The Nightmare A.I. Will Wrought

When we will be to robots what dogs are to humans… ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ February 26, 2024  |  [Sign Up]( The Nightmare A.I. Will Wrought “I visualize a time when we will be to robots what dogs are to humans, and I’m rooting for the machines.” — Claude Shannon [Special Reminder: In case you missed our late-day announcement yesterday, [The Real October Surprise]( The Essential Investor has merged with legacy contributors to Agora Financial. The new, larger, more inclusive project is called The Grey Swan Investment Fraternity. If you’re interested in the scope and benefits of our new endeavor, please see what prompted us to merge [here](. If you’ve been a member of The Essential Investor, please keep an eye out for your new benefits.] Dear Reader, February 26, 2024 –  “I’d rather read toilet paper than Zero Hedge,” writes Mr. JC Wilcox, who kicked off the topic of our last missive, How To Read The Internet And Why. While Nvidia and the S&P 500 were hitting all-new highs and dominating the news cycle, we were quietly reviewing a number of responses to our more mundane inquiry.  I had to admit to JC that I read Zero Hedge as a "guilty pleasure" in the same way I read Vanity Fair or The New Yorker. Their bias is so obvious that they're willing to stretch the truth for a good zinger. I'd probably do the same with WaPo or NYT or The Wall Street Journal — but I don't want to pay to read them! Heh. “I agree,” Wilcox continues “the internet is full of BS and our computer-news population is ignorant. [Mainstream media], like CNN and NBC, by contrast, sin mostly by omission.” And, we might add, it’s going to get a whole lot worse. Exhibit A: The following interaction our industry colleague Stephen McBride had with Google’s AI, Gemini (formerly known as Bard). Enjoy! What an embarrassment, Google Stephen McBride, RiskHedge.com Warning: We’re touching on a thorny issue in today’s Jolt. [Addison’s note: Jolt is Stephen’s publication]. First, I was wrong about AI… I’ve said many times, “This is the WORST artificial intelligence is ever going to be.” Google (GOOG) just proved me wrong. Last week, Google launched Gemini, its much-anticipated ChatGPT competitor. If you own Google because you think it will be a leader in AI, think again. It has almost no chance of winning the AI race. Google has everything it takes to win: money, data, and chips. But it’s been hijacked by what I call the “PCP”— political correctness police. Like ChatGPT, Google Gemini can generate images. Here’s what you get when you ask it to portray America’s Founding Fathers. Notice anything weird? Source: Gemini There are dozens more examples of Gemini rewriting history (see them on X). What’s going on? Remember, Google had an AI chatbot ready to go before ChatGPT. But senior execs were afraid to release it because the AI might say something “politically incorrect.” So, Google fine-tuned Gemini to remove stereotypes. The result: Gemini refuses to depict white people. I dug into Google’s Gemini documentation to see exactly how it works. In short, when you give Gemini a prompt, it first gets routed to an AI model trained on diversity and “anti-harm” rhetoric. This model secretly edits the prompt before passing it to the image generator (you can’t see the edits). Gemini’s refusal to depict — or even say — positive things about white people isn’t a silly mistake. The AI works as designed and reflects the political leanings of those who built it. Gemini is trained on ideological datasets whose stated purpose is to oppose “stereotypes,” even if those stereotypes are true. Gemini prioritizes diversity over facts. It sacrifices accuracy for ideology. This affects you, even if you plan to never touch AI. First off, we’re investors. And Google is the world’s fourth most valuable company. Many of you own Google to profit from AI. And even if you don’t own it directly, you’re exposed through popular ETFs like SPY and QQQ. I’ve suggested avoiding Google many times. With this latest embarrassment, Google has irreparably damaged its reputation in AI. Oh, how the mighty have fallen. Google still dominates search and will continue to rake in billions of dollars selling ads. But as for being an AI leader? “Forgetaboutit,” to quote the great philosopher Tony Soprano. Google’s stock is still below its 2021 highs. Avoid it. But the reason this really matters is that by blatantly rewriting history, Google could speed-run us into a dystopian nightmare. Here’s George Orwell in his classic 1984: Every record has been destroyed or falsified, every book has been rewritten, every picture has been repainted, every statue and street and building has been renamed, every date has been altered. … I know, of course, that the past is falsified, but it would never be possible for me to prove it, even when I did the falsification myself. After the thing is done, no evidence ever remains. The solution isn’t to shut down or ban AI. No, no, the total opposite. We must fight to keep AI open and push back against regulation. Big AI players like Google and OpenAI tell us this tech is dangerous. That it must be heavily regulated to keep it out of the hands of the bad guys. What they’re trying to do is craft regulation in their favor, so they have full control over AI. This would mean a handful of companies, unlikely to be staffed by freedom lovers, will be able to censor what we see online without most people even realizing it. Imagine if people like this got full control of AI and used it to present their ideology as fact. I remain pro-AI. Every tech brings tradeoffs. Fire warms us and allows us to cook food. Armies also used it to burn down cities. Let’s embrace the “good”: personalized AI tutors, robo-doctors, and self-driving cars. Let’s also fight to keep AI open. We have freedom of speech. We need freedom of “compute.” – Stephen McBride, Risk Hedge CONTINUED BELOW... 