Weekend Reading #3

This is the third edition of our weekly newsletter, Weekend Reading, sent out on Saturday 2rd February 2019. Sign up here and receive a copy each week right into your inbox.

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Weekend Reading #3

What is the three-body problem and why you should care?

One problem has troubled mathematicians for centuries, namely the question of how three objects (bodies) orbit one another according to Newton’s laws. No single equation or theory has been able to consistently predict the answer, underscoring how the future is unknowable and the only certainty is uncertainty itself. 

Here at Three Body Capital, this is how we see the world. 

We believe that markets, and the real world they represent, are chaotic systems that are extremely sensitive to changes in their initial conditions. They have the ability to magnify the impact of decisions into unpredictable outcomes. 

Time to break our programming.

Today, we are seeing butterfly effects resulting from events that took place a long time ago. Climate change, technological development, political fracture, the reconfiguration of the global order… these events weren’t triggered by a specific episode that we can point to. There wasn’t an “archduke moment”, even if people insist on post-rationalising complexity.

We're wired to think with heuristics and rules of thumb, relying on past information to quickly process what might happen in the future. That method worked well for our hunter-gatherer ancestors, but the human race has developed technologically much more quickly than it has physiologically, particularly our brains and cognitive processes. To uncover opportunities and generate returns, we need to break our programming and think different. 

That’s why we write extensively on unintended consequences, and why we’re advocates of second-order, non-linear, exponential thinking. 

A dose of existentialism and science fiction. 

Gloomy existentialist philosopher Soren Kierkegaard once said that "Life can only be understood backwards; but it must be lived forwards". It's certainly true that most people believe the future will resemble the past, but here at Three Body Capital, our underlying assumption is that the opposite is true - the future looks different. 

You may also recognise “The Three-Body Problem” as a science fiction trilogy by Chinese author Liu Cixin (刘慈欣). The book is groundbreaking in its thinking and introduces concepts which span multiple disciplines. So too does China itself. In the coming years, we believe that global transformation will be driven, to a large degree, by China. In particular, its emerging leadership in innovation led by artificial intelligence.

Our roadmap for the future. 

So why should you care about the three-body problem? Because it’s the closest approximation of what a roadmap for the future looks like.

Too many new factors are being introduced into the chaotic system that is our environment for it to remain stable. We live in world where a misspelled tweet written by a guy sitting on the toilet in his pyjamas has the ability to move markets and change economic policy with global consequences - who would’ve imagined that?

The only way to get anywhere close to making sense of chaotic systems is to step back and look at the big picture. Only then do things start making a little bit more sense. 

And for the inquisitive amongst you, here’s the physics and the maths.

Beyond the obvious.

Chinese facial recognition will take over the world in 2019
+Disrupting death: Technologists explore ways to digitize life
+5G: if you build it, we will fill it
+It’s time to pay serious attention to TikTok
+English's reign as the "global language" might end

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