Some naive thoughts on AI investing

Investment-wise, I think pretty soon there will come a time when people just get tired of all the AGI bullshit and decide not to invest that much in it, and only afterwards do people realize the real value of the current LLM line and invest again. This means that there are two streams of thought, and the struggle between the two is the most important factor that sets the price for the whole AI industry. The first stream is about AGI, while the second about automation. The first creates the bubble and sets the limit, while the second supports the value and becomes the base.

A valuation system on AI is best designed, therefore, based on the absolute valuation of the temporal strength of the two streams, or the relative strength between the two. 

But how? I mean these are highly abstract intellectual streams that are very far away from practical industrial uses, and they are notoriously hard to pin down quantitatively. Seems much easier to track Nvidia's output than these.

Two solutions come to my mind: one is to focus on the relative change, the difference in difference of the issue. Say the current price (or the moving average of it, if we leave the time span problem aside temporarily) already reflects the relative strength, if someday some event causes the investing people to feel much disappointed at the AGI braggings, such a change creates, immediately and only temporarily, an undervaluation of the AI industry, which is a signal for buying. This approach presupposes that the two streams work on two different levels and change at different speeds. The AGI stream, that is, people's hope (or fear) of realizing AGI, floats on the surface and fluctuates more, while the automation stream, that is, people's actual usage of AI (mostly based on LLMs) to gradually bring repetitive chores to automation, runs deeper and changes slower, because every usage, every large scale social habit, needs time to culminate and diffuse.

The second solution is to find the abnormal, the extreme cases to bet on. Look for the companies or projects that are either very futuristic and yet impractical or very low-profile and yet useful. The futuristic impractical ones are the ones you can bet against, while the low-profile useful ones are the ones you can bet on. This approach requires only a qualitative assessment, but it has to be wide, exhaustive, so as to compare between different projects and decide which is more futuristic and which more useful. Combined with some derivatives, you may even create a bet on the relative price change between two extreme cases, which protects you from losses EVEN IF all the AI projects are overvalued already. That being said, I do think there are some undervalued AI projects out in the market waiting to be discovered, because there is a trend of overrating AI projects based on its intelligence rather than its usage, so that companies are trying hard to show off some cleverness of their models either by superhuman performance or by resorting to sci-fi conspiracy theories where AIs are already planning on destroying or (much worse) enslaving the human race. Well, these are all plainly bullshit, and to make small bets against such bullshit is what I think a good way of making money AND rectifying the society at the same time.

Comments

Post a Comment

Popular posts from this blog

Family education is not that important

(translated from my Chinese blog) This is my new project, “Nietzschean Philology”. In each installment, I’ll read a passage from Nietzsche’s original writings. By practicing text analysis, we can enhance our ability to understand the world. The reading of "We Philologists" continues. Section 11 continues the discussion of external factors hindering genius individuals from the previous section, shifting from professional education (unqualified philologists) to family education. It's no surprise that Nietzsche views the importance of family education very lowly; ultimately, there are too few cases where families can provide the life possibilities for geniuses. Let it be considered how differently a science is propagated from the way in which any special talent in a family is transmitted. The bodily transmission of an individual science is something very rare. Do the sons of philologists easily become philologists? Dubito. Thus there is no such accumulation of philological c...
Read more

The value of life depends to a great extent on pure hazard

(translated from my Chinese blog) This is my new project, “Nietzschean Philology”. In each installment, I’ll read a passage from Nietzsche’s original writings. By practicing text analysis, we can enhance our ability to understand the world. "We Philologists" Section 1. Starting from the two main themes of classical linguistics and education, Nietzsche discusses how the specialization of education leads to premature decisions that result in foolish choices in life. He also explores the dilemma of choosing a career: it’s impossible for a person to know what kind of career they should pursue while actually engaging in that career at the same time. As a result, life becomes something determined purely by chance. To what a great extent men are ruled by pure hazard, and how little reason itself enters into the question, is sufficiently shown by observing how few people have any real capacity for their professions and callings, and how many square pegs there are in round holes: happ...
Read more

Can Writing be fun?

 My dear friend suggested, after reading my last post, that writing can have more than one purpose, and what I was arguing, namely writing as a form of thinking, was merely one of the many purposes for writing. For instance, writing can be for remembering; writing can also be for fun. Now I would like to leave the remembering part for the next post. For now, let's talk about fun. Can writing be fun? Yes. But what kind of fun is that? To answer this question, there are basically two approaches, both of which lead to the same conclusion. I will start with the easy approach: the supply side of the fun. Now, what are the things that are mostly considered fun? Entertainments. Movies. Music. Video games. Hanging out with friends. Partying. Sightseeing. Travelling. TikTok. Youtube. Netflix. These things can be placed into an imaginary spectrum, with one side being totally brainless, and the other side requiring some sort of effort. Let's take music for example. Listening to music can ...
Read more