2024 – The Real Election Year Surprise In 2016, the October Election Surprise was Hillary Clinton’s email scandal… In 2020, the October Election Surprise was the suppression of all the dirty material on Hunter Biden’s “forgotten” laptop… Now, in 2024, we’re forecasting an October Election Surprise that almost no one sees coming — and this time it’ll be way more devastating than anything you’ve seen before. [Click here to learn about 2024’s real October Election Surprise »]( It’s not at all what you think. CONTINUED... While we applaud McBride’s optimistic assertion, even the idea that we have “freedom of speech” anymore is questionable. We’re still left with the conundrum of how to decide what’s legit on the internet and how to make important decisions in our lives. “The dossier part of election interference by Russia was false,” we return to include the real point of Mr. Wilcox’ reader response. “But the 8000 FSB and other Russian employees working to cloud the West’s vision with dezinformatsiya are a reality. “And that’s just the Russians. Domestic players are not about ‘dirty tricks’ either, obviously.” Artificial Intelligence only makes the hacker’s agenda easier. It will turn the internet into an even greater obfuscation of what's important… and what’s true. “What did happen to fiscal responsibility?” our correspondent Mr. Wilcox asks in his e-mail, more directly to the biggest non-issue of this year’s election. “[The national debt and the defense industry] are the giant elephant being swept under the carpet. “These are the reasons I’m overweight in gold, Bitcoin and Ethereum, right now.” “[The trend we’re following] can’t end well. There’s a lot of pain ahead.” We suspect that’s an understatement, as well. “The pace of progress in artificial intelligence is incredibly fast,” Elon Musk wrote recently in a comment on Edge.com  “Unless you have direct exposure to groups like Deepmind, you have no idea how fast — it is growing at a pace close to exponential. The risk of something seriously dangerous happening is in the five-year time frame. Ten years at most.” Yeah, hmm… looking forward to that. Addison Wiggin, The Wiggin Sessions P.S. Like millions of other teenagers do to their own dads, my daughter sends me TikTok videos. Which means, I have inadvertently signed up to receive TikToks from other teenage girls. That might sound like hell… and it is. But, this weekend, TikTok may have proved useful. Someone unknown to me sent a video to my account. It was from a roughly teenaged girl gleefully exclaiming how she’d just made over $500 trading shares in… [drumroll]... Nvidia, the poster child for AI stocks on the Nasdaq. If I were even mildly interested to follow the thread – which it turned out I was – I would have discovered a litany of teenaged girls trading Nvidia and other stocks. Geez. What could go wrong? In the early 2000s we used to share stories of cab drivers tipping undoubtedly well-researched tech stocks. By the end of that decade shoe shine boys were flippin’ houses. Not all that long ago, Reddit-Nation was “gettin’ back at Fat Cats on Wall Street” by perniciously rallying the price of the moribund entertainment stock AMC to nosebleed heights, sticking it to short sellers in the process. Signs of a bubble. All of them. We could handle each, in turn. Pure entertainment. But girls who would ordinarily be sharing make-up tips with one another or forwarding videos of Addison Rae taking the “Savage” dance challenge… Are. Now. Trading. Nvidia. P.P.S. A quick search of the financial sites, you can see that the price-to-earnings ratio (P/E) of Nvidia at the close on Friday was 65. The P/E of a stock, as we’re sure you’re aware, is a measure of $1 earnings vs. the dollar price of the stock. Historically, a good stock on the S&P trades at a P/E of 20 to 23. The NASDAQ, where Nvidia trades, has averaged a slightly higher P/E of 28 over the past ten years. So… a P/E of 65 is already in bubble territory. A serious investor who wants to build a portfolio would have to wait 65 years for the earnings to reach parity with Friday’s Nvidia price. Meaning, if you’re expecting to make any money on it, you’re competing with the financial acumen of millions of teenage girls. That said, Nvidia’s P/E may already be on its way down. Last October it hit a P/E high of 143. Or… it could just be getting started going up again. “We haven’t even reached 1999, yet,” the paid market analysis service of Zero Hedge also noticed on Friday. They’re referring, of course, to the P/Es of tech stocks in the dot.com bubble that busted and destroyed the hopes and dreams of many would-be kitchen table tech geniuses in 2000-01… not to mention their 401(k) balances. More on The Bubble on Mainstreet and how to plan accordingly in the inaugural issue of The Grey Swan Bulletin, the paid segment of our investment fraternity. Hope you’ll join us with your own membership. Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com The Daily Missive from The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to The Wiggn Sessions delivering daily email issues and advertisements. 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