Welcome to The Nightcrawler, a weekly collection of thought-provoking articles and analysis on technology, innovation, and long-term investing. The Nightcrawler is written and published every Friday evening by Eric Markowitz, Nightview Capital’s Director of Research.

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In this evening’s email… 

Quote of the week: “In this business, it’s easy to confuse luck with brains.” – Jim Simons (1938—2024)

Where the human brain (still) has an edge over AI

Over the last few months, I’ve been thinking about a fundamental question: as AI becomes increasingly efficient andintelligent, where will individuals continue to have an enduring advantage over machines? In other words, what human skillsets—or weaknesses—will become increasingly important for innovative ideas to thrive in an era of AI? This week, Fast Company magazine published my essay which explores this idea.

I came up with a few answers. One: emotional intelligence will become increasingly important as more systems get automated by AI. Two: human grit is hard to replicate. And three: our potential to make mistakes is arguably the source of all true innovation. “Human fallibility, rather than being a liability, is an asset when it comes to creativity,” I write. “It is our ability to embrace randomness, luck, and flexibility that often leads to breakthroughs.” I continue: 

  • Key quote: “While AI excels in efficiency and computational power, humans are slow and sometimes inefficient processors of information. However, what we lack in speed, we gain in freedom—the ability to disregard conventional wisdom in pursuit of originality. Consider a field like investing. There is no doubt that AI will become vastly more capable than any single individual in digesting and interpreting vast sums of industry and company data. And perhaps AI may react more rationally than a human during times of market volatility. But in investing—as well as many other disciplines—outperformance often relies on unconventional thinking and going against the grain. In fact, as AI tools make gathering consensus information and existing data more efficient, the role of human intuition could arguably become increasingly important to outperform over the long-term.”

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How misinformation exploits our biases

I enjoyed this Q&A between former poker pro Annie Duke and London Business School finance professor Alex Edmans about a subject I find endlessly fascinating: how to avoid focusing on the wrong information in order to make better decisions.

“We fall for misinformation because of our biases, and I focus on two, Alex says. “The first is confirmation bias, which is that we latch onto something uncritically if we want it to be true, and we reject something out of hand if we don’t like what it says. The second is black-and-white thinking, where we were predisposed to thinking that something is always good or always bad. We get swayed by extreme bits of information.” He continues: 

  • Key quote: “We often think that the solution to misinformation is to put all the facts on the table. If I’m right wing and you’re left wing, then, we will agree because we see the same information. But we won’t. I will latch onto something opposing gun control and you are going to latch onto something supporting gun control. Therefore, just making information available is not going to work because of biased interpretation and search. We need to think about our own biases when we look at the information.”

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Jim Simons’ 5 principles

In 2010, Jim Simons, the widely-respected investor and philanthropist delivered a lecture at MIT, his alma mater. On the way there, his wife Marilyn encouraged him to end his talk with a discussion of his values. “I felt ‘values’ was not quite the right word, so I used ‘guiding principles’ instead,” he later wrote. Those Five Guiding Principles are listed here.

Simons, who died this week at age 86, was widely known as an intellectual powerhouse who built one of the greatest investment firms of the century, Renaissance Technologies. His biography, The Man Who Solved the Market, is a must-read. And his five brief principles offer some timeless wisdom about business—and life. 

  • Key quote: “Do something new; don’t run with the pack. I am not such a fast runner. If I am one of N people all working on the same problem, there is very little chance I will win. If I can think of a new problem in a new area, that will give me a chance.”

A few more links I enjoyed: 

How I Think About Debt – via Morgan Housel 

  • Key quote: “Japan has 140 businesses that are at least 500 years old. A few claim to have been operating continuously for more than 1,000 years. It’s astounding to think what these businesses have endured – dozens of wars, emperors, catastrophic earthquakes, tsunamis, depressions, on and on, endlessly. And yet they keep selling, generation after generation. These ultra-durable businesses are called ‘shinise,’ and studies of them show they tend to share a common characteristic: they hold tons of cash, and no debt. That’s part of how they endure centuries of constant calamities.”

The Story That Changes the World – via Tom Morgan 

  • Key quote: “We use the word curiosity all the time but I don’t think we spend enough time thinking about what it actually means. The dictionary definition is ‘a strong desire to know or learn something,’ and, if you reflect on that, it’s a pretty disappointing definition because it doesn’t really tell you anything. It doesn’t tell you where the strong desire comes from and it doesn’t tell you how you pick the ‘something’ your curiosity is directed towards. So, the question I would ask, and I’d ask you to really sit and try and answer it: Can you force yourself to be interested in something?”

This time, we are the horses: the disruption of labor by humanoid robots – via RethinkX

  • Key quote: “Now, we are on the cusp of a new disruption: physical labor performed by humanoid-form robots. Except this time, we are the horses. Just as internal combustion engines gave automobiles the capability to disrupt horses, a convergence of technologies that together create what we call a labor engine is what gives humanoid robots the capability to disrupt human labor.”

Nightpixels Issue #6: YouTube vs. Netflix, disappearing stocks, Zillow’s users, and more

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