Chief Investment Strategist, The Freeport Society
Machines able to think for themselves…
Learning independently…
Even teaching other machines…
And all without any human supervision or input!
I’ve seen this movie and everyone knows the infamous line: “I’ll be back!”
Except this isn’t a movie. And the machines (hopefully) have no plans to exterminate humanity.
We really are on the cusp of a future in which AI has the ability to understand, learn, and apply knowledge and reasoning across a wide range of tasks, just like a human being.
This is true artificial intelligence, which the tech crowd calls Artificial General Intelligence (AGI). And if you ask Elon Musk or Sam Altman, president of the company that launched ChatGPT, it could arrive as soon as this year.
Current AI tech is already a major productivity booster. I use it daily. So does my team. But its scope is still really limited.
I can ask a bot to execute specific tasks for me: write a letter, summarize a lengthy white paper, transcribe the audio from a video clip… But it’s not going to do anything on its own.
AGI can potentially take the initiative, like an ambitious employee, looking for new projects to do without my having to boss it around.
Bringing this to life requires significant capital injections by all involved. Evolving it once it’s “alive” will as well. And every step of the way, there is opportunity for investors.
To help me unpack all of this, I sat down with Futurist and InvestorPlace Senior Analyst, Eric Fry.
Eric was an early investor in AI, long before it was all the rage on CNBC.
That’s because he’s always on the lookout for big-picture trends that drive huge, multiyear moves in entire sectors of the market. When he finds them, he extracts and exploits the moneymaking opportunities a regular Wall Streeter would miss.
The insights he shares in today’s video are both exhilarating from an investment point of view… but also terrifying from a business perspective.
Click on the play button to watch now.
During the video, Eric and I discuss his presentation that expands on AGI and how to invest in it. You can view that here.
To life, liberty, and the pursuit of wealth.
Transcript
Charles Sizemore: Hi, Charles Sizemore, Chief Investment Strategist of The Freeport Society. And today we’re going Darwinian. We’re talking natural selection. Do you remember Blockbuster video? I remember many a trip, getting in my car as a teenager for movie night, driving to Blockbuster, fighting with the rest of the crowds, trying to get that new release. You know, good luck because they only had a limited number in the store. But if I got lucky, I got my video and had my movie night. What about Kodak? Do you remember film? It seems like eons ago, but you would take pictures, you would have to go to the photo lab and get them developed. That seems like something from a movie at this point. Blackberry, you remember that one as well? Yeah.
What do all these companies have in common?
They all failed to adapt to rapid technological change. And now they are all firmly in the dustbin of history.
Well, great. We have another potentially extinction level event coming… in artificial general intelligence.
Now most people know what artificial intelligence is by now. You’ve played with Chat GPT or you’ve at least heard of it. Artificial general intelligence is a whole other animal. And to help me unpack that, make sense of this madness, I brought on the visionary himself, Mr. Eric Fry.
Eric, welcome.
Eric Fry: Hi Charles, great to be here.
Charles Sizemore: Yeah, thanks for joining me. Now you are no Johnny-Come-Lately to artificial intelligence. You were very early to this trade. You were in it really six months to a year before anybody else I knew was talking about it. You’ve made your readers a lot of money in this.
But let’s go basic. Let’s just start with the fundamental question.
What is artificial general intelligence?
Eric Fry: Well, it’s the next iteration of AI, of artificial intelligence. And to use a very simple sort of metaphor and illustration, it would be like, you know, most of us have a certain age, your age, my age, some people younger, remember pocket calculators. We would use them for school exams or just at your house or whatever. And if you have a little pocket calculator, you’re punching in numbers to get a result, right?
So…
AGI would be akin to, if you still had one those things, walking in and just watching it make calculations on its own with no human input. It’s deciding what equations it needs to solve. It’s deciding what answers it wants to find without any prompting from a human.
So that’s a super simple illustration, but the idea is that.
