This week, every news organization wrote a headline that said something like, “ Anthropic Researchers Believe More Than 10% Chance AI Kills Us All.”
This sounds scary until you remember that nobody knows anything.
Music industry experts didn’t think the Beatles would be any good. Movie industry experts didn’t think John Wick or Star Wars would make any money. The experts in the NFL didn’t think Kurt Warner, NFL and Super Bowl MVP, was worth a draft pick.
Barry Ritholtz’s book, “How Not to Invest,” uses some great stories to make this point, and Ben Carlson’s recent blog post does the same.
In The End of a Golden Era for Investors, Ben cites a McKinsey study that said:
A coming collapse in investment returns means that people that age today will have to work seven years longer or save almost twice as much to end up with the same nest egg as those of roughly a generation ago.
The punchline: the study was originally published in 2016 and turned out to be completely wrong.
The world is full of similar examples.
In February, the Fed projected rates would fall. By June, they changed their minds and projected rates would go higher.
This change largely happened because they didn’t predict we would invade Iran.
The truth is, nobody knows how AI will impact society, and as a financial advisor, I have no idea how markets will react to whatever does happen. But that is nothing new.
As Howard Marks pointed out in his memo, The Folly of Certainty
The rare person who in October 2022 correctly predicted that the Fed wouldn’t cut interest rates over the next 20 months was absolutely right . . . and if that prediction kept them out of the market, they’ve missed out on a gain of roughly 50% in the Standard & Poor’s 500 index. The rate-cut optimist, on the other hand, was absolutely wrong about rates but is likely much richer today.
Economists and AI researchers are usually very smart, but that doesn’t make them any better at predicting the future. Between now and the time AI is supposed to kill us all, an infinite number of things will change. Some will be good, and some will be bad. All we can know for sure is that predictions about the world ending rarely come true, and investors need to plan accordingly.
Personal Note:
Lacrosse is back! I’m still the President of Fort Bend Lacrosse and now the VP of the Houston Youth Area Lacrosse League. These are community rec programs.
My passion project is trying to create something in my area where kids can play for fun, without getting involved in the private equity-fueled travel sports complex. Maybe that means most of these kids won’t become professional lacrosse players, but that is probably okay.
If you aren’t familiar with the state of youth sports in the US, check out this article from the NY Times:
How very true - especially with Kurt Warner of my Rams.
Yes it was - looks to be that kind of year for my Rams