How much impact do you expect such a COI to have compared to the extra potential donations?
For reference:
You could have more than doubled your investments over the past 1 year period by investing in the right AI companies, e.g. Nvidia, which seemed like a predictably good investment based on market share and % exposure to AI and is up +200% (3x). SMH is up +77%.
Even the S&P500 is around 30% Microsoft, Apple (maybe not much of an AI play now), Nvidia, Amazon, Meta, Google/āAlphabet and Broadcom, and these big tech companies have driven most of its gains recently (e.g. this and this).
And how far do you go in recommending divestment from AI to avoid COIs?
Do you think people should avoid the S&P500, because its exposure to AI companies is so high? (Maybe equal-weight ETFs, or specific ETFs missing these companies, or other asset classes.)
Do you think people should short or buy put options on AI companies? This way theyāre even more incentivized to see them do badly.
Well, the bottom line is extinction, for all of us. If the COIs block enough people from taking sufficient action, before itās too late, then thatās what happens. The billions of EA money left in the bank as foom-doom hits will be useless. Might as well never have been accumulated in the first place.
Iāll also note that there are plenty of other potential good investments out there. Crypto has gone up about as much as AI stocks in general over the last year, and some of them (e.g. SOL) have gone up much more than NVDA. There are promising start-ups in many non-AI areas. (Join this group to see more[1]).
To answer your bottom two questions:
1. I think avoiding stock-market-wide index funds is probably going too far (as they are neutral about AIāif AI starts doing badly, e.g. because of regulation, then the composition of the index fund will change to reflect this).
2. I wouldnāt recommend this as a strategy, unless they are already on their way down and heavy regulation looks imminent.
Bitcoin is only up around 20% from its peaks in March and November 2021. It seems far riskier in general than just Nvidia (or SMH) when you look over longer time frames. Nvidia has been hit hard in the past, but not as often or usually as hard.
Smaller cap cryptocurrencies are even riskier.
I also think the case for outperformance of crypto in general is much weaker than for AI stocks, and it has gotten weaker as institutional investment has increased, which should increase market efficiency. I think the case for crypto has mostly been greater fool theory (and partly as an inflation hedge), because itās not a formally productive asset and its actual uses seem overstated to me. And even if crypto were better, you could substantially increase (risk-adjusted) returns by also including AI stocks in your portfolio.
Iām less sure about private investments in general, and they need to be judged individually.
I donāt really see why your point about the S&P500 should matter. If I buy 95% AI stocks and 5% other stuff and donāt rebalance between them, AI will also have a relatively smaller share if it does relatively badly, e.g. due to regulation.
Maybe thereās a sense in which market cap-weighting from across sectors and without specifically overweighting AI/ātech is more āneutralā, but it really just means deferring to market expectations, market time discount rates and market risk attitudes, which could differ from your own. Equal-weighting (securities above a certain market cap or asset classes) and rebalancing to maintain equal weights seems āmore neutralā, but also pretty arbitrary and probably worse for risk-adjusted returns.
Furthermore, I can increase my absolute exposure to AI with leverage on the S&P500, like call options, margin or leveraged ETFs. Maybe I assume non-AI stocks will do roughly neutral or in line with the past, or the market as a whole will do so assuming AI progress slows. Then leverage on the S&P500 could really just be an AI play.
My main point is that itās not really about performance, itās about ethics and conflicts of interest. Investing in Index funds is much more neutral from this perspective, given that AI companies are part of society and we canāt divorce ourselves from them completely because we canāt divorce ourselves from society completely (the analogy of the vegan accepting mail from their non-vegan delivery person comes to mind).
The S&P500 might be closer to neutral, but itās still far from neutral. If you want to actually be neutral, youād want to avoid positive exposure to AI companies. You might even want to be net short AI companies, to offset indirect exposure to AI companies through productivity gains from AI.
There are multiple options here that are much more neutral on AI than say the S&P 500, some very straightforward and convenient:
SPXT (excludes all ātechnology companiesā and so Microsoft, Apple and semiconductors, but still has other big AI-related companies like Amazon, Meta, Google, Tesla)
S&P500 + shorting individual AI companies, the MAGS ETF, semiconductors and/āor the NASDAQ-100 (inverse ETFs, put options, shorting with margin)
I also think the case for outperformance of crypto in general is much weaker than for AI stocks
Separately, arguing for being able to beat the EMH with AI, but not crypto, seems a bit idiosyncratic. Why not any other sector? Why does it have to be the one we are particularly concerned about having massive negative externalities? Why arenāt there climate change worriers making similar investments in new oil and gas drilling, or vegans making similar investments in meat companies?