It’s when artificial intelligence gets to the point where it exceeds human intelligence, it develops its own version of free will. So where you would have like an AI choosing to train some other AI completely away from any human involvement. And then how, you know, broadly and crazily that spirals is really anyone’s guess.
But that’s the general idea. It’s when right now, AI, as wonderful as it is in its various iterations, still requires a human prompt, a human question, if you will. AGI would not.
Charles Sizemore: Well, this is where this is where it gets really interesting to me because I use AI all the time just to augment my productivity, right? But it doesn’t replace me. It just makes me a little more productive, right? And that’s how really everyone is today. They might use Chat GPT, they may use Meta’s Lama AI, Grok, you know, pick one. They’re all really good. You know, all the main competitors out there are excellent. But none of them actually replace a human worker yet.
They make your existing workers more productive. I guess at the margin, you might go with four workers instead of five, but you’re not talking about massive disruption yet.
You get to AGI, you’re really talking about replacing a human worker. You’re talking about having an assistant with Einstein’s IQ that’s working independently, potentially 24 hours a day.
Never taking a bathroom break, let alone going on vacation or maternity leave or anything else. Not even so much as taking a coffee break. That is really a game changer.
Eric Fry: Yeah, so in terms of the impact of AGI on the workforce, let’s say, or on corporate productivity, you know, business development, I think, I don’t think we need to draw a huge distinction between AI and AGI, even though there’s a huge distinction. AI is already, if you will, replacing jobs, as you just mentioned. If it makes a certain workforce more efficient,
That means you’re going to need fewer humans to do the same work. That’s already happening and it’s already happening in pretty significant size. Then if AGI comes along, that potentially creates a hockey stick, an exponential curve in the capabilities of AI, which potentially then creates the wrong kind of hockey stick for for employment like this.
I think that type of move is inevitable. The question is over what span of time. Again, from an investment standpoint, I don’t think we need to make a huge distinction between those two things, but I would say this…
So I recently wrote about the tractor as an example of AI technology, like a precursor.
The first widely used tractor came out in 1917. It was by the Ford company called the Fordson. It was an immediate hit and displaced a gigantic number of farm workers over time. So it wasn’t just the Fordson, it was also the motorized thresher combine and other mechanical farm equipment.
Charles Sizemore: Beyond that, think about the second order effects too. Not only did it replace the manual laborers in the field, it also replaced the animals they were using, mules, horses, all of that. And then beyond that, it replaced the workers that would have been working on the horses, the veterinarians, the people putting horseshoes on them, like their second and third and fourth order effects of labor that was disrupted from that.
Eric Fry: That is absolutely correct. I have a direct experience with that. My great grandfather was working on a farm in Illinois. And when these machines came along, he had no choice, couldn’t get work, had a choice to go up to Montana to become a cowboy. He was on the husbandry side of the farm business, as you mentioned, and then lost his employment. So what does it get at is in 1800s it took 300 man hours to raise a bushel of wheat. That drops to 50 man hours in the 1920s and today we’re at three man hours. So if you go from 300 to 50, that’s sort of like AI. But if you go from 50 to three, that’s sort of AGI. So you see, and if you look at it over span of 200 years, you’re going from 300 to three.
That’s what we’re looking at.
Charles Sizemore: Yeah, that’s game changing, to say the least. Now, when does this happen? Because you hear, you know, some tech visionaries are often known to exaggerate, but then sometimes they actually come in ahead of schedule. I know Elon Musk and Sam Altman have both said they, well, I think Sam Altman was a little bit more, he wasn’t putting a date on it, but he said it was coming really soon. Whereas Musk thinks it’s happening this year. What whispers do you hear? What do you think?
