Jul

13

The Turing Test, originally introduced by British mathematician and computer scientist Alan Turing in his 1950 paper "Computing Machinery and Intelligence," is a proposal for evaluating whether a machine can exhibit intelligent behavior indistinguishable from that of a human.

This is more relevant today than ever. Applied to the market some moves appear very machine like. Other moves not so much. A large proportion if trades now are computer generated. Maekt making must all be computer managed. Humans still can game the machines as their rules are fixed.

Peter Ringel writes:

The Turing Test is fuzzy. Useful, but not precise. The underlying question is: Is AI conscious? My answer is: NO! but it is a freakishly good imposter.

It is also domain specific. In my opinion, in the general domain, AI broke the Turing Test in 2024. Humans can't distinguish anymore responses from robots to humans in the general domain. In specific domains it is different. The low to mid level is broken, the mid to high is not. OTOH, recently we had news that open AI proofed some longstanding Math hypothesis (I lack the knowledge to judge). And we all know about Google's AlphaFold. Both domain specific. High End.

Market making was algo based before AI. I indeed, try to game this with my human discretion. (At least in the sort-term part of my trading. It is not relevant for longer TF.) AI definitely facilitates research. This makes markets more efficient and faster efficient. I think we are seeing this currently.

Creativity is not broken. I hope, as of now.

Oliver Joseph writes:

A conversation that I find endlessly fascinating. In my opinion the current technology stack with regards to LLMs and machine learning tools in general is an absolute game changer. The barriers of entry associated with software seem to have been lowered significantly, however to use another tech analogy the "last mile" still remains elusive. By that I mean that the LLM really needs help to get certain complex problems over the finish line. That said, what we are dealing with is essentially a cliche generator. Humans tend to anthropomorphize, and personally I have found myself pondering the meaning of consciousness as I use the latest generation of LLM's ( I don't think we are dealing with consciousness here). Rich Suttons essay "The Bitter Lesson" from 2019 concludes with the idea that we want "AI agents that can discover like we can not which contain what we have discovered" arguing that by using experts to build in their knowledge it makes it harder to even see how the discovering process happens in the first place. He emphasizes a focus on what he calls scaleable general purpose methods primarily search and learning. It is interesting to me as I work with locally run models to see what output the <| think |> control token actually generates. I have one of those old IBM notepads that says think on it, however I must say I am prodded to think myself as I see this machine chugging through the art of thinking clearly with such mechanical precision (now we're in Dobelli of the beast). In conclusion I agree with the above sentiment that creativity is not broken but rather like where T.S. Eliot was wrestling with the concept of historical sense in his art; we now find ourselves with a large portion of human knowledge existing simultaneously in one place frozen in time, embalmed and pacified. It is up to us to be creative and let the tool inform our creative throughput.

On another tangent when I produce and or record music my workflow (and output) is changed by the tools I use. Ableton on a Macbook with VSTs gives me a different feeling and results than using an Atari 1040st and an Akai S950. I get the same feeling as I use LLM's for certain tasks.

Zubin Al Genubi adds:

I find AI helpful but AI doesn't quite get the joke. Kind of like a super-smart nerdy guy.

Nils Poertner comments:

From a spec point of view, there are tremendous opportunities where human creativity is always finding something which LLMs not seeing…as they have built mirrors in a mirror rooms and confusing this room with reality (but reality remains mysterious, indescribable and so on…and fuzzy logic or jain logic is already a slight improvement to our "either-or" logic that is so prevalent in our times).

Peter Ringel responds:

Yes, the tools we use define culture. Music culture, trading culture - binned per generation. AI is a tool (as of now).

If I close my eyes, I still can hear the metronome signal of Cubase through a crappy 1040 sound speaker ( or was it the monitor ?): "meeeep, mup mup mup" for a four to the floor. Cubase and similar tools made it easy to create a typical track structure. Probably long and repetitive. This defined the 90 and 2000 pop music. Before that - with some overlap - Sound-tracker. The UK in the 90 is unthinkable without it. Way more interesting. Then Fruity loops and similar. More questionable structure. Then Ableton. It freed the structure again, the creativity. I don't know, what the kids prefer now.

Nils Poertner responds:

Yes, very good. Real speculators are incredibly good in finding opportunities in mkts (and not just go with the latest fashion and think that's it). For older specs it will be "how to keep and possibly improve health" and for younger ones, I suppose it is how to turn their frustration/ anger into creativity and learn the game.

