A Few Things: 5 AI Ideas from 5 AI Leaders, Economist on Fertility, Druck on Markets, GS Currie on Commodities, Kuppy in London, Ogilvy's Ad-Man, Young Forever, A16Z on AI....

June 9, 2023

I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.

You can check out last week’s edition here: The Rising Cost Of Compute, David Foster Wallace, Relax For Same Result, Seth Godin & Tim Ferriss On Meaning, The Precipice, Coming Wave Of AI and How To Invest, Amplifying Humanity....

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Quotes I Am Thinking About:

“Desire to have things done quickly prevents their being done thoroughly.”

- Confucius

“A wise man doesn't know everything—only a fool does.”

- African Proverb

“What the superior man seeks is in himself. What the mean man seeks is in others.”

- Confucius

“Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.”

- Karl Popper

"The myth is that there isn't enough time. There is plenty of time. There isn't enough focus with the time you have. You win by directing your attention toward better things."

- James Clear

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A. A Few Things Worth Checking Out:

1. Probably the most interesting thing I read this week was Doug Clinton’s Five AI Ideas from Five AI Leaders.

They all seem non-consensus. Definitely worth a read.

• Using a GPU is a Sign of Failure.

• Causal Understanding is Missing from Systems to Get to AGI.

• AI is Like a Really Talented Improv Actor

• Search isn’t Dead, but the Shape of it is Changing

• Statistical Understanding of the World is Understanding

2. The Economist had two great pieces on fertility and greying economies.

Some insights:

In 2000 the world’s fertility rate was 2.7 births per woman, comfortably above the “replacement rate” of 2.1, at which a population is stable. Today it is 2.3 and falling. The largest 15 countries by GDP all have a fertility rate below the replacement rate. That includes America and much of the rich world, but also China and India, neither of which is rich but which together account for more than a third of the global population.

Low ratios of workers to pensioners are only one problem stemming from collapsing fertility. As we explain this week, younger people have more of what psychologists call “fluid intelligence”, the ability to think creatively so as to solve problems in entirely new ways.

This youthful dynamism complements the accumulated knowledge of older workers. It also brings change. Patents filed by the youngest inventors are much more likely to cover breakthrough innovations. Older countries—and, it turns out, their young people—are less enterprising and less comfortable taking risks.

Elderly electorates ossify politics, too. Because the old benefit less than the young when economies grow, they have proved less keen on pro-growth policies, especially housebuilding. Creative destruction is likely to be rarer in ageing societies, suppressing productivity growth in ways that compound into an enormous missed opportunity.

Eventually, therefore, the world will have to make do with fewer youngsters—and perhaps with a shrinking population. With that in mind, recent advances in AI could not have come at a better time. An über-productive AI-infused economy might find it easy to support a greater number of retired people. Eventually AI may be able to generate ideas by itself, reducing the need for human intelligence. Combined with robotics, AI may also make caring for the elderly less labour-intensive. Such innovations will certainly be in high demand.

This demographic decline has negative implications for industries, government finances, and economic growth. The falling number of educated young workers entering the labor market will reduce innovation and productivity, which are crucial for long-term economic growth. The decline in innovation is particularly concerning, as younger individuals tend to contribute more to disruptive and novel inventions, while older individuals excel in incremental innovations.

3. Druckenmiller did a 30 min interview at the Bloomberg Conference, June 7 2023. He starts with a discussion on US entitlements, recession risks & markets, AI Investing, China and Japan.

4. It’s good to take sell side research with more than a grain of salt, especially when it is coming from GS, but I did give this interview with GS Head of Commodities Research, Jeff Currie a listen. He highlights that global commodity inventories are shrinking so fast that they are calling it "The Great De-Stocking".

5. I read David Ogilvy’s Confessions of an Advertising Man based on David Senra discussing it on the Founders podcast here. It’s an awesome podcast.

David Senra summarized the main ideas in this twitter post.

6. My friend Harris “Kuppy” Kupperman is in London in early July and I’m hosting a little lunch with him for family office investors and allocators to hear his views on Inflection Investing as CIO of Praetorian Capital. Shoot me an email if you’d like to join.

