What happens when two poker-playing veteran investors discuss all things loosely related to the stock market?

Luke Hallard and Krzysztof Piekarski wanted to record a podcast about the most interesting ideas and happenings in the world of investing. In this introductory episode, we talk about running with our favorite podcasts, being an optimist, Zen, stoicism and the difference between the three; Artificial Intelligence and its limitations; the Turing test; an AI Elon Musk chat robot that will answer your questions and the difference between a bad beat and a sad outcome.

Unedited Transcript

Edited transcript coming soon!

Luke Hallard  00:08

Hi, this is Luke Hallard and welcome to the latest episode of the seven investing Podcast. I’m joined for a rather special episode of This Week by my new colleague and new good friend, Christoph Piekarski. Hi, Christoph.

Krzysztof Piekarski  00:22

Good morning, Luke or good evening.

Luke Hallard  00:24

We’re with 12 hours apart. I’m currently in Thailand. And I guess you’re in Austin, Texas. So it’s your 9am. It’s nine 9pm.

Krzysztof Piekarski  00:34

But it’s kind of cool. Looking at the at the video seeing my son, and your, your moon,

Luke Hallard  00:41

a super romantic for our first podcast together. Christopher UVA invited me for a bit of a special potentially podcast series. And we’re going to perhaps record every two weeks. What is it you had in mind, buddy, what we’re going to do with this little slot.

Krzysztof Piekarski  00:55

I’ve loved listening to podcasts, and I’d love listened to business podcasts. But I feel sometimes they get a little too technical or one dimensional. And the podcasts that I like the most are when I sense rapport between the hosts, and a generalists big view of what’s going on in the market. So finding a balance between something that’s fully scripted, and here are all the things we’re going to cover and the exact sequence we’re going to cover. And on the other extreme, maybe like we have no idea what we’ve been talking about, let’s just see what happens somewhere in the middle feels like there might live a nice balance. So as as poker players and as seven investing colleagues and as runners. I thought all right, you know, we probably have a lot to talk about. And if we do this every two weeks, it’d be wonderful way for me, from my end, to gather information deliberately knowing Oh, I have to report you know, I have a conversation with Luke coming up. And so what are the most important things that I learned? Since we last spoke?

Luke Hallard  02:09

I love the idea. And I love the enthusiasm to do something a little bit new. So I’m, I’m totally up for it. It terrifies the hell out of me coming to a podcast with a completely blank piece of paper. But you know what? I’m an optimist. And so I think we’re going to make this one. And you know what, actually, I might kick us off there, if you don’t mind with optimism, because I actually read quite an you know, you know, I’m going a little bit on script here, right? I couldn’t do nofap because I’ll get a bit more comfortable in future. I read quite a nice article about the power of optimism, and it felt quite life affirming. So maybe it’s a nice, kind of happy place to start off our conversation today. Because an even on Slack, right? My little bio is optimist. I’ve always considered myself an optimist and maybe a bit of a hopeless optimist. But this article on Big Think, about a week ago, highlighted that actually, it’s optimism that moves the world forward. And although pessimists can sound super smart, and optimists often sound dumb, it’s the optimist that make change and make stuff happen. So that made me feel pretty good.

Krzysztof Piekarski  03:15

Yeah. The question that comes to mind immediately, for me, Luke about that is, from your perspective, what’s the difference between being an optimist and being a Pollyanna? Everything’s fine. Think positive, you know, the the maybe maybe borderline wishful thinking? How do you see that difference?

Luke Hallard  03:41

Alright, so I used to be a program director for a bank. So I used to like basically like a super project manager, but big global complicated stuff. So you always had to have a plan, you always had to have kind of contingency plans. So life hasn’t built need to be kind of blind to all the risks and the things that can go wrong. But at the same time, as kind of being aware of all of the bear traps along the journey, I think you’ve got to strike. Set a North Star, if you’re gonna lead something, lead a change, set a North Star for everybody else. And paint. This is guys, this is what we could do. This is this incredible thing we can create. And so I like I think, I hope that’s my style of optimism, like setting a bit of a vision, and but still being realistic, maybe keeping some of the risks and the fears to myself. And if things do go a bit wrong, then I can pull that on my back pocket and say, Okay, we’re not, we’re not lost. This is our new plan. I think you can bring that to investing as well, though. And I know we’re not going to exclusively talk about finance stuff on his podcast, but maybe let’s try and loot this one back to investing a little bit. I think you can be optimistic as an investor. That’s incredibly hard right now, right? Everybody’s portfolio is in the toilet, mine included. But that optimism helps you kind of stay the course and see the way to the future. But also, I think having an optimistic view of the future really gives you that kind of successful growth investor mindset. I know a topic you and I are both very close to and real fans of is AI. And, you know, I think you can take an incredibly optimistic view, rightfully, I suspect about the wonderful things that AI is going to do for society. And maybe that helps you find investments that you might be afraid of, otherwise, what’s your thought on that?