Oliver Joseph writes:

I love that Peter. Yes, Cubase was and is a fantastic tool precisely because of its constraints.

LLM’s being another cool new tool it is worthwhile to make an attempt to understand its uses and constraints. As a very simple thought experiment I asked three different models de jour to generate a random number between 0 and 500. I ran 500 iterations of the prompt per model. The “think” tokens generated reasoning from the models that stated basically “I’ll just pick a number that sounds random”. The “think” token of course being obscured from the end user. Going through such gesticulations is completely unnecessary other than I think that conceptually it's important to understand that here we ask for an output (the random number) and what we actually get is a number within the bounds of the below graph. Importantly we run the risk of thinking it's what we actually asked for. Surprise! It's not. Everyone on the spec list knows the right tool for the above job is a HRNG or TRNG or who knows what all else; lava lamps and wristwatches.

To my mind it is one of those inexplicably beautiful facts of history that Wall Street was thus named for a wall that separated traders and speculators from livestock. In the car business we have a large vocabulary derived mostly from farming and the cattle business. One thing that we would commonly do is go out and “put hands on” our “stock” go physically touch and look at the car. Statements are a representation of inventory I am supposed to have and obviously they have their use.

In summary as has been the case for the last 6000 years of recorded human history the farmer has asked the farmhand “where is the cow?” and the farmhand sometimes just said “over by the watering hole.” even though he actually had no clue. We equate the representation of the thing and the thing in and of itself at our peril. As speculators we should endeavor to identify the places in our experience where an incorrect representation is believed in more so than the thing in and of itself. I believe it pays to every now and again to hop the liminal.

Jul

8

Brilliant podcast from Financial Times. Analyses the investment styles of Charles Dawrin, Isaac Newton, Winston Churchill (blew up his GBP 80 million account), the painter J. M. W. Turner doing fixed income arbitrage, J. M Keynes out performing Warren Buffet.

They are history’s geniuses. But were they any good at investing? | The Story of Money Podcast

Does scientific, artistic or political brilliance translate into investing success? It’s a topical question with hedge funds today accused of sucking talent away from the rest of the economy. So, the FT’s Gillian Tett and Robin Wigglesworth sat down with reporter Toby Nangle, who has dug into the archives to assess the investment portfolios of Isaac Newton, Charles Darwin, Winston Churchill, John Maynard Keynes and other widely regarded geniuses of the past. What Toby found may surprise you, as will the historical wildcard he’s unearthed.

Jul

4

The American Revolution Redefined Freedom Itself

When the Continental Congress approved the Declaration of Independence on July 4, 1776, its immediate purpose was practical: to justify severing ties with Great Britain and explain to audiences both foreign and domestic why rebellion had become necessary. Yet the document’s historical importance extended far beyond the thirteen colonies. The American declaration not only created a new nation, but helped establish a new political language: a language rooted in natural rights, popular sovereignty, and the legitimacy of political self-determination. It was a language that would reverberate across continents for centuries.

Jul

4

A new Cato Institute/Morning Consult survey finds that 46 percent of Americans don't know what Saturday commemorates.

Idea 1: Lead a family event where the Declaration of Independence is read in its entirety.

For the fuller, messier version of the origin story, see "The 'Two Ships' Theory of American History" in the August Atlantic — James Traub's review of historian David Reynolds's Two Ships, on why Americans have never agreed on where their country began.

Full disclosure: the author is a confirmed descendant of both Mayflower passengers and Jamestown settlers — and a relation of Oliver Cromwell besides. If Reynolds is right that America was separated at birth, the divide runs straight through my DNA.

Then read the Mayflower Compact, written 156 years before the Declaration. Notice that the principle Jefferson would make famous — government by "consent of the governed" — is already at work in it: the signers "covenant and combine ourselves together into a civil body politic," binding themselves to laws of their own making.

Idea 2: Look for local mattress sales.

Stefan Jovanovich writes:

Six men who were delegates to Congress on July 1 and 2, 1776 declined to vote for the resolutions that authorized the Declaration of Independence. Four were from Pennsylvania: John Dickinson, Charles Humphreys, Robert Morris and Thomas Willing. John Alsop was from New York and George Read from Delaware. Two of the men would actually sign the Declaration when the document was presented to Congress on August 2nd; Robert Morris, who had abstained, and George Read who had voted no. John Dickinson would leave Philadelphia in July; Charles Humphreys and Thomas Willing would be removed from the Pennsylvania delegation before the document signing date.

