Today, we stand on the precipice of a transformation that will dwarf the Industrial Revolution, the advent of electricity, and the rise of the internet combined. The advent of artificial general intelligence - true, human-level AI - is no longer a fantasy.
Instead, it is happening in front of our eyes: the exponential improvements in capabilities, the feverish capital deployment by hyperscalers, as well as the quiet (and not-so-quiet) stockpiling of compute resources by everyone, from startups to nation-states.
Within our lifetimes, we will see the marginal cost of intelligence plummet. Consider what happens when cognition becomes too cheap to meter. Entire industries will be rendered obsolete overnight, while others will explode into existence and create trillions in value.
Yet the market still prices securities as if we're in an ordinary tech boom, as opposed to the civilisation-altering force AGI truly represents. As reality catches up to these possibilities, this represents the greatest asymmetric betting opportunity of our generation.
If you truly believe this will happen, the question you should be asking is: where does value accrue in this world?
That is because one of the purest expressions of conviction is putting money behind your beliefs. Talk is cheap, but executing a trade clarifies your views: not just whether you're right, but how right, when you'll be proven right and how much you're willing to risk on being right.
The distinction between being right and putting on a good trade is key. Indeed, some forms of correctness are too much; they break the machinery that would verify them.
A classic example is betting on the collapse of the financial system in 2008, by buying insurance on major banks from... major banks. Another is betting on the doom of FTX in 2022, by shorting its native token FTT via… FTX.
The technical term is “wrong-way risk”: a situation where the more correct you are, the less likely you will be to get paid.
This isn't limited to financial markets. Starting the charter city Prospera in Honduras is a bet against its quality of governance. Unfortunately, the governance turned out to be so bad that the Honduran government seized Prospera without compensation. Yikes!
Now, what if you thought that artificial general intelligence might pose an existential risk to humanity?
This is “wrong-way risk” cranked up to 11, and there are no “apocalypse contracts” lying around. ("Hi, yes, I'd like to structure a derivative that pays off when the robots become sentient" is not a conversation that most derivatives salespeople are equipped to have.)
That's not all!
Even beyond the matter of the eschaton, turning “AGI is coming” into a profitable portfolio is not straightforward. A crystal ball is not enough to avoid catastrophic drawdowns. You need to:
Yet this difficulty is no excuse to avoid trading!
More coming soon: if you're interested in trading the eschaton, my DM's are always open.