Building Wealth When you get a chance to make a joke at your bosses' expense, you take it.
That may not be good career advice, but I (Matt Weinschenk) just couldn't resist.
A few years ago, our investment teams met for our annual Spring Editors' Conference. This is when all of our editors and analysts at Stansberry Research get together to discuss the outlook for the year, debate investments, and share ideas.
When it was my turn, I shared a presentation designed to poke fun at our top editors' predictions.
First, I played an audio clip of Steve Sjuggerud predicting oil would go to $500 per barrel and bitcoin to $1 million by the end of 2019.
I played another clip, this time with Dan Ferris admonishing investors to "never buy a value stock."
Only after I played these recordings of Steve, Dan, and other folks at Stansberry, I revealed that all of these audio clips were faked with artificial intelligence.
This was early 2020. And this AI technology was not nearly as advanced as it is today. But I found a software library that could, with some coaxing, read out text in the voice and accent of a particular speaker based on a 10-second audio sample.
The results weren't perfect, but they were passable. And we got a laugh out of hearing our experts make lousy predictions and give advice that was totally against their character.
But at the root of the talk was a warning.
I followed up by pointing out that AI "deepfakes" were coming. Fake audio. Fake video. And they would, I predicted, upend society.
I pointed out an actual 2019 case in which a fraudster faked a CEO's voice, called his company, and successfully got them to transfer $243,000 to the criminal's account.
And if you've been watching the news at all, you now see that my warnings have all played out...
"Generative" AI – the kind used to create text, audio, or video from various prompts – has undergone major breakthroughs and is in everyday use by the public. According to a UBS study, ChatGPT became the fastest technology to reach 100 million monthly users, needing only two months.
I was entirely right on the potential of AI. And my innate modesty will only allow me to make such a claim when I follow it with a second truth... I got the investment implications completely wrong...
Get Off the Internet
My takeaway from my 2020 study of AI was that the Internet would soon become a dumpster fire.
With the ability to create fake, realistic content on demand, nothing you saw online could be trusted or relied upon.
Very soon, we would see faked footage of a politician saying something offensive. Someone would automatically generate and post thousands of articles about a person committing some sort of crime to besmirch their character.
Eventually, the stuff people used to watch online, like incredible feats of athleticism or interesting travel locations, would result in a yawn. We'd think it's just fake.
Therefore, we saw greater value being put on real-world experiences... We expected everyone to shut down their fake-filled phones and go out to concerts and theaters, fill up the stadiums at sporting events, and travel to national parks.
Unfortunately for me, this conference occurred in early March 2020. The next week, the pandemic shut down all real-world experiences. All of the "experiences" stocks I favored – including Churchill Downs (CHDN), World Wrestling Entertainment (WWE), Formula One (FWONK), and Live Nation Entertainment (LYV) – tanked.
Now, many of these stocks eventually soared to new highs as the economy reopened. People are flocking to real-world experiences like concerts and travel, just as I'd predicted.
But still, I had ventured into a classic bungle. I made overly confident and broad predictions about where a revolutionary new technology would lead.
At the birth of a new technology, some immediate uses may be apparent. But given the way technology, culture, and society evolve and interact, the long-term applications are nearly impossible to predict.
In the early age of computers, they were big machines that crunched numbers. Few people had the vision to consider they'd do more than that.
To crack the German Enigma code during World War II, the British government commissioned the building of world-class "Colossus" computers. After they cracked the code, Winston Churchill ordered them destroyed, stating that "there would never be any need for such machines once the war ended."
When smartphones were invented, they seemed pretty cool. But no one anticipated teenagers would post music videos of themselves singing – with computer-perfected faces – and be seen by millions of people. We figured that a BlackBerry (for phone calls and e-mail!) was about as "smart" as anyone really needed.
Technology grows and interacts with other things in ways that even the brightest technologist can't predict.
World-renowned science-fiction writer Arthur C. Clarke summarized this in his three laws...
Law 1: When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.
Law 2: The only way of discovering the limits of the possible is to venture a little way past them into the impossible.
Law 3: Any sufficiently advanced technology is indistinguishable from magic.
Only words like "magic," the "impossible," and "probably wrong" can capture what happens when you look too far into the future of technology.
Now, with these new AI models unleashed upon the world, we're all grappling with just what they mean, what they will change, and, for some of us, how to invest.
And it's time to slow down for a minute...
On July 19, two Wall Street legends will reveal how AI just shattered one of the most important barriers in technological history. They'll also detail why the opportunity to use AI today could transform your wealth in 2023 – or risk you being left behind forever.
Click here to reserve your spot today.
Best regards,
Matt Weinschenk