Can AI Truly Help Your Investments? Warren Buffett’s Longtime Business Partner Quips ‘Old-Fashioned Intelligence Works Pretty Well’
While artificial intelligence (AI) is taking the world by storm — and while many investors are very bullish on the technology — some public figures believe it is over-hyped. Berkshire Hathaway’s vice chairman, (billionaire investor and Warren Buffett’s right-hand man) Charlie Munger, recently said AI was “probably getting more [attention] than it deserves,” according to Fortune.
“We’ve always had artificial intelligence, where software creates more software,” he said, according to Fortune. “And, of course, that’s very useful, [but] we’ve had it for a long time.”
Munger added he was “skeptical” of some of the hype surrounding AI, noting that “old-fashioned intelligence works pretty well.”
AI: A Shiny, Bright New Object?
Some experts agreed with Munger, noting that while they remain bullish about the future of AI, the current hype might be a case of “shiny bright new object.”
“It’s no coincidence that Munger and Buffett have stood the test of time with their investment returns,” said Ryan Doser, owner and founder of ThriveOneFive Media and website admin for AI Insider Tips. “Leaning on the fundamentals of investing and evaluating the financial health of publicly traded companies should take priority over ‘chasing shiny objects.'”
Doser added that prior to AI, the “shiny objects” investors sought were cryptocurrency and DotCom stocks.
“Both of these had their run and eventually crashed. I see a similar pattern with AI when it comes to investing,” he said.
Experts who agree with Munger’s sentiment cite another argument: current large learning model (LLM) AI is not appropriate for investments that require fresh data to make good decisions.
“If data is fed into quantitative machine learning models those can be quite helpful to find hard to see patterns. That is technology many hedge funds use to find short term anomalies in markets,” said Phil Siegel, founder of CAPTRS. “But for most of us it’s not very helpful to make routine investment decisions because we don’t have access to ways — yet — to combine the power of the models with the freshest real time data.”
AI Bulls Remain on Alert
Yet, AI bulls believe differently — including Wedbush Securities analyst Dan Ives, who said that the demand for AI is real and growing.
“Use cases are exploding and enterprises are viewing AI as a major strategic initiative over the coming years which we continue to view as the most transformational tech trend since the birth of the Internet in 1995,” he wrote in an Oct. 10 research note.
Ives also observed in an Oct. 6 note that while the bears “now have all come fully out of hibernation mode and will yell fire into a crowded theater again creating agitation and panic for the bulls,” Wedbush will instead focus on “this generational AI growth and $1 trillion of tech spending now on the horizon over the next decade.”
In addition, Richard Gardner, CEO at Modulus, said AI is highly effective at synthesizing and analyzing large amounts of data — data in quantities that would be impossible for humans to analyze in real-time.
In turn, that leads to the identification of patterns and correlations that are quite useful in quantitative trading strategies, he said.
“It is also incredibly useful in analyzing sentiment, whether from news, social media posts, or other inputs. In such a role, the input is absolutely massive, and, from that, it can draw conclusions and help analysts make predictions in ways otherwise impossible,” he said.
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