I am big fan of Kuppy and he’s a got a gifted feel for markets and the zeitgeist.

If you are new to Kuppy, you can get a flavour for him on this Value Hive podcast.

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B. Young Forever

My friend Feisal who runs Qineticare, the world’s first Family Health Office, used by some of most prominent family’s in the world recommended I check out Mark Hyman’s book: Young Forever.

It’s definitely an easier and simpler read than say Peter Attia’s Outlive, and compared to Outlive which was more exercise focused, this book is more diet focused.

If you are curious about longevity and increasing your Life Span this is a great gateway book.

The book is split into 3 sections:

• How and Why We Age

• Optimising Your Health Span and Life Span

• The Young Forever Program

My personal take aways / reminders after reading it were:

1. Really watch my consumption of sugar, starch and processed foods.

2. Keep adding fruits and vegetables, not just quantity but diversity. I’ve made an effort to add things like Beets, Mushrooms, Pomegranates. Things I wouldn’t normally eat.

3. Look for and manage the toxins in your diet. Not just the mercury in the fish, but look at the where your diet is sourced from.

4. Been thinking more actively about supplements such as Creatine, Magnesium, Metformin again.

5. Add then further adding both lean protein and fermented foods.

You can get a good flavour for him by watching this recent presentation at the Summit Conference.

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C. The Technology Section:

1. Was initially weary of Marc Andreessen of a16z’s post on Why AI Will Save the World, but it’s actually really well written and systematic in it’s discussion.

Key bits:

What AI is: The application of mathematics and software code to teach computers how to understand, synthesize, and generate knowledge in ways similar to how people do it. AI is a computer program like any other – it runs, takes input, processes, and generates output. AI’s output is useful across a wide range of fields, ranging from coding to medicine to law to the creative arts. It is owned by people and controlled by people, like any other technology.

A shorter description of what AI isn’t: Killer software and robots that will spring to life and decide to murder the human race or otherwise ruin everything, like you see in the movies.

An even shorter description of what AI could be: A way to make everything we care about better.

What AI offers us is the opportunity to profoundly augment human intelligence to make all of these outcomes of intelligence – and many others, from the creation of new medicines to ways to solve climate change to technologies to reach the stars – much, much better from here.

In our new era of AI:

• Every child will have an AI tutor that is infinitely patient, infinitely compassionate, infinitely knowledgeable, infinitely helpful. The AI tutor will be by each child’s side every step of their development, helping them maximize their potential with the machine version of infinite love.

• Every person will have an AI assistant/coach/mentor/trainer/advisor/therapist that is infinitely patient, infinitely compassionate, infinitely knowledgeable, and infinitely helpful. The AI assistant will be present through all of life’s opportunities and challenges, maximizing every person’s outcomes.

• Every scientist will have an AI assistant/collaborator/partner that will greatly expand their scope of scientific research and achievement. Every artist, every engineer, every businessperson, every doctor, every caregiver will have the same in their worlds.

• Every leader of people – CEO, government official, nonprofit president, athletic coach, teacher – will have the same. The magnification effects of better decisions by leaders across the people they lead are enormous, so this intelligence augmentation may be the most important of all.

• Productivity growth throughout the economy will accelerate dramatically, driving economic growth, creation of new industries, creation of new jobs, and wage growth, and resulting in a new era of heightened material prosperity across the planet.

• Scientific breakthroughs and new technologies and medicines will dramatically expand, as AI helps us further decode the laws of nature and harvest them for our benefit.

• The creative arts will enter a golden age, as AI-augmented artists, musicians, writers, and filmmakers gain the ability to realize their visions far faster and at greater scale than ever before.

• I even think AI is going to improve warfare, when it has to happen, by reducing wartime death rates dramatically. Every war is characterized by terrible decisions made under intense pressure and with sharply limited information by very limited human leaders. Now, military commanders and political leaders will have AI advisors that will help them make much better strategic and tactical decisions, minimizing risk, error, and unnecessary bloodshed.

• In short, anything that people do with their natural intelligence today can be done much better with AI, and we will be able to take on new challenges that have been impossible to tackle without AI, from curing all diseases to achieving interstellar travel.