Of the four men who said “no” and meant it, Thomas Willing would become the most important; President Washington would nominate him to become the first President of the Bank of the United States. and join the Pennsylvania militia; he would return in 1779. John Alsop would formally resign from Congress on July 16th. The other two delegates from Pennsylvania – Willing and Humphreys – would be removed from their delegation before the Declaration’s formal signing on August 2nd. Robert Morris and George Read would sign the physical declaration when it was presented to Congress.

Thomas Willing would stay in Philadelphia and work with his former business partner Robert Morris to fund the Continental Army. Morris, like the other members of Congress, would skedaddle to York when General William Howe and his British army arrived on September 26, 1777. The Loyalists would celebrate their arrival with parties and celebrations; Willing and his family, who were the richest people in the Philadelphia, would refuse to attend. When Willing was sent the formal oath of allegiance to King George III that Howe’s command was requiring of all prominent residents of the city, Willing refused to sign. Howe let Willing stay because there was at least some hope that Britain and the Americans could end their war. At the end of October, the rumor reached Philadelphia that a motion had been presented to Congress to rescind the vote for independence and it has lost by only one vote. On November 2, 1777 Howe would meet with Willing and his colleague John Brown. (Willing and Brown would be among the founders of the Bank of North America.) At the meeting Howe would express his desire to see a cease fire and peace settlement based on having the status of affairs in the thirteen colonies return to what they had been in 1763 and the Declaration being withdrawn. The Americans agreed to pass on the message. Henry Laurens, President of Congress, would report the proposals to George Washington. In his response, Washington would write: “it has been the unvaried custom of the enemy, from the commencement of the present contest, to try every artifice and device to delude the people. The message sent through John Brown was calculated for this end. I am surprised Thomas Willing should suffer himself to be imposed on by such flimsy measures. He knows that there is a plain, obvious way for General and Lord Howe to communicate … to Congress, without the intervention of a second or third hand. But this would not suit their views.”

A decade and a half later Washington would appoint Willing to be President of the Bank of the United States. When asked why he had voted no on the Declaration of Independence, Willing wrote: :“I voted against this declaration in Congress not only because I thought America at that time unequal to such a conflict as must ensue—having neither arms, ammunition, or military experience—but chiefly because the delegates of Pennsylvania were not then authorized by their instructions from the assembly as the voice of the people at large, to join in such a vote.”

Jul

3

The Trump administration is revising the radiation rules for commercial nuclear power. Headlines suggest a safety rollback. The reality is closer to retiring a rule that outlived its purpose. The savings may prove modest; the principle at stake is whether regulation should require spending to address risks too small to measure.

The rule is ALARA — "As Low As Reasonably Achievable." Developed by international radiation-protection bodies in the 1950s and adopted by U.S. regulators in the mid-1970s, it now sits in NRC regulation at 10 CFR 20.1101(b). It requires licensees to push doses as far below the legal limits — 5 rem per year for workers, 100 millirem for the public — as is reasonably achievable.

On paper, ALARA is a cost-benefit test; economics is built into its definition. In practice, it has drifted toward open-ended dose minimization. A U.S. plant's contribution to public exposure is now a fraction of the roughly 300 millirem that Americans receive annually from natural background radiation. Yet designers must keep spending — on shielding, staffing, and procedures — to drive those trivial numbers even lower. I have stood inside the containment building of an operating reactor — Big Rock Point, at full power — and the visit was routine under the plant's radiation protection program.

The fix is underway. A May 2025 executive order directed the NRC to reconsider ALARA; the Energy Department struck it from the directives governing its own facilities in January; and the NRC has begun replacing ALARA requirements for commercial facilities with fixed dose limits. NRC’s final rules are expected in November. New-build developers stand to benefit most, with lighter shielding and construction requirements.

Two cautions for investors. Even the industry's position is layered: the Nuclear Energy Institute has urged the NRC to replace the ALARA requirement with a practical dose threshold, while signaling that operating plants — where ALARA programs have kept worker doses low — would retain those practices voluntarily. Critics also allege procedural shortcuts that invite litigation, so the savings shouldn't be banked yet. Fair points, both. But a requirement to spend without limit against risks below background has run its course.

Jul

2

I need your advice. What is the best entry point for his work?

Paolo Pezzutti responds:

No doubt. Master and Commander.

Big Al adds:

Yes, it's a series, and the first volume is Master & Commander.

A fascinating biography of a man who was some of the inspiration for O'Brian's writing:

Cochrane: Britannia's Sea Wolf

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