Berkshire Hathaway 2018 Annual Meeting Audience Question # 54

Warren doesn’t think machine intelligence bring much to the table in terms of capital allocation or investing

Warren Buffett:

OK, station 7.

Audience Member:

Hi, Warren and Charlie. Thank you for everything. I’m David (the sound in this part of the video is inaudible), an investment manager in Shanghai. I’ve been here for eight years.

If investment is a sport in the Olympics, you are our champion team. So my question is, facing the fast-growing machine challenges, how do you see the new competition impact the capital allocation productivity in the future?

For Charlie, what is the first principle of capital allocation from a general economic interest point of view? Thank you.

Charlie Munger:

Well, two questions. Machine intelligence. I’m afraid the only intelligence I have is… is being provided by something that’s not a machine. And I don’t think I’m going to learn machine intelligence. Yeah. If you ask me how to beat the game of Go with my own intelligence, I couldn’t do it. And I think it’s too old for me to learn computer science.

Generally I’m… I think that the machine intelligence has worked. After all, a machine now can beat the best human player of Go. But I think there’s more hype in that field than there is probable achievement.

So I don’t think the world is going to be changed that much by machine intelligence. Some, but not hugely.

And what was the other question?

Warren Buffett:


Charlie Munger:

One of them was machine intelligence.

Warren Buffett:

I think he was getting at capital allocation…

Charlie Munger:

Oh yeah. That’s such a general question. Generally speaking, we’re always trying to get the best… to get something that’s worth buying.

And the human mind rejects that if you’re in academia, because you could come in and make one declaratory sentence at the opening of the semester and you wouldn’t have anything to do for the rest of the… of your time. So people want to find some formula. It’s what I call “physics envy.” These people want the world to be like physics.

But the world isn’t like physics, outside of physics. And that false precision just does nothing but get you in trouble.

So I would say you’ve got to master the general ideas, and you’ve got to work to improve your judgment slowly, the way all the rest of us had. And I don’t think most individuals have much hope of individual gain from machine intelligence.

Warren Buffett:

No, I don’t… I don’t think that… I’m impressed when machines beat Go or something of the sort, or even win at chess or whatever it may be.

I don’t really think they bring much to the table in terms of capital allocation or investing. And then I may be missing something entirely, you know, maybe I’m just blind to what’s out there.

Charlie Munger:

You’re missing a lot of very remunerative, fee-earning twaddle.

Warren Buffett:

Yeah, well. Well, that takes care of that. So we’ll go on to station 8.

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