Remarkable video from Peter Thiel speaking at the Singularity Summit two years ago about the need for Singularity in todays Financial Markets.

Peter Andreas Thiel (born 1967) is an American entrepreneur, hedge fund manager, libertarian and venture capitalist. With Max Levchin, Thiel co-founded PayPal and was its CEO. He currently serves as president of Clarium Capital.

Thiel has made early-stage investments in several startups, including Slide, LinkedIn, Friendster, Geni.com, Yammer, Yelp, Powerset, Vator, Palantir Technologies, Joyent and IronPort.

Btw, we already mentioned Palantir Technologies in this earlier blog post. Also those folks are ex-PayPal.

“As you can’t predict, you have to bet” says Thiel.

And “The alternative to the singularity is the apocalypse”. See also my previous post on the need for a singleton if we want to avoid humans to be overruled by Artificial Intelligence

We will (are) witness massive manias, booms and busts

on a scale unprecedented.

But that’s not normal for markets that are well connected. Markets that are well connected (such as the financial markets) have more information circulating on their networks. Normally, when more and more information is floating around in a market, that market gets smoothened out and gets more efficient. Stocks would evolve at a smooth 6-7% per year, and most volatility would go out of the market.

Well, unless you have been living on another planet, the contrary is true. And worse,

the frequency ànd amplitude of the booms and busts gets bigger.

There was the Japanese crash end 80ies, the emerging markets mid 90ies, the intro of the financial derivatives that scaled to a 1 trillion hype industry, in 98 Russian market blew up, the March 2000 Internet bubble, the 2008 bust of Lehman’s and the big crisis we are in now. Peter Thiel explains how in March 2009 was the last month of insanity before the bust.

Dillusion and insanity were at their peak.

What i really like is when he says: “at the peak of the boom, you can see furthest”.

It reminds me of another quote – can’t find right away from who – that when innovating you better start with the future in mind, rather than starting from the now. The latter approach usually leads to small incremental adjacencies, whereas the first approach at least gives you a chance of driving something disruptive.

All big breakthroughs were disruptive. None of them were predictable by extrapolating the past of the now. See also Nassim Nicholas Taleb’s The Black Swan book.

Btw, in the last Wired (Aug 2009), you can read that speaking of the Black Swan is really “tired”. That’s the stage before “expired”. Old-fashioned.

Isn’t this about big trends ? Like that all sorts of businesses will  not work in the enterprise 2.0 economy. That running a more authentic business becomes mandatory. See book industry, see newspapers, etc.

However, the biggest trend –says Thiel in 2007 -  is the trend from old to new media. So big a trend you don’t even see it.

That was at the Singularity Summit in 2007 two years ago. Next summit is in October 2009. Have  a look at the line-up of speakers. Very curious what those great thinkers will spot as trends you don’t even see.

What are the biggest manias, busts and booms to come ?