Enstein’s Fallacy, Occam’s Razor Losing Steam, and BTC Risk

bitcoin risk
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Today I am going to discuss three seemingly uinrelated topics that you will realize are deeply interconnected by the end of this newsletter, the Einstein fallacy, Occam’s Razor, and an introduction into perhaps the most important podcast about bitcoin risk. The first is the alleged statement that has enough attribution to state that Einstein issued a comment about not knowing with what weapons WWIII would be fought but that WWIV would be fought with rocks. The fact that Einstein said something closely resembling this statement less than 70 years ago, and the likelihood that this statement will prove prescient no longer is probable, simply illustrates how much the world has changed in just the past 66 years. The cause of all world wars – the desire to exert economic hegemony and domination over others – seems not to have changed that much.

Even though conventional warfare in recent years in Libya, Mali, Syria, Ethiopia, Yemen, Afghanistan, and Iraq among other nations, have still been waged over resources and economic hegemony, the means of waging these wars in the future is definitely rapidly shifting, as economic warfare no longer needs the mobilization of human resources, weaponry and munitions to enforce embargoes to economically devastate people around the world. Such economic warfare can now be waged in the cybersphere at a fraction of the cost with the added benefit of the instigator of such warfare that can economically devastate hundreds of millions of people quite easily with the use of hacking viruses called zero day exploits even deceptively attributing such attacks on the infrastructure and electrical grids of nations to outside nations not involved in the attack.

Thus, WWIII is most likely to be waged in the cybersphere, leaving nuclear wars as an option on the table for future wars that would then cause the following world war after that to be fought with rocks. How does this topic tie into investing? Well it simply proves, if you know nothing about, and have never heard of, the serious capacity of zero day exploits to wreak havoc on entire nation’s economies with the capacity to kill millions of people, that massive risks exist beneath the surface unknown to the vast majority of people, as is the case with the global financial and banking system at the current time.

Secondly, as we observed during the 2008 global financial crisis through dozens of leaked documents and emails from Wall Street banks and the world’s largest banks. the principle of Occam’s Razor, that the simplest answer is the most likely correct answer, almost never applies. As in the case of why Einstein’s theory about future world wars has become outdated, technological advancements in the banking and financial industry that have allowed the criminals to become far more efficient criminals than just twenty years ago, is the precise reason why simple answers no longer explain the movements and behaviors of capital markets all around the world anymore. The simplest answers provided in attempts to explain massive price movements in capital markets by the top economists with the most elite academic pedigrees are almost always based upon theoretical principles taught in business school programs that simply no longer apply to asset pricing mechanisms today. Why?

Rapid advancements in technology in the financial world, from fiber optics and military-grade technology that provide companies like Virtu that deploy HFT algorithms to trade stocks a capability to frontrun trades by nanoseconds,to granting companies the abilities to quote stuff at the rate of tens of thousands of quotes per second, were never strategies that could have been used before to unduly manipulate asset prices. Business school curricula, whether by design or neglect, simply have not kept up with the times, and never educate their students about the real reasons why violent asset price movements, both up and down, occur today. And finally, I will conclude with some truths about cryptocurrency markets that again, people incapable of critical thought, always downvote, not because I am stating anything that is untrue, but simply because the research I have done in these markets disagree with their uneducated, uninformed opinions formulated by following self-proclaimed gurus.

In the past, on YouTube, I may have watched a video in which someone truly heroic, courageous and of high moral character is being interviewed about a serious topic, like the fight against human trafficking, and I would spot a high number of dislikes and think to myself, How can 85 people down vote a video in which a man is risking his life to fight the most repugnant behavior ever? And I constantly would observe such noble discussions about problems and discussions about how to solve them receive dozens to hundreds of down votes and, at first, was puzzled  at this negative behavior, as I couldn’t believe so many morally repugnant people existed online that would express dislike for noble behavior. However, after repeatedly observing this behavior I quickly concluded that the down votes were not a reflection of the podcast content itself or a vote against the noble, upstanding work being discussed on the podcast.

I realized that the down votes were cast by immature people that simply either disagreed with one statement issued by the interviewee or the interviewer in the podcast or that didn’t like something the interviewee or interviewee said in a previous podcast and merely carried over their dislike from a previously issued statement to the current podcast. In other words, the type of people that cannot hold a civil conversation with any one that disagrees with anything they believe were the ones expressing dislike for great content, a behavior which fits into our Orwellian world in which anything labelled by the ignorant masses as conspiracy theories, anti-science and part a “truther” movement in a disparaging tone actually has a much more likely probability of presenting facts and truth than the consensus narrative.  Consequently, the down vote number merely came to represent, on truthful podcasts, a running counter of the number of delusional arrogant people that watched that video that believe their view on every matter is always correct and that anyone that disagrees with their views is automatically a conspiracy theorist.

One thing that is certain in life, whether it applies to ensuring the safety of your family as the oligarchs continue to implode the global economy, or to ensuring the robustness of your investment strategy is that the wisest plans will always result from a consideration of all opinions and divergent views, whereas the weakest plans will always result from an automatic rejection of any information that disagrees with one’s views, tantamount downvoting an alternative, divergent view simply because it diverges from your own. To view a full podcast about this topic, simply click the image at the top of this newsletter.

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J. Kim

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