Like a star-struck teeny-bopper…

Friday, 23 February 2018
Melbourne, Australia
By Kris Sayce

  • An alternative to real intelligence
  • Finding the holy grail of AI

Your editor was like a star-struck teeny-bopper.

We flew to Sydney yesterday, along with colleague, Greg Canavan, to have lunch with legendary investment writer, James Grant.

It was just Mr Grant, your editor, Greg…and about 50 others from the Australian investment community, tightly packed into a meeting room at the InterContinental Hotel.

Being star-struck didn’t stop your editor from piping up. When the call went out from Mr Grant for audience participation…Australia’s financial glitterati were mute.

A strange happening. Fearing the dread of continued silence, your editor took a deep breath, and then poured forth our opinion on the state of the Aussie economy.

Not surprisingly, one of the first words from our mouth was ‘high house prices’. [Reader’s voice: Won’t you ever learn?]

Along with our theory on how Aussies have too much debt, which stocks investors should short sell (talking our own book, we mentioned the stocks we’ve short-sold in Crash Market Investor), and how the Aussie financial industry was more like a cheerleader for the economy, rather than a critical observer.

Perhaps it was Mr Grant’s smile as we said all these things that caused us to editorialise beyond our welcome (of the others at the lunch that is). Mr Grant seemed most interested.

With that, and after allowing fellow luncheon guests to get a word in edgeways, the event ended…we introduced ourselves to Mr Grant with a shake of the hand, and that was it.

Back to Melbourne. After which, we are still on Cloud Nine, and too weary to write. Today, we hand over the pen and paper to our colleague, Sam Volkering.

He has a thing or two he’d like to tell you. We, on the other hand are done. At least for today. Over to Sam, after the markets…

Markets

Overnight, the Dow Jones Industrial Average closed up 164.7 points, or 0.66%.

The S&P 500 gained 2.63 points, or 0.1%.

In Europe, the Euro Stoxx 50 index ended the day up 1.83 points, for a 0.5% gain. Meanwhile, the FTSE 100 fell 0.4%, and Germany’s DAX index lost 0.07%.

In Asian markets, Japan’s Nikkei 225 index is up 101.47 points, or 0.47%. China’s CSI 300 is up 0.05%.

In Australia, the S&P/ASX 200 is up 50.22 points, or 0.84%.

On the commodities markets, West Texas Intermediate crude oil is US$62.81 per barrel. Brent crude is US$66.38 per barrel.

Gold is trading for US$1,328.33 (AU$1,697.11) per troy ounce. Silver is US$16.57 (AU$21.17) per troy ounce.

The Aussie dollar is worth 78.27 US cents.

Bitcoin is US$9,814.48.

An alternative to real intelligence

And now, over to special guest essayist, Sam Volkering.

Artificial intelligence (AI) is on the rise, don’t you know. According to Sam, the time to back this trend is now…

Cheers,
Kris


Finding the Holy Grail of AI
By Sam Volkering

A question for you.

How do you know I am who I say I am? After all, you’ve seen my picture, read my work, you may have seen me on YouTube, or a live webinar. Maybe you’ve even met me in person and now you’re here reading this.

But how do you know that I’m me?

Confused by my question? Well, hold on tight. It’s about to get more confusing.

What if I’m not me? What if I’m something else? What if I’m not even human? I could just be an algorithm. I gather information from around the internet, run it through some incredibly complex mathematical formulas, and then spit out a piece of written work that you assume is written and put together by me, Sam Volkering — allegedly a human being.

But what if I’m just a machine? Just another piece of complex technology fooling you into thinking I’m human?

Here’s the question you should ask yourself: If I was a machine and if I did a good job and delivered the value and insight you expect, then do you even really care if I’m a human or a machine?

Unless you’ve met me in person, and spoken with me face to face, you would simply have no idea whether I’m a human or a machine.

Even if you have met me in person, without cutting me open to see my biological internal organs, how would you know I’m human, and not the most advanced piece of robotic and artificial intelligence ever produced?

Let me go one step further. How do you know anyone is really a human, and not a machine, these days?

Now before this gets a little too ‘Westworld’, I am human…at least the last time I checked. But in a future that’s approaching us incredibly quickly, the line between human and machine is going to blur.

In a future of high-tech automation, robotics and artificial intelligence, you might not be able to tell the difference between who is human and who is a machine.

This blurring of the lines between mechanical and biological is commonly referred to as the Turing Test.

Turing and the Imitation Game

You might already know of Alan Turing. He was the genius English mathematician who devised and built the statistical technique that enabled the Allies to crack the Germans’ Enigma code in the Second World War.

He is, in essence, one of the founding fathers of computers and artificial intelligence. His early work and theories helped usher in the world of personal computers that we all take for granted today.

But some of Turing’s most influential and visionary work involved his ideas and concepts of ‘thinking’ computers and artificial intelligence.

One of the most interesting papers I’ve ever read was his paper on ‘thinking machines’. He postulated that in the future (around the turn of the 21st century), we would have machines that could play a game whereby an ‘interrogator’ would struggle to tell the difference between man and machine.

