastily & disingenuously that "their value cannot be solely assessed on these parameters" & launches into climate change propaganda !
I think Ark Invest's customers are in for some mega shock as Cathie Wood aggressively pursues her dogmatic visions of a financial Rapture into heaven for those who follow her advice.
I have not included any sources here.
My attempt to take down the Multiomic Sequencing technology as a viable source of "exponential" economic growth by arguing from first principles as to whether the paradigm of health should be reductionist (as Cathie Wood & others like her assume without argument) or holistic/quantum - and arguing that it should be the latter
Excerpt from the AI comment:
Multiomic Sequencing Explained
Multiomic sequencing (MS) is akin to assembling a complex puzzle where each piece represents a different layer of biological information. Imagine you're trying to understand the entire story of a book, but instead of reading it page by page, you have snippets from different chapters—some from the beginning, some from the middle, and some from the end. Each snippet offers a glimpse into the story, but only by putting them all together can you see the full picture.In biological terms, these snippets are the 'omics': genomics (the entire set of an organism's DNA), proteomics (the entire set of proteins produced), transcriptomics (the complete set of RNA transcripts), and more. Multiomic sequencing combines these layers to provide a holistic view of the biological systems at play.
Challenges and Limitations
However, the road to these discoveries is not without obstacles. The sheer volume and complexity of data generated by multiomic studies pose significant challenges in terms of data integration, analysis, and interpretation.
Moreover, the technology and methods for effectively combining and making sense of this data are still being developed. There's also the issue of cost and the need for advanced computational resources, which can be prohibitive.
Overoptimism?
Advocates like Cathie Wood may be overly optimistic about the near-term economic impact of MS. While the potential is undoubtedly vast, the practical application and integration of these technologies into healthcare and other industries will likely take longer than anticipated. The challenges of data analysis, ethical considerations, and the need for robust computational infrastructure mean that the exponential growth predicted may not materialize as quickly as some hope.
In summary, multiomic sequencing is a powerful tool that could lead to significant advances in various fields. However, realizing its full potential will require overcoming substantial technical, computational, and economic challenges.
My friend’s conclusion:
So it is true to say MS has more potential than actual realisation ahead in the next 6 years and perhaps Ark Invest should have held on to its Nvidia stock which at least has concretely performed last year & will continue to do so in the near & middle term. Intriguingly, and perhaps suspiciously, Wood is diffident about about NVIDIA stocks: https://qz.com/nvidia-stock-price-rally-faltering-cathie-woods-1851320536
My good friend the devil’s advocate adds:
The other plank of Cathie Wood's vision of the imminent Tech & Economic hyper-exponential event is "Robotics". I won't trouble you with my AI interrogation on this subject, but suffice to say that it is nowhere close to what Wood is prognosticating & prophesying. In fact the only sure thing in her 5 pillars is AI.
Here is biting criticism of Cathie Wood:
I have no idea whether the claims in this video hold water in pars or toto. I find it worth watching, though.