I'm not a utilitarian, although I am closer to that than most people (scope sensitivity goes a long way in that direction), and find it a useful framework for highlighting policy considerations (but not the only kind of relevant normative consideration).
And no, Nick did not assert an estimate of x-risk as simultaneously P and <P.
This can prevent you from being able to deduct the interest as investment interest expense on your taxes due to interest tracing rules (you have to show the loan was not commingled with non-investment funds in an audit), and create a recordkeeping nightmare at tax time.
Re hedging, a common technique is having multiple fairly different citizenships and foreign-held assets, i.e. such that if your country become dangerously oppressive you or your assets wouldn't be handed back to it. E.g. many Chinese elites pick up a Western citizenship for them or their children, and wealthy people fearing change in the US sometimes pick up New Zealand or Singapore homes and citizenship.
There are many countries with schemes to sell citizenship, although often you need to live in them for some years after you make your investment. Then emigrate if things are starting to look too scary before emigration is restricted.
My sense, however, is that the current risk of needing this is very low in the US, and the most likely reason for someone with the means to buy citizenship to leave would just be increases in wealth/investment taxes through the ordinary political process, with extremely low chance of a surprise cultural revolution (with large swathes of the population imprisoned, expropriated or killed for claimed ideological offenses) or ban on emigration. If you take enough precautions to deal with changes in tax law I think you'll be taking more than you need to deal with the much less likely cultural revolution story.
April was the stock market's best month in 30 years, which is not really what you expect during a global pandemic.
Historically the biggest short-term gains have been disproportionately amidst or immediately following bear markets, when volatility is highest.
Sure, it's part of how they earn money, but competition between them limits what's left, since they're bidding against each other to take the other side from the retail investor, who buys from or sells to the hedge fund offering the best deal at the time (made somewhat worse by deadweight losses from investing in speed).
It doesn't suggest that. Factually, we know that a majority of investors underperform indexes.
Absolutely, I mean that when you break out the causes of the underperformance, you can see how much is from spending time out of the market, from paying high fees, from excessive trading to pay spreads and capital gains taxes repeatedly, from retail investors not starting with all their future earnings invested (e.g. often a huge factor in the Dalbar studies commonly cited to sell high fee mutual funds to retail investors), and how much from unwittingly identifying overpriced securities and buying them. And the last chunk is small relative to the rest.
When there's an event that will cause retail investors to predictively make bad investments some hedge fund will do high frequency trades as soon the event becomes known to be able to trade the opposite site of the trade.
I agree, active investors correcting retail investors can earn normal profits on the EMH, and certainly market makers get spreads. But competition is strong, and spreads have been shrinking, so that's much less damaging than identifying seriously overpriced stocks and buying them.
Thank you, I enjoyed this post.
One thing I would add is that the EMH also suggests one can make deviations that don't have very high EMH-predicted costs. Small investors do underperform indexes a lot by paying extra fees, churning with losses to spreads and capital gains taxes, spending time out of the market, and taking too much or too little over risk (and especially too much uncompensated risk from under diversification). But given the EMH they also can't actively pick equities with large expected underperformance. Otherwise, a hedge fund could make huge profits by just doing the opposite (they compete the mispricing down to a level where they earn normal profits). Reversed stupidity is not intelligence. [Edited paragraph to be clear that typical retail investors do severely underperform, just mainly for reasons other than uncanny ability to find overpriced securities and buy them).]
That consideration makes it more attractive, if one is uncertain about an edge, to consider investments that the EMH would predict should be have very modest underperformance, but some unusual information would suggest would outperform a lot. I was persuaded to deviate from indexing after seeing high returns across several 'would-have-invested in' (or did invest a little in, registered predictions on, etc) cases of the sort Wei Dai discusses. So far doing so has been kind to my IRR vs benchmarks, but because I've only seen results across a handful of deviations (one was coronavirus-inspired market puts, inspired in part by Wei Dai and held until late March based on a prior plan of letting clear community transmission in the US become visible), and my understanding from colleagues in the pandemic space), the likelihood ratio is weak between the bottom two quadrants of your figure. I might fill in 'deluded lucky fool' in your poll. Yet I don't demand a very high credence in the good quadrant to outweigh the underdiversification costs of using these deviations as a stock-picking random number generator. That said, the bar for even that much credence in a purported edge is still very demanding.
I'd also flag that going all-in on EMH and modern financial theory still leads to fairly unusual investing behavior for a retail investor, moreso than I had thought before delving into it. E.g. taking human capital into account in portfolio design, or really understanding the utility functions and beliefs required to justify standard asset allocation advice (vs something like maximizing expected growth rate/log utility of income/Kelly criterion, without a 0 leverage constraint), or just figuring out all the tax optimization (and investment choice interactions with tax law), like the Mega Backdoor Roth, donating appreciated stock, tax loss harvesting, or personal defined benefit pension plans. So there's a lot more to doing EMH investing right than just buying a Vanguard target date fund, and I would want to encourage people to do that work regardless.
I agree human maturation time is enough on its own to rule out a human reproductive biotech 'fast takeoff,' but also:
All of those factors would smooth out any such application to spread out expected impacts over a number of decades, on top of the minimum from maturation times.
MIRI researchers contributed to the following research led by other organisations
MacAskill & Demski's A Critique of Functional Decision Theory
This seems like a pretty weird description of Demski replying to MacAskill's draft.
Yes. GPU/ASICs in a car will have to sit idle almost all the time, so the costs of running a big model on it will be much higher than in the cloud.