“A computer once beat me at chess, but it was no match for me at kickboxing” Mitch Hedberg
These are broad areas that have been getting stronger
- Oil Equipment
- Homebuilders
- Steel Companies
- Seminconductors
These are broad areas that have been getting weaker
- Japanese Yen
- Utility Companies
- Long Term Corporate Bonds
- Biotechnology
Source: Dorsey Wright and Assoc./Thomson Reuters
(See complete List by clicking here: Market Trends)
Recently, I have had quite a few conversations about artificial intelligence or AI. It’s not surprising, since we see the term mentioned all over the news. Companies have also been talking about possibly using AI in their organizations. Because of all this, I thought it be helpful to walk through what it is.
The official term “artificial intelligence” was coined by John McCarthy. He was a mathematics professor at Dartmouth. He organized the Dartmouth Summer Research Project on Artificial Intelligence in 1956 (1). It was here that this field of research was born.
Experts have broken down the field of artificial intelligence into four main branches: (2)
- Reactive Machines
- Limited Memory
- Theory of Mind
- Self-Aware
Reactive Machines are basically machines that have no memory and are task specific. The same input will always create the same output. This is predictable because no variables exist. The popular example of this category is IBM’s Big Blue. It was a computer that was taught to play chess and beat Grand Master Garry Kasparov in the late 1990’s. This was one of the biggest accomplishments this branch had seen, and it took almost 50 years for it to occur.
The second branch, Limited Memory is where we are today. It is what has been in the news. This focuses on trying to imitate how the neurons in our brain work together. “…it gets smarter as it receives more data to train on.” (3) It attempts to operate like a child’s mind by learning in layers. For example, the child learns the alphabet and then learns to read. Later they learn to write. Likewise, the limited memory algorithm also learns basic image recognition first, then moves on to other types of patterned “reinforcement learning.”(3) This is called “Deep Learning” in the AI world. This is one of the main differences between reactive machines and limited memory. Reactive machines operate in a world of finite information, like the finite number of possible chess moves. Limited memory learns and operates in a world of new variable information.
Limited memory functions are searching the internet, which is constantly growing, for new and updated information. From there, it is using its ability to recognize patterns of information and chunks of patterns of information. Then the limited memory machine or algorithm is using probabilities to determine which patterns of information to use at a given time. This process is referred to as Generative AI. Right now, generative AI is being used to create content like, writing books, movie scripts, songs and art. Companies are also exploring ways to use this AI to streamline operations.
This field has really just come to the mainstream within the last 12-18 months. So, we are in the infancy stage of this field. In order for this field to grow it needs capital investment. I believe companies and organizations are going to need to spend large amounts of money strengthening their technology capabilities. In other words, they are “going to need a bigger boat.” And the main piece of this “bigger boat” is the engine. That engine in the technology world is the computer chip (i.e. semiconductors). From an investment perspective I believe this is an area to spend time researching. As you can see in the list of “areas getting stronger,” semiconductors is on the list.
You’ll remember I mentioned two more branches of AI….which we haven’t discussed yet. We don’t really need to put much time into them because, we are not there and experts don’t think we will get there soon. Some experts predict it could take centuries (4). The Theory of Mind, which is the understanding of another’s needs, which deals with sympathy and empathy and Self Aware, which deals with self awareness and self preservation. Hopefully the experts are right and it takes centuries….my vote is “never!”
One last item….In case you were wondering. This article was not generated through AI. It was completely written by yours truly!
As always, I enjoy interacting with you! Feel free to contact me with any thoughts and questions. There is so much information out there and I would love to learn what you know as well! You can email or call me…my phone is with me all the time. I look forward to speaking with you soon!
Michael
Michael S. Lewis
President, Wealth Manager
Anchor Wealth Management
358 NW 1st Ave, Suite 2, Canby OR 97013
(503) 910-1687
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Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC (finra.org/sipc.org)
- Dartmouth University (Dartmouth.edu)
- Joshi, Naveen – “7 Types of Artificial Intelligence” Forbes Magazine 6/19/2019
- Coursera.com
- Talty, Stephen – “What Will our Society Look Like When Artificial Intelligence is Everywhere?” Smithsonian Magazine, April 2018
Content in this material is for general information only and not intended to provide specific advice or recommendation for any individual. All performance referenced is historical and is no guarantee of future results. All investing involves risk including loss of principal. No strategy assures success or protects against loss.