There have been two big events happening over the past week.
- The Silicon Valley Bank collapsed on Mar 10.
- OpenAI introduced GPT 4.0 to the wider public on Mar 14.
And Ray Dalio published his thoughts about the Silicon Valley Bank (SVB) situation on LinkedIn two days ago. So I am interested to understand how chatGPT 4.0 “thinks” about Ray’s article vs GPT 3.5. (More accurately, ChatGPT doesn’t think about Ray’s article, it just summarizes it per my prompt.)
(This is the prompt that I use: I am going to provide you with the content from Ray Dalio. Please summarize this content for me using bullet point format. Focus on the main ideas and recommendations. Do you understand?)
chatGPT 4.0 summary
- Ray Dalio suggests Silicon Valley Bank’s situation is a classic bubble-bursting event in the short-term debt cycle
- Bank failure serves as a “canary in the coal mine” for the venture world and beyond
- Key points in the archetypical debt cycle dynamic:
- Forced sales of assets at low prices
- Equity dilution
- Attractive acquisition prices for strong companies to buy distressed ones
- Credit problems negatively impacting markets and economy
- Fed easing and bank regulators providing money, credit, and guarantees when the problem becomes system-threatening
- US central government has large outstanding debts; central banks monetizing the debt
- Big problem arises when too much money printing leads to inadequate real returns for creditors
- Potential for a big decline in the value of money in the next year or two
- Ray Dalio sees the next two years as a very risky time due to financial, economic, internal conflict, and international conflict dynamics
- Recommends achieving balance of uncorrelated good return streams for investing, reducing risk without reducing expected returns
I am quite impressed with this summary because it includes most of the main points from Ray’s article.
Now, let’s see the result from chatGPT 3.5
chatGPT 3.5 summary
Ray Dalio’s response to a question about Silicon Valley Bank includes the following main ideas and recommendations:
- The bank failure is a classic event in the bubble-bursting phase of the short-term debt cycle.
- The current cycle is likely to result in more problems before it runs its course, including forced sales of assets at very low prices and credit problems being a negative for markets and the economy.
- The Fed and bank regulators will eventually act in a protective way by easing and providing money, credit, and guarantees, but it is too early for that now.
- The much bigger longer-term problem is that the US central government has large outstanding debts and is selling more debt than there is demand for, and central banks are monetizing the debt. The really big problem will come when there is too much money printing to provide creditors with adequate real returns, which will lead to a high risk of a big decline in the value of money.
- The financial/economic picture over the next year or two will be tough, with a significant risk of bad financial and economic conditions at a time of bad internal and international conflicts.
- The key to good investing lies in achieving a balance of uncorrelated good return streams so that one’s portfolio has little or no bias to go up and down as conditions get better and worse. Risk reduction can be done without reducing expected returns.
Which one do I like more?
While the GPT 3.5 summary is quite good, I like the 4.0 summary more because:
- It includes more specific details from the original article like “canary in the coal mine”
- It does include the “archetypical debt cycle dynamic”, which is an important piece of content that the reader needs to know to understand what comes next from Ray’s perspective.
- The sentence structure from GPT 4.0 is easier to read i.e. each sentence is short and concise.
What do you think? Have you done any comparison between GPT 3.5 and GPT 4? Feel free to leave your comments below.