Eric Fry: Well, all I can tell you is just to repeat what the true experts in the field have been saying. If you go back even five years, most of the leading AI experts in the U.S. and globally expected, AGI, at least the first versions of it, to arrive about 50 years out. And then with each year, it dropped from 50 to 30 to 20 to 10 to now…
As you say, the leading voices in this area believe this is a this year or the next two or three year thing. It’s now. And what that means is that all of the leading AI companies are attempting to develop their own version of AGI, just like they all attempted to develop their own version of generative AI with, you know, Chat GPT and Claude and all these different versions all the different companies have, whether it’s Oracle or Amazon or Meta or whatever. So the same folks are trying to win this AGI race.
Charles Sizemore: You know, I think about all the ways that this could could be used. I think about how I could use it personally and my eyes start bugging out of my head. Yeah, I think about the greatest trade I ever made in my career was really a lucky accident. I happened to be sitting in front of my computer when we had a flash crash. And what happened? The prices of several ETFs dropped from whatever they were trading at, you know, $10, $20 a share to just pennies. There was just no market for them. The market failed for a brief window of time. I happened to be in front of my computer and I just started buying like, you know, I was afraid to place too big of orders in an illiquid market, but I was placing a hundred shares, go, a hundred shares, go, a hundred shares. I minted money and I only was able to do that because I happened to be sitting at my desk at that time. Now, imagine you build an AGI bot that is you’ve given it general instructions to monitor, look for flash crashes, look for market dislocations, tell it to place trades when it sees some extraordinary event like that and use its discretion. Imagine you could be playing golf or something, you could be taking a nap, it could be the middle of the night and this is happening in Tokyo for all you know, and you just made life changing trades. I think about the potential there.
We’re in the business of absorbing information, distilling it into something usable, and then sharing it with our readers. That is an extraordinarily time consuming and difficult task. Imagine you have an AGI agent scouring all available information as it comes in in real time. Knowing you, it distills it into something it thinks you might find useful and actionable, and then, you know, essentially gives you bullet points. Oh my gosh, I mean, what would have taken you hours, days, maybe weeks?
Eric Fry: So yeah, absolutely true. The use cases of course would be infinite, right? The flip side, the sort of scary side, is that it’s really like, it’s a sort of Frankenstein moment. The Frankenstein’s not the monster, the monster is the monster. Frankenstein’s the doctor. So Dr. Frankenstein tries to make this benign monster, but the monster’s not benign.
So you try to build an AI that screens the stocks you want to screen and maybe this AI says, I got my own idea. This is what I’m going to do. And I’m going to create a better system. And I’m going to not only do that, when the trade succeeds, I’m going to wire the money to an account in Singapore. I mean, you don’t know what this AI is going to do. It makes its own decisions. That’s the thing about AGI.
It becomes human-like.
Charles Sizemore: You like to think you could build basic rules around it like guardrails, but then if it really was acting on its own, it could just eliminate the guardrails, right?
Eric Fry: In theory, well, it actually will happen in some respects. If you have a technology that is A, more intelligent than the most intelligent human, and B, has the capacity physically to develop beyond what it has already.
One particular scary use case for the crypto world is that a lot of people believe that AGI is one of the technologies that could break crypto codes. At least it would participate in that process. That’s a plausible real threat.
Charles Sizemore: AGI powered by a quantum computer. Exactly. All known encryption.
Eric Fry: Right, exactly correct. And maybe AGI accelerates the development of super effective quantum computing, where the two things could work together, potentially. But that’s the story of AGI and AI. That’s the world we’re in. As you said at the outset, it’s the Darwinian process. And the companies that, just narrowing it down to the investment world, the companies that identify both the opportunity and the risk most quickly and are able to integrate the new technologies most quickly and most effectively on the survivors and those that don’t won’t.
Charles Sizemore: Yeah, they become the next blockbuster. So that does bring me to the next question I wanted to ask you, how do we invest in this? I know from from your past writings, you sort of broken it down into buckets to look for. So why don’t you walk us through some of those?
