"The mistake originates in logic. Logic reduces life to statistics. And statistics convert real-world business into spreadsheets of digits: total income, net profit, employee productivity. . . Those mathematical values are then scoured by logic for patterns and trends. Which is to say: The spreadsheets are fed into AI machine learning systems or analyzed by traders who (by engaging Daniel Kahneman's system 2) have rigorously purged their minds of bias."
"Years ago, Warren Buffet realized that this logical method was bullshit. There's no way for math to predict asset prices because markets aren't platonic algorithms. They're biological ecosystems. And biological ecosystems, as a guy called Charles Darwin once observed, are sites of incessant competition where victory comes from innovation. Innovation obsolesces yesterday. In business, the data you gathered from last quarter can therefore be used to calculate ... last quarter."
Global investors increasingly rely on numerical models, logic, and statistical analysis to forecast asset prices, feeding spreadsheets into AI and machine-learning systems or into rigorous trader analysis. Those methods treat business as static numbers—income, profit, productivity—and search for patterns and probabilistic signals that prompt leveraged, index-wide bets. Markets function as biological ecosystems driven by incessant competition and innovation, which renders historical data predictive of the past rather than the future. Innovation rapidly obsolesces prior metrics, so last quarter’s data often only explains last quarter. Warren Buffett abandoned pure mathematical forecasting in favor of practical common sense over formal logic.
Read at Big Think
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