• And this isn’t just about intelligence! Perhaps the most underestimated quality of AI is how humanizing it can be. AI art gives people who otherwise lack technical skills the freedom to create and share their artistic ideas. Talking to an empathetic AI friend really does improve their ability to handle adversity. And AI medical chatbots are already more empathetic than their human counterparts. Rather than making the world harsher and more mechanistic, infinitely patient and sympathetic AI will make the world warmer and nicer.

He then goes on to cover why all the AI Risks aren’t true, which include:

• Will AI Kill Us All?

• Will AI Ruin Our Society?

• Will AI Take All Our Jobs?

• Will AI Lead To Crippling Inequality?

• Will AI Lead To Bad People Doing Bad Things?

And the critical What Is To Be Done section:

• Big AI companies should be allowed to build AI as fast and aggressively as they can – but not allowed to achieve regulatory capture, not allowed to establish a government-protect cartel that is insulated from market competition due to incorrect claims of AI risk. This will maximize the technological and societal payoff from the amazing capabilities of these companies, which are jewels of modern capitalism.

• Startup AI companies should be allowed to build AI as fast and aggressively as they can. They should neither confront government-granted protection of big companies, nor should they receive government assistance. They should simply be allowed to compete. If and as startups don’t succeed, their presence in the market will also continuously motivate big companies to be their best – our economies and societies win either way.

• Open source AI should be allowed to freely proliferate and compete with both big AI companies and startups. There should be no regulatory barriers to open source whatsoever. Even when open source does not beat companies, its widespread availability is a boon to students all over the world who want to learn how to build and use AI to become part of the technological future, and will ensure that AI is available to everyone who can benefit from it no matter who they are or how much money they have.

• To offset the risk of bad people doing bad things with AI, governments working in partnership with the private sector should vigorously engage in each area of potential risk to use AI to maximize society’s defensive capabilities. This shouldn’t be limited to AI-enabled risks but also more general problems such as malnutrition, disease, and climate. AI can be an incredibly powerful tool for solving problems, and we should embrace it as such.

• To prevent the risk of China achieving global AI dominance, we should use the full power of our private sector, our scientific establishment, and our governments in concert to drive American and Western AI to absolute global dominance, including ultimately inside China itself. We win, they lose.

2. Thoughtful Times article titled: How does AI threaten us — and can we make it safe? It covered the Threats, but also the Solutions for those threats.

Summarising the threats:

• Unintended consequences

• Chemical weapons made fast

• Killer robots

• Deaths of despair

• Could the machines love us to death?

• Fake news

Summarising the solutions:

• Systems that are good at one thing

• Better guardrails

• Tough regulation and new treaties

• Agree principles to align AI and humans

• Reboot society

3. On the AI front, re-watched Ex-Machina after many years. What a beautiful and thoughtful movie!

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D. News and Charts That Made Me Think:

1. Apple is enhancing the iPhone's auto-correct feature with advanced AI capabilities. The upgraded auto-correct will use powerful AI to more accurately predict the words and phrases users are most likely to write next. The feature will learn from users' frequently-used words, including profanity, to personalise auto-correct over time. It's powered by a transformer language model, which will also improve the accuracy of speech typing. Will stop autocorrecting users’ curses to “ducking.”

2. In US equity positioning, non-commercial owners of E-mini S&P 500 contracts are in a record short position. 

Quoting MIR:

This is allegedly smart money, betting on an imminent decline. It represents the consensus about the US equity market which I have “experienced” after speaking to a broad range of investors over the past four weeks. The bearish narrative is dominant- the economy is going in recession (not my view, not now), earnings are going lower (the data suggest otherwise), there is a liquidity trap coming due to impending T-bill sales reaching $1 trillion (no, those bill sales can be done over time), the list goes on. Bearishness and fear of a collapse have overwhelmed major parts of the equity markets and in a way have driven the positive performance in the FANGs. 

What if there is no recession and revenues grow?

3. The US Manufacturing Renaissance.

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Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If you enjoyed this, don’t be shy.