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Buffett: Machines don’t bring much to the table when it comes to capital allocation

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At the Berkshire Hathaway annual shareholder meeting, Warren Buffett and Charlie Munger discuss machine intelligence and capital allocation.

DAVID FRANKEN: Hi, Warren and Charlie. Thank you for everything. I’m David Franken, a global investment manager in Shanghai. I’ve been here for eight years. If you must win the sport in the Olympics, you are a champion team. So my question is facing the fast-growing machine intelligence, 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 points of view? Thank you.

CHARLIE MUNGER: Well, two questions– machine intelligence– I’m afraid the only intelligence I have 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 asked 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, the machine now can beat the best human player at 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 change that much by machine intelligence– some, but not hugely. And what was the other question?

WARREN BUFFETT: Well–

CHARLIE MUNGER: One 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 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 think that– I’m impressed when machines beat Go or something of this order, or even win at chess, or whatever it may be. I don’t really think they’d bring much to the table in terms of capital allocation or investing. And 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, figure-earning twaddle.

WARREN BUFFETT: (CHUCKLING) Yeah, well–

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11 Comments

11 Comments

  1. @omppc

    March 29, 2024 at 4:02 pm

    THE LEFTY IN THE RIGHTY
    PAANA

  2. @omppc

    March 29, 2024 at 4:02 pm

    FROM FRESH TRANSFER TO CAPITAL TRUST INGREDIENTS OF PEOPLE

  3. @jdp0359

    March 29, 2024 at 4:02 pm

    It must be so hard to sit up there in front of everybody and take these questions. Charlie kind of rambled and his answer wasn't as clear or concise as Warren's answer.

  4. @nathanhatton18

    March 29, 2024 at 4:02 pm

    The key word everyone in the comments section seems to have missed is “judgement”. Computers are incredible. But this topic is about a computer allocating capital. Buffett is able to get successful deals not just by picking a stock and buying, but by interacting with people and negotiating. Business and investing is humanistic by nature so a computer couldn’t possibly outperform Berkshire Hathaway. Think about this; Warren Buffett is the most successful investor of all time. For someone to program a computer to not only replicate what he does, but to be even better is impossible. No one else on Earth has the knowledge about investing that he does. So unless he programs the computer himself to follow whatever criteria and valuation methods he uses to choose an investment, it just cannot happen.

  5. @lokyinphotography

    March 29, 2024 at 4:02 pm

    I think it make no difference when you buy at a low price is hold for a long period of time.

    Usless you're using technology to buying a selling in those fraction of a second?

  6. @SunnyGoklani9

    March 29, 2024 at 4:02 pm

    This is the first time I've seen Charlie trying to be funny, but nobody laughed..and then he continued to the next sentence.

  7. @ChaceBonanno

    March 29, 2024 at 4:02 pm

    I mean they have said they don’t know anything about technology so

  8. @sommi888

    March 29, 2024 at 4:02 pm

    If you could gather data on capital assets and quantify many balance sheet things they look, so then surely there is a world where Robots / AI take over in the future

    How can you not even anticipate this?

    The human brain is a computer itself. Cant we build a bigger and better computer one day? Of course we can. how ignorant to think otherwise.

  9. @Jannie171

    March 29, 2024 at 4:02 pm

    Buffet and Munger don't know a thing about technology.

  10. @Jeff-ns7wx

    March 29, 2024 at 4:02 pm

    With all do respect, Charlie monger is making a statement in which computer science will not overtake humans in his field. This is a bias, as he claims he is too old to learn computer science. How can make he make an argument against a science in which he just stated he does not understand

  11. @donhossy4526

    March 29, 2024 at 4:02 pm

    "machine intelligence is hype" tell that to rentech

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