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Notes -
So I made a successful tech play and I am trying to decide whether to (1) cash in; (2) re-balance; or (3) let it ride.
The background: I normally invest in boring Vanguard style mutual funds, but a year or two ago a buddy convinced me to take a modest chunk of my overall investments and basically make an AI play. The thinking was that this is analogous to the dot com bubble and people who got in early on "infrastructure" type investments as well as the leading companies ended up doing very well. Some of the investments fizzled, some did rather well, and some did extraordinarily well. Probably the best example is Sandisk which went up more than 50-fold. The upshot of this is that my tech portfolio is now worth a little less than $4 million. It's no longer a small chunk of my overall portfolio but instead is a slight majority of the total value.
At this point, the obvious thing to do is to take some chips off the table, but the tricky part is that part of me thinks that AI is more than just a bubble, that it will have economic impacts which make the Internet seem like pet rocks, hula hoops, and Dutch tulip bulbs. So basically I am left with a question that has been kicking around here for a while: investing in a situation where there is a huge range of possible outcomes, up to and including the possibility of a full on technological singularity. Thoughts?
From a psychological perspective I'd say pull half your winnings out and distribute it hedging against some scenarios you can think of. If AI goes off and the tech stocks don't reap the outside gains what might? A broad index of companies like the S&P500 might get commodity priced intelligence for very cheap and become much more valuable because their size and market position give them the best chance to leverage the boons. Other inherently scarce commodities like minerals and land will likely preform well in any scenario where labor, both physical and intellectual, falls to marginal. So mining companies with mineral rights and REITs might pay off. I'm sure you can think of some other scenarios. In most worlds these investments aren't big winners, but in the worlds where they are you'll be very happy you halved your direct AI exposure, which will be plenty anyways if it pays off, to hedge in them.
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Congrats on the success.
I suppose my 2c is that continuing to invest in tech stocks in expectation of AI being a crazy world shaking event seems a bit counter-productive; at the level of disruption that'd need to happen, it seems much more likely to me that value ends up accruing in completely unexpected places, that property rights themselves stop making much sense or even just straightforward doom as you say, rather than straightforward "AI investors rule, everyone else drools".
If there truly is going to be an aristocracy, it seems extraordinarily unlikely to me that it's going to be made up of random people who had a few mil in tech stocks pre-singularity, when society is already made up of interests much more powerful than "upper % retail investors".
YMMV, just a random largely risk-averse guy online.
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Honest question - what's your number to retire today? Because for me a least, $4 million is fuck you money. Do you really need more?
I'm already semi-retired in the sense that the business I run has stopped accepting new projects, at least temporarily and possibly permanently. The other wrinkle is that I am engaged and my fiancee is from a wealthy family so she may end up being on the high-maintenance side of things. But anyway, my question is more about making the most of the big changes which seem to be on the horizon as opposed to budgeting for retirement.
I'm pretty confident that absent some doom type scenario, we'll all end up collecting UBI. My concern is that there is going to end up being some kind of permanent or semi-permanent aristocracy. Which would kind of suck, but if there's going to be an aristocracy, I think I'd rather be one of the aristocrats.
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Do any of you have any side jobs or gigs that you do? Do they earn any positive income?
I play in a band, and just for giggles I did the math on today's take. I think that after travel costs, I probably made about $3 an hour. It's still a fun hobby that basically funds itself, but I won't be quitting my day job anytime soon.
My Substack buys me a few cups of coffee every month.
I sold a few digital and vinyl copies of my last album (not enough to break even on the recording costs, although fortunately the label paid for the vinyl pressing).
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