By William J. Kelly, CAIA, Founder & Managing Member, Educational Alpha LLC
This entitled piece is a ‘qu’-bit takeoff from Samuel Beckett’s tragicomedy play, Waiting for Godot, which finds the two central characters spending the entirety of the two Acts by a lone tree on a country road, waiting for a chap named Godot to arrive. Spoiler Alert: he never does, at least not in this play, but some may also wonder when the waiting game (and the dough!) will arrive in a place called Quantum-ville.
The Mysterious Promise of a Quantum Future is why this phenomenon has taken on Godot-like features. The power and promise are legendary, but just like the hallucinations of ChatGPT, the quantum mechanics-leveraging machine often takes on decoherence tendencies. Quantum becomes classical just like the savant who suddenly seems more human as she struggles to successfully unicycle backwards and juggle at the same time. No wonder this expected quantum “supremacy” still comes with the “promising” qualifier.
The MIT Club of Southern California recently ran an interesting and informative webinar on this very subject. The content was excellent, and it was clear from the Q&A portion of the program that we still have many questions and far less definitive answers. It is the field of quantum mechanics that is foundational to its computing offspring, and while the former has been around for one hundred years, the latter is still in the waiting room. Richard Feynman, an MIT alum (class of 1939), a Nobel prize winner, and one of the greatest physicists of all time also got some honorable mentions in this webinar. A particular quote from him was cited, as it continues to age quite well: “I can safely say that nobody understands quantum mechanics.”
If Feynman were alive today, he would likely be saying the same thing about quantum computing, and it is visual explainers like this recent one in the Financial Times that shows both the great power and the obstacles that we face. It is the “lack of imagination” noted by Feynman that just might be the highest hurdle for human and machine to understand and accept the unexplainable. Put more simply, who amongst us can imagine the mid-point state of a flipped coin in the air (so-called “superposition”) that can be both a bit heads and tails at the same time?
A recent report from McKinsey (which begins with the same aforementioned coin flip analogy) highlights the quantum potential along with some early use-case data, and they estimate that quantum computing alone could potentially represent $1.3T of value by 2035. No doubt that this level of capital commitment and smart minds will eventually figure this all out, but what happens when we get there?
Some of our readers might remember Y2K and the great business risks and uncertainties that a simple flip of a calendar might cause. While it mostly turned out to be much to do about nothing at all, we were very certain about when that date would arrive, so we had a specific event to plan for, replete with all the contingencies put in place to prevent the sky from falling.
Q-Day, on the other hand, is a lot like Godot; we remain more certain than hopeful that it will eventually come, but absent specificity of the arrival date, it is more convenient to ignore or underestimate the havoc it may wreak. Read on and be very afraid!
Classical computing is what we use to power our iPhone, the internet, and most of the account-level services provided by banks, brokers, and almost every other app you can imagine. With this level of convenience comes the constant threat of malware attacks leading to exposed or lost PII, compromised access, and substantial loss of reputation and property. Cybersecurity measures and best practices such as multi-factor authentication certainly help to keep us and our data safe, but the last line of defense is the underlying cryptography. That is what obfuscates coded algorithms that secure our data and communications. Come Q-day, this very same cryptography will have met its kryptonite, and fending off a cyber-attack will become as probable as catching a speeding bullet within the clench of your teeth.
And here we sit waiting for our computational version of Godot, but we should heed the premonition of Vladimir, one of the essential characters in this Beckett play: “Let us not waste our time in idle discourse. Let us do something while we have the chance…”
Seek education, diversity of both your portfolio and people, and know your risk tolerance. Investing is for the long term.
About the Contributor
William (Bill) J. Kelly, CAIA is the Founder and Managing Member of Educational Alpha, LLC where he writes, podcasts, and speaks on a variety of investment related topics, focused on investor education, transparency, and democratized access to differentiated risk premia. Previously he was CEO of CAIA Association since taking this leadership role in 2014 until his retirement in 2024. Prior to that, Bill was the CEO of Boston Partners, and CFO and COO of The Boston Company Asset Management, a predecessor institutional asset manager. In addition to his current role, Bill is also the Chairman and lead independent director for the Boston Partners Trust Company and serves as an independent director for the Artisan Partners Funds, where he is also Chair of Audit Committee and a designated Audit Committee Financial Expert. He is also currently an Advisory Board Member of the Certified Investment Fund Director Institute within the IOB (Dublin) which strives to bring the highest levels of professionalism and governance to independent fund directors around the world. Bill began his career as an accountant with PwC where he earned his CPA (inactive).
Learn more about CAIA Association and how to become part of a professional network that is shaping the future of investing, by visiting https://caia.org/