Everybody is talking about AI and its latest star, ChatGPT, an artificial intelligence chatbot that utilizes information available across the internet to provide conversational answers to specific questions. And, I would have to agree, it’s entirely mind-blowing and completely scary at the same time.

When I asked ChatGPT to “write a poem for me about butterflies for my birthday”, it returned the following:

Butterflies, oh butterflies 

So delicate and fair, 

Their wings of vibrant colors, 

So bright and rare. 

They dance and flutter, 

On the breeze so light, 

Their beauty on display, 

A wondrous sight. 

So, on your special day, 

I send a wish your way, 

For all the joy and happiness, 

That comes with each new day. 

May the butterflies bring you cheer, 

And all your dreams come true, 

For you are loved and valued, 

More than words can say, too. 

Beautiful, and affirming! Who needs Hallmark!

But there’s a problem. Arvind Narayanan and Sayash Kapoor put it succinctly: “[t]he philosopher Harry Frankfurt defined bulls**t as speech that is intended to persuade without regard for the truth. By this measure, OpenAI’s new chatbot ChatGPT is the greatest bulls**tter ever….ChatGPT is shockingly good at sounding convincing on any conceivable topic. But OpenAI is clear that there is no source of truth during training.”

This latest development in AI seems entirely consistent with a world consumed with finding the shortcut, the antidote to real, hard work, the latest version of Cliff Notes.

It seems some would rather have conversations with an inanimate object that regurgitates the collective wisdom of the most vocal than engage in a meaningful dialogue with real people.

In our opinion, not surprising in a world where “authorities” of all kinds touting our collective best interest seek to homogenize the human experience. A little too lofty for an investment take? Perhaps, but this applies to our financial services industry as well. Look no further than the constant stream of stories that suggest active management has fallen and can’t get up while plugging the unassailable benefits of passively following indexes — constructed, of course, by committees of nameless people in back rooms at places like S&P, MSGI, and Russell.

Why expect more?   

According to these guys, we should be satisfied with the collective performance of all investors and accept mediocrity as an agreeable outcome.    


As another example, what about ESG investing (we’ve commented extensively about this topic – see our blog post on the topic HERE.  Have institutional managers had any choice but to accept the pronouncements and sign onto the directives laid out in the Principles of Responsible Investment (What are the Principles for Responsible Investment? | PRI Web Page | PRI (unpri.org)) to continue to compete for these mandates?   

Where’s the evidence that PRI leads to better-performing companies, better-performing portfolios, or a better world?    

Is it laziness or a complete absence of curiosity?   

Or is it something much deeper?   

Do objective truths even matter anymore?   

We say they do. 

Follow the science, after all. And. beware of those who cherry-pick the data, explain away the results, and/or manipulate the interpretation when the data doesn’t support their accepted reality. 

In the end, it’s not science itself that we should adhere to, but rather the scientific method – a rigorous process to ferret out the truth regardless of personal beliefs or preconceived notions.   

We have often stated that we believe this is the secret sauce of the best money managers – consistent and rigorous implementation of an investment process that has been proven successful, the willingness to evolve that process over time to incorporate novel evidence and new insights, and the ability to extend these methodologies beyond their current scope of application.  Notably, this does not mean succumbing to the current whims of the market to gain acceptance.   

To that end, for instance, we have much more respect today for Ark Invest and its founder, Cathy Wood, than we did two years ago.  We know it currently sounds counterintuitive, but if you believe Ark’s approach adds value over time (and weren’t merely chasing performance), you must admire the steadfastness with which they defend their process in the face of adversity.  After all, Ark is just reaping what is sowed – the hype-driven marketing machine they created tends to consume its own when things turn.  They are neither the geniuses they were made out to be, nor the idiots they now appear – the truth, in our opinion, lies somewhere in between.     

Notably, search engine providers are concerned with ChatGPT.  Google has gone into crisis mode trying to figure out why all the money it is spending on “moon shots” isn’t resulting in anything practical or revenue-generating (a long overdue “come to Jesus” meeting, in our opinion).  While Google has been aggressively building its capabilities in this area, it has been slow to make them available to the public, fearing unintended consequences (and no doubt concerned that it could cannibalize its existing business).  Microsoft and Facebook had to take down their chatbots because they often gave “unsavory” answers.  Open AI doesn’t seem burdened by this responsibility — much like Tik Tok in that regard. 

In the end, despite our inclinations, we must recognize that ChatGPT doesn’t precisely know anything, notwithstanding its authoritative demeanor.  Let’s not fall into the trap of accepting everything we are spoon-fed simply because it’s easy (and fun). 

 On the positive side, my poetry has improved dramatically!  My wife will be pleased! 

Validus Growth Investors, LLC seeks to invest in companies at every stage of their growth. From startups to publicly traded companies, our research identifies inflection points that have the potential to produce meaningful growth and income for the clients we serve.

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