I guess you might say ābecause if alignment is solved, then TAI will be worth a lot of moneyā. But itās complete speculation to say that alignment is even possible to solve, given our current situation. Much bigger speculation than investing in crypto imo. And the markets clearly arenāt expecting TAI to happen at all.
AI will be worth a lot of money (and ātransformativeā, maybe not to the extent meant in defining āTAIā) before alignment is much of an issue. Tasks will be increasingly automated, even before most jobs (let alone ~all jobs) can be fully automated, and prices will increase with increasing expectations of automation as it becomes more apparent (their expectations currently seem too low).
Do you expect that between now and TAI that would kill everyone, AI stocks wonāt outperform?
Why not any other sector? Why does it have to be the one we are particularly concerned about having massive negative externalities? Why arenāt there climate change worriers making similar investments in new oil and gas drilling, or vegans making similar investments in meat companies?
Give me decent arguments for substantial outperformance and Iād invest (although probably still keep AI to diversify). I think there are decent arguments for AI. There seems to be pretty limited upside in oil and gas and meat, and I donāt have any particular disagreements with standard projections, or any apparent edge for these. If you find some edge, let us know!
Do you expect that between now and TAI that would kill everyone, AI stocks wonāt outperform?
No, I expect they will, but it might be only a matter of months before doom in those cases (i.e. AI capabilities continue to advance at a rapid pace, AI capable of automating most work tasks happens, stocks skyrocket; but AI is also turned on AI development, and recursive-self improvement kicks in, doom follows shortly after).
If you find some edge, let us know!
Are you in the HSEACA fb group? Hereās a tip[1]: the relatively new crypto, WART. Heuristics: recommended by same guy that picked the 1000x (KASPA) and 200x (CLORE); geniuinely new algo (CPU/āGPU combined mining; working on an in-browser node); fair launch and tokenomics (no premine); enthusiastic developers who are crypto enthusiasts doing it for fun (currently worth very little); enthusiastic community; bad at marketing (this is an advantage at this stage; more focus on product). Given it has only a ~$1.5M marketcap now, there is a lot of potential upside. Iād say >10% chance of >100x; 1000x not out of the question. Timeframe: 6-18 months.
Usual caveats apply to these: not investment advice, do your own research, donāt put in more than you can afford to lose (significant chance they go to ~0), donāt blame me for any losses, etc.
How much impact do you expect such a COI to have compared to the extra potential donations?
For reference:
You could have more than doubled your investments over the past 1 year period by investing in the right AI companies, e.g. Nvidia, which seemed like a predictably good investment based on market share and % exposure to AI and is up +200% (3x). SMH is up +77%.
Even the S&P500 is around 30% Microsoft, Apple (maybe not much of an AI play now), Nvidia, Amazon, Meta, Google/āAlphabet and Broadcom, and these big tech companies have driven most of its gains recently (e.g. this and this).
And how far do you go in recommending divestment from AI to avoid COIs?
Do you think people should avoid the S&P500, because its exposure to AI companies is so high? (Maybe equal-weight ETFs, or specific ETFs missing these companies, or other asset classes.)
Do you think people should short or buy put options on AI companies? This way theyāre even more incentivized to see them do badly.
Well, the bottom line is extinction, for all of us. If the COIs block enough people from taking sufficient action, before itās too late, then thatās what happens. The billions of EA money left in the bank as foom-doom hits will be useless. Might as well never have been accumulated in the first place.
Iāll also note that there are plenty of other potential good investments out there. Crypto has gone up about as much as AI stocks in general over the last year, and some of them (e.g. SOL) have gone up much more than NVDA. There are promising start-ups in many non-AI areas. (Join this group to see more[1]).
To answer your bottom two questions:
1. I think avoiding stock-market-wide index funds is probably going too far (as they are neutral about AIāif AI starts doing badly, e.g. because of regulation, then the composition of the index fund will change to reflect this).
2. I wouldnāt recommend this as a strategy, unless they are already on their way down and heavy regulation looks imminent.
But note that people are still pitching the likes of Anthropic in there! I donāt approve of that.
Bitcoin is only up around 20% from its peaks in March and November 2021. It seems far riskier in general than just Nvidia (or SMH) when you look over longer time frames. Nvidia has been hit hard in the past, but not as often or usually as hard.
Smaller cap cryptocurrencies are even riskier.
I also think the case for outperformance of crypto in general is much weaker than for AI stocks, and it has gotten weaker as institutional investment has increased, which should increase market efficiency. I think the case for crypto has mostly been greater fool theory (and partly as an inflation hedge), because itās not a formally productive asset and its actual uses seem overstated to me. And even if crypto were better, you could substantially increase (risk-adjusted) returns by also including AI stocks in your portfolio.
