Written by: Andrew Kang, Founder of Mechanism Capital
Compiled by: Ken, Chaincatcher
For those who have experienced at least one full market cycle, you develop an instinct to be wary of price increases that far exceed historical growth rates. Witnessing the dot-com bubble, the 2008 global financial crisis, and the rise and fall of cryptocurrencies triggers pattern recognition alarms in your brain. You are afraid to enter the market because prices are too high, yet you want to sell your holdings for fear of being at a peak.
But it's crucial to recognize that we are in one of the most profound and unique moments of asymmetry in history. The only move now is to extend your time horizon and completely abandon short-termism.
Excessive worry about bubbles is foolish. Trying to time the market is also foolish. Short-term volatility and pullbacks will always occur, but given how close we are to the "singularity," these fluctuations are merely noise. Artificial intelligence, robotics, energy, and innovation are poised for runaway explosive growth.
Within the next decade, we will have billions (or more) of AI agent workforces, humanoid robots, space data centers, multi-planetary colonization, and vastly improved medical therapies; we will fundamentally alter the development speed and output of technological breakthroughs across all fields. The technological progress and economic growth we compress into the next twenty years will surpass the sum total of all human civilization history.
We are already in an extremely steep part of the J-curve, but this is hard to perceive when zoomed into the micro-level of daily or weekly views. 100% of Anthropic's product code is now written by Claude. Product managers have a virtual team of software engineers with efficiency so high it feels like bending time. Companies leveraging AI effectively are seeing their product iteration speed increase not by single digits, not by double digits, but by triple digits.
Moreover, the capabilities of these tools are evolving at an even faster pace. Whether we officially reach Artificial Superintelligence (ASI) in 2027 or 2029 is not really important. It is inevitable. By the time it's officially announced, the assets you want to own will have multiplied in price countless times.
It is highly likely that the actual economic growth over the next 3-10 years will be at a 20-sigma level under any historical distribution model. This growth, once considered nearly impossible, will be driven by unprecedented second- and third-order changes. Traditional valuation models cannot price these transformations. The potential upside is so vast that traditional present value calculations struggle to capture it.
The speed of wealth creation will be staggering, similar to how cryptocurrencies initially created many billionaires and millionaires in a short time, but this time the magnitude will be far more extreme. If you have no exposure, it will be difficult to buy into such vertically rising asset prices; but unlike past bubbles, the creation of real economic value will better keep pace with the vertical rise in asset prices. Over the past three years, those operating in the market with the understanding of an "exponential perspective" have already reaped significant rewards. If you haven't adopted this perspective yet, it's not too late.
While it's important to always be mindful of downside risks, this is the largest upside risk in world history. Learn to bear risk over longer time horizons. Now is not the time for swing trading. For the vast majority, long-term investing typically outperforms short-term trading, but the gap in expected value between "trading" and "investing" will be wider than ever. Ask yourself, what is the value of the call option embedded in the singularity?