This ‘test’ is now famously known as the ‘Imitation Game’, or the ‘Turing Test’.

The simple explanation of the Turing Test is that if a machine can convince a human that it is not a machine (hence a human), then it is indeed a ‘thinking machine’ — or, as we like to call it today, artificial intelligence.

It’s the ultimate test in defining man or machine.

Many experts thought the Turing Test was impossible to pass.

After all, to beat the Turing Test, you need a machine that is capable of human thought processing, such as feeling, reasoning, common sense and even supposition.

They were wrong…

The Turing Test was first passed by a program called Eugene Goostman in 2014. This was a super computer masquerading as a 13-year-old Ukrainian boy.

And while Eugene didn’t have a body or a voice, he could communicate through text. He was a chat-bot.

Eugene is still a far cry from the perfect incarnation of AI that Turing imagined however.

Turing’s paper was an insight into the world we’re building today well before it ever happened.

It will simplify matters for the reader if I explain first my own beliefs in the matter. Consider first the more accurate form of the question. I believe that in about fifty years’ time it will be possible, to programme computers, with a storage capacity of about 109, to make them play the imitation game so well that an average interrogator will not have more than 70 per cent chance of making the right identification after five minutes of questioning. The original question, “Can machines think?” I believe to be too meaningless to deserve discussion. Nevertheless I believe that at the end of the century the use of words and general educated opinion will have altered so much that one will be able to speak of machines thinking without expecting to be contradicted.

Turing first suggested that in order to develop a machine that is capable of passing the Imitation Game, it would have to be a child-like machine that is able to learn — much in the same way we learn as children — to reach a more developed mind.

Instead of trying to produce a programme to simulate the adult mind, why not rather try to produce one which simulates the child’s? If this were then subjected to an appropriate course of education one would obtain the adult brain. Presumably the child brain is something like a notebook as one buys it from the stationer’s. Rather little mechanism, and lots of blank sheets. (Mechanism and writing are from our point of view almost synonymous.) Our hope is that there is so little mechanism in the child brain that something like it can be easily programmed. The amount of work in the education we can assume, as a first approximation, to be much the same as for the human child.

Think about yourself for a moment. How far back can you remember as a child? It’s unlikely that you remember every moment of every day you’ve ever lived. But you have memories of the past.

You can also appreciate that somewhere, deep inside your brain, everything you’ve ever seen, heard, felt or experienced has influenced the development of your brain.

When you were a kid, you might have accidentally touched a boiling kettle and burnt your hand. You might not remember the experience exactly, but you knew from that time forward that when you touch something extremely hot, you hurt yourself. Hence, you don’t do it as an adult.

Perhaps you were given a book as a one-year-old. You saw a picture in that book of an animal, with orange hair around its face and sharp teeth in its mouth. The word above the picture said ‘lion’. You saw a similar picture in another book, again with the word ‘lion’.

Your brain quickly learnt to associate the word ‘lion’ with an animal looking like the ones in the pictures. Without any other input or assistance — from mum, dad or anyone else — you learnt what a lion is.

That’s how the human brain works. We receive a range of sensory inputs — visual, audible, physical — which our brain processes, analyses and learns from.

In our view it’s the level of ‘unsupervised learning’, this child-like brain that separates AI today from true artificial intelligence.

We’re getting so close though. AI is rapidly being incorporated more and more into our daily lives. And we may have already found the holy grail of AI — unsupervised learning.

But before the full-throttle AI consumes industry, right now it’s early AI like Eugene Goostman that is spreading online, finding its way into devices like our phones and computers. Chat-bots like Eugene now help customers around the world 24 hours a day.

Right now chat-bots are taking apart the customer service industry. But in a few years they may be helping people talk through their problems in therapy. Or providing medical advice over the phone like a fully qualified general practitioner.

AI will soon take over our homes as well. Smart speakers like Amazon Alexa, Google Assistant or Apple’s HomePod are just the first generations. Soon your home will talk to itself more than it talks to you.

Your appliances will sort any and all grocery shopping for you. All your creature comforts will become automated. Temperature, lighting, entertainment all handled by a machine. Your ironing and washing will be automated and perfected to ensure the longevity of your clothes.

Even your toilet won’t be safe from AI. It will become your doctor. Analyzing your body fluids and adjusting your needs where appropriate to keep you happy and healthy.

You will find AI in your car. A machine, smarter, faster to react, and safer than you could ever be behind the wheel.

Remember how Google Maps and Sat-Nav destroyed Melways? Do you even remember Melways?

Ask any teenager what a Melways is and you’ll get a blank stare.

AI is set to impact industry in the same way GPS impacted the mapmaking industry.

Healthcare, transportation, advertising, telecommunication, education, finance, media, government…all of them will feel the effects of AI at some point.

This is a revolutionary step. It’s a revolutionary breakthrough. A chance to embrace and adapt, rather than to push back against.

The machines of the future will think smarter and faster than we can even imagine. They will be able to achieve a lifetime of learning and knowledge in a matter of minutes…

Whether you’re ready or not, it’s going to change everything and you should be ready to take full advantage of the opportunities and benefits it brings.

Regards,
Sam