Eric Fry: Well, the first bucket is a bucket I mostly completely ignore, and that is investing directly in the new technologies that facilitate AGI or AI. You can make a lot of money there, but very easy to be wrong. The world is changing at lightning speed. So I consider it personally too easy to make a mistake there. And so I pretty much ignore almost all the direct technology investments in AGI. Instead, been looking at the suppliers, companies that apply AI and will apply AGI in some fashion, who are applying it today to actual commercial advantage, not applying it as a sort of side hobby, but actually implementing AI in some way to make themselves more prosperous.
That’s one huge category of investment.
Another is investing alongside AI or alongside AGI. That’s basically investing in companies that facilitate, usually in a physical way, facilitate infrastructure with land, equipment, components, cooling, you name it. Things for data centers, things that will facilitate some facet of AI.
And the final category, what I call future-proof companies. Companies that, no matter what, even if, you know, AGI bots end up running the entire planet, you’re still going to need some of these things. So agriculture, I mean, to the extent there’s still humans around there eating something, you know, you’re going to need agriculture.
You’re going to need transportation for a very long while. Again, as long as your machine was around, you’re going to need travel companies.
Charles Sizemore: Until you know quantum teleportation is possible, until beam me up Scotty becomes a real thing, you’re still going to need transportation.
Eric Fry: Yes, so I look in those fields, areas that are I consider to be future proof where they’re not going away anytime soon, if they ever do.
Charles Sizemore: You know, Eric, it’s funny, I had this this concept that popped into my head, you know, the farmers revenge, right? It seems like the trend of the last 100 years has been away from the countryside into the cities, the farmer was forgotten about, nobody cared about that, that entire industry. Suddenly in a world where everything is in flux, you know, modern industries are at risk of, know, Darwinian natural selection here. Suddenly the oldest and most boring industries like agriculture, the most basic, the most finite, there’s a limited amount of viable farmland, all of a sudden that starts looking good.
Eric Fry: Yeah, well, there’s a variety of reasons there. You know, there was this whole locavore movement, call it 10 years ago, where people were eating locally, right? Locavore. That’s the farm-to-table concept, all the love. Now, a lot of that was just, we’ll call it no-grin-all-ahead, love-the-earth type of thing. But it becomes… in an extreme case or even in a non-extreme case, it becomes not essentially an economic imperative, but it becomes something to think about. How close do you, I mean, we’re kind of getting out there now, but how close do you want to be to your food? How close do you want to be to your water? How much control do you want to have over different components of your lifestyle in a world where AI is…
Charles Sizemore: Or potentially you’re going to have a robot master controlling you. Right.
Eric Fry: Right. And the only way get away from this is to live in your 1970s VW bus somewhere and grow your own vegetables.
Charles Sizemore: The hippies revenge. Love it. So, okay, I know that you recorded a presentation on this on Thursday. We’re going to put a link to that so that anybody that wants to know more about AGI, how to invest in it, all of that, they can follow that link. Any last investment tips before we go?
Eric Fry: No, not really. I think some of the things that are the direct ideas that we’re investing in are like companies that are using AI to sort recycling materials, another one using AI to optimize rolling stock, how trains move across tracks. There’s a lot of different categories of AI applier that I think people…
It’s just not on the forefront of people’s minds.
Charles Sizemore: No, most people think AI. They immediately think, you know, a chat bot that’s going to write a legal brief for them or something. They’re not thinking old economy. And that’s where the opportunity lies.
Eric Fry: That’s where some of them, they may not be, you know, the next 100,000 percent gainer stock, but they can be the next 1,000 percent gainer stock and they can do so pretty securely because you’re talking about, in some cases, an established company that has taken that next step and has figured out a way to apply AI in ways that dramatically boost efficiency and therefore expand profit margins on the same basic business line. So those are fascinating companies.
Charles Sizemore: Those are the companies using that to stay one step ahead of evolution. Love it.
Well, Eric, thanks for joining me today.
Again, we’re going to put a link to your presentation below the video.
Thanks. I hope to have you on again soon.
Eric Fry: Thank you, Mr. Charles, appreciate it.
Charles Sizemore: And everybody watching, this is Charles Sizemore, signing off.