It is probably impossible to hedge against a FOOM scenario. But it seems like there are plausible 'slow' but still transformative AI scenarios we might want to hedge against.

Here is an example of a portfolio you could construct:

40% VUG (covers most larger us tech companies, has some stuff you don't specifically want but gives you some hedging)

40% IGV (smaller us tech companies)

20% CQQQ (china, really high expenses but oh well)

A related question is how you could add exposure to an existing more balanced portfolio. (example answer: Buy CQQQ and IGV)

I am fully aware that trying to get lots of exposure to AI progress is the opposite of diversification for most lesswrong users. But if you are expecting rapid progress soon it might still be worth doing.

Some sub-questions that might be useful:

-- Which US Tech ETfs are most useful

-- Should people buy specific stocks instead of ETFs? Which ones?

-- How should we get Exposure to China? Do we want/need China tech exposure?

-- How do we get exposure to areas besides the USA and China? Do we need to?

-- Should we invest in land if we expect AI progress?

-- Should we directly invest in hardware (Nvidia has already gone up a lot)?

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6 Answers sorted by

sapphire

Jul 29, 2020

80

I wound up doing something similar to this:


ARKQ - 27%

Botz - 9%

Microsoft - 9%

Amazon - 9%

Alphabet - 8% (ARKQ is ~4% alphabet)

Facebook - 7%

Tencent - 6%

Baidu - 6%

Apple - 5%

IBM - 4%

Tesla - 0 (ArkQ is 10% Tesla)

Nvidia - 2% (both Botz and ARKQ hold Nvidia)

Intel - 3%

Salesforce - 2%

Twilio - 1.5%

Alteryx - 1.5%

BOTZ and ARKQ are ETFs. They have pretty high expense ratios. You can replicate them if you want to save 68-75 basis points. Botz is pretty easy to replicate with only ~10K.

Alexei

Jul 28, 2020

50

I'd consider adding exposure to specific company candidates most likely to participate / benefit from AGI, namely: Google, Microsoft, IBM, Amazon, etc...

Also, since you're betting on a pretty drastic outcome, which is very likely not priced in correctly into the markets*, you should consider buying options instead of stocks. The cost to you is much cheaper, it's easier to get more leverage, and they payout is much bigger for the extreme cases (in your favor).

* I gave a talk that touches on this point recently. The transcript should be up in the next few weeks.

Steven Byrnes

Jul 25, 2020

40

Robot bodies are an obvious complement to robot brains.

2Pattern4y
Such as?
4Stuart Anderson4y
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Steven Byrnes

Jul 27, 2020

20

For hardware, I can imagine a scenario where FPGAs become temporarily very important... This would be a period of rapid development into new types of algorithms that diverge from the capabilities of GPUs / TPUs, with such rapid and wild algorithm changes that new ASICs can't keep up. I dunno, it's just a possibility, probably not the most likely when I think about it.

artemium

Jul 27, 2020

10

Excellent question! Was thinking about it myself lately, especially after GPT-3 release. IMHO, it is really hard to say as it is not clear which commercial entity will bring us over the finish line, and if there will be an investment opportunity at the right moment. It also quite possible that even the first company that does it might even bungle its advantage and investing there might be a wrong move (seems to be a common pattern in the history of technology).

My idea is just to play it safe and save money as much as possible until there is a clear example we arrived at the AGI level (when AI completely surpasses humans on Winograd schemas for example), and if there won't be any FOOM try to find the companies that are mostly focused on the practical application where you get the biggest bang for the buck.

But honestly, at the point where you will have AGI widely available its quite possible that the biggest opportunity is just learning to utilize it properly. If you have access to AGI you can just ask it yourself: "how to benefit from AGI given my current circumstances?" and it will probably give you the best answer.

I've given this a strong downvote, but I'm writing a comment so the OP and passerby aren't confused why a long comment that provides relevant answers is (currently) sitting at -3 karma:

  1. Repeating the false but popular assertion that smart people can't outperform indexes without insider knowledge/huge amounts of luck.
  2. Conflating whether it's moral to invest in China with whether it is profitable.
  3. The suggestion that the asker should look into selling moonshine/other contraband. (This isn't a moral complaint, it's just bad advice. Starting a manufacturing business isn't a remotely suitable replacement for stock investing + the risk adjusted returns of such a business are very poor.)
3MikkW4y
I say props to Stuart for not letting Goodhart get the best of him, and we should follow suit. Investing in China might be profitable (i.e. provide financial returns), but it also increases the probability of living in a world that I don't want to live in- for selfish reasons as much as moral reasons. When investing, it's far too easy to be blinded by the numbers, and end up actively incentivizing bad things to happen. That's not something rationalists should strive to do.
2Stuart Anderson4y
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1Stuart Anderson4y
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