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Notes -
There is a certain investment thesis that I see increasingly on LW / AI Twitter / adjacent spaces online. Let me summarize it:
If AI destroys the world, or someone uses it to, money doesn’t matter and probably even the most hardcore preppers are toast. There is no use preparing for this scenario other than maybe bringing forward some bucket list items if you’re a Yud level doomer.
If AI leads to some incredible abundant utopia with a FOOM / hard takeoff scenario, money won’t matter and we’ll all be trillionaire emperors of our respective limitlessly abundant space kingdoms and/or VR wirehead heavens. Maybe Elon Musk will become some overlord, but the average equity investor won’t know or care.
If things don’t change, and/or AI gets retrofitted onto the existing economy in a fake scenario to preserve social and economic status stratification and/or private ownership of property / means of production, people who own big tech / AI companies will be best off. Everyone else will either be a UBI peasant at best or Elysium / Manna underclass at worst.
If the realistic possibility space consists of solely these scenarios, the only logical investment strategy unless you’re retired or retiring in under 5 years is to YOLO everything on AI/tech/etc stocks. But that is a big if. This thesis is especially enjoyed by tech industry workers who argue that either AI will replace them, in which case this must make money, or it won’t, in which case at least they still have a high paying jobs.
I don’t think it takes a genius to see why this is more than a little flawed.
While I align with the idea that in the limit the only real possible outcomes of superhuman general AI are doom or utopic abundance, I agree that the third point is proving too much. Possibility of AI being a bubble aside, even granting that AI lives up to the hype and drives unprecedented productivity, it seems extraordinarily difficult to determine who actually ends up capturing the value from that productivity.
Nvidia is a software company in a trenchcoat vulnerable to having their moat and margins forded by sufficiently good SWE AI, FAAMG still derive a supermajority of their revenue from vulnerable middle-class consumers directly and indirectly, and the American frontier labs are potentially vulnerable to having their margins on inference undercut by Chinese lab competition and tokens turning into a commodity.
Personally, my thesis is simply to be largely all in on global total market indices - reasonably diversified against a potential bubble, while insofar as property rights are preserved and AI creates unprecedented value, it gives me the best chance to invest in the someone primed to capture that value, and presumably even the "modest" returns on an index fund are going to be good enough if AI does end up being that transformative.
Of course, in the more exotic doom / utopia scenarios one's investment mix is not going to matter very much either way; betting on the rapture has never been a winning strategy.
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