Iām less sure about private investments in general, and they need to be judged individually.
I donāt really see why your point about the S&P500 should matter. If I buy 95% AI stocks and 5% other stuff and donāt rebalance between them, AI will also have a relatively smaller share if it does relatively badly, e.g. due to regulation.
Maybe thereās a sense in which market cap-weighting from across sectors and without specifically overweighting AI/ātech is more āneutralā, but it really just means deferring to market expectations, market time discount rates and market risk attitudes, which could differ from your own. Equal-weighting (securities above a certain market cap or asset classes) and rebalancing to maintain equal weights seems āmore neutralā, but also pretty arbitrary and probably worse for risk-adjusted returns.
Furthermore, I can increase my absolute exposure to AI with leverage on the S&P500, like call options, margin or leveraged ETFs. Maybe I assume non-AI stocks will do roughly neutral or in line with the past, or the market as a whole will do so assuming AI progress slows. Then leverage on the S&P500 could really just be an AI play.
My main point is that itās not really about performance, itās about ethics and conflicts of interest. Investing in Index funds is much more neutral from this perspective, given that AI companies are part of society and we canāt divorce ourselves from them completely because we canāt divorce ourselves from society completely (the analogy of the vegan accepting mail from their non-vegan delivery person comes to mind).
The S&P500 might be closer to neutral, but itās still far from neutral. If you want to actually be neutral, youād want to avoid positive exposure to AI companies. You might even want to be net short AI companies, to offset indirect exposure to AI companies through productivity gains from AI.
There are multiple options here that are much more neutral on AI than say the S&P 500, some very straightforward and convenient:
SPXT (excludes all ātechnology companiesā and so Microsoft, Apple and semiconductors, but still has other big AI-related companies like Amazon, Meta, Google, Tesla)
S&P500 + shorting individual AI companies, the MAGS ETF, semiconductors and/āor the NASDAQ-100 (inverse ETFs, put options, shorting with margin)
Small-cap, mid-cap or value ETFs.
Equal-weighted S&P500.
ETFs excluding US stocks.
Thanks for these. Iāll note though that personally, I have ~0 stock market exposure (majority of my wealth is in crypto and startups).
Separately, arguing for being able to beat the EMH with AI, but not crypto, seems a bit idiosyncratic. Why not any other sector? Why does it have to be the one we are particularly concerned about having massive negative externalities? Why arenāt there climate change worriers making similar investments in new oil and gas drilling, or vegans making similar investments in meat companies?
I guess you might say ābecause if alignment is solved, then TAI will be worth a lot of moneyā. But itās complete speculation to say that alignment is even possible to solve, given our current situation. Much bigger speculation than investing in crypto imo. And the markets clearly arenāt expecting TAI to happen at all.
AI will be worth a lot of money (and ātransformativeā, maybe not to the extent meant in defining āTAIā) before alignment is much of an issue. Tasks will be increasingly automated, even before most jobs (let alone ~all jobs) can be fully automated, and prices will increase with increasing expectations of automation as it becomes more apparent (their expectations currently seem too low).
Do you expect that between now and TAI that would kill everyone, AI stocks wonāt outperform?
Give me decent arguments for substantial outperformance and Iād invest (although probably still keep AI to diversify). I think there are decent arguments for AI. There seems to be pretty limited upside in oil and gas and meat, and I donāt have any particular disagreements with standard projections, or any apparent edge for these. If you find some edge, let us know!
No, I expect they will, but it might be only a matter of months before doom in those cases (i.e. AI capabilities continue to advance at a rapid pace, AI capable of automating most work tasks happens, stocks skyrocket; but AI is also turned on AI development, and recursive-self improvement kicks in, doom follows shortly after).
Are you in the HSEACA fb group? Hereās a tip[1]: the relatively new crypto, WART. Heuristics: recommended by same guy that picked the 1000x (KASPA) and 200x (CLORE); geniuinely new algo (CPU/āGPU combined mining; working on an in-browser node); fair launch and tokenomics (no premine); enthusiastic developers who are crypto enthusiasts doing it for fun (currently worth very little); enthusiastic community; bad at marketing (this is an advantage at this stage; more focus on product). Given it has only a ~$1.5M marketcap now, there is a lot of potential upside. Iād say >10% chance of >100x; 1000x not out of the question. Timeframe: 6-18 months.
Another: Equator Therapeutics[2].
Usual caveats apply to these: not investment advice, do your own research, donāt put in more than you can afford to lose (significant chance they go to ~0), donāt blame me for any losses, etc.
Join the group to see more.