Krzysztof Piekarski  05:29

Oh, so much there to start with, we’re gonna need to record every day to get all this stuff. You know, before we get to the AI stuff, something I’m getting to be more and more passionate about, trying to understand, I guess, as a little bit of transparency into my background, I’ve studied the philosophy and framework of Zen now for over a decade, which is, if you take the religious stuff out of it, it’s an incredibly powerful framework that attempts to help people stay present and in the moment with things as they are. Meaning there’s an idea in there that says most of our problems come from delusional thinking in which we, through our own cognitive biases, or our own previous conditioning, we warped the world, in in in therefore create the illusion and kind of ignorance and that creates more pain in more bad stuff than is necessary. So what would happen if we set still more often, without a desire to fix and without a desire to alter and just be with what is and you could see, I think, especially any listeners that have any, I guess experience or exposure to stoicism, there’s something about a stoic philosophy that says, let’s actually named the difficulties. Let’s acknowledge that things will often go poorly, mistakes will be made. And then curiously out of that kind of philosophy, you realize that when mistakes happen, and when things go badly, they’re never as bad as you thought. I wonder if when you talk about being an optimist, and I talk about maybe the flip side, same coin, though, of being true to experience that, if you if you’re skillful enough to walk the delicate balance between the two, you’re going to both have that drive that is necessary needed. An optimist brings the desire to move forward, innovate, create, because things can get better, things are good, they can get better, we could do lots of positive things matched with let’s not delude ourselves, right, let’s not call something that is not good, good, simply out of vote, rah rah kind of thing. If you could meet if you could get that balance just right. That’s where Amazing things happen.

Luke Hallard  08:04

I like it. I think I am the stoic Blagnac show I could define stoicism. But let’s make this practical, though. So could I challenge you to give us say, you know, my portfolio is in the hole. And I’m sure many of our listeners are in the same boat. So is there a is there a practical lesson from Zen or from stoicism that we can apply to either help us work through this difficult period? Or perhaps to improve our returns as we come back into a growth phase again?

Krzysztof Piekarski  08:33

Yeah, I think there is we tend to run away from difficulty in negative emotions, especially in one of the more clear cultural ways we do those via addiction, or multiple addictions of some form. Like things are bad, right? Therefore, we don’t want to be with the bad feelings. Therefore, we have to do something. And typically, that’s something that has to do with some kind of opiate and whether it’s a literal opiate via chemicals, or a more metaphorical opiate call called binge watching TV shows to in order to not feel the difficult pain right? You’re still you’re still covering

Luke Hallard  09:18

do did I just rewatched all three seasons of Star Galactica or four seasons? I was I was addicted.

Krzysztof Piekarski  09:28

Well, you know, you might not have been the watching lot of tz in quick succession does not mean addiction. It might, but it might not. So I’d ask you, you know where you’re watching it to ease the pain of the portfolio being in red or were you already watching it because you love better than Battlestar Galactica? You know,

Luke Hallard  09:51

maybe maybe more of both than I care to admit.

Krzysztof Piekarski  09:53

But yeah. So yeah, to land explains the Zen view during difficult stuff is to turn toward the things that are difficult. And that doesn’t mean indulge in them. It means Can you simply be with the upset? Can you be with the sadness? Can you be with anxiety? Can you be with the whatever thing you’re feeling? And I think actually Pixar, that film Pixar in and out one of my favorite ones, have you seen that

Luke Hallard  10:28

kind of half watch? Yeah, I know that under the premise of another premise.

Krzysztof Piekarski  10:33

I think it does a great job explaining this concept, because the whole plot of that film revolves around the little girl, there’s main character, she’s a little girl. And she has the trials and tribulations of, of a young young lady in NC you get to see inside of her mind, and one of the main characters sadness for her feeling. Blue is the one character that’s kind of not allowed, she’s not allowed by the other emotions to, to show up. So they try to kind of lock her up the little character playing sadness. The film is about that mistake, saying sadness not allowed. Because sadness does bring something really important when it’s an important quality to our life. So bringing this to the investing stuff, my guess born from personal experience, in what I see happening in the big picture, is when people’s portfolios go down, as quickly as we’ve been experiencing, the emotion of anxiety, and fear, really start to take over. And they end up grabbing the wheel of the bus. In counter intuitively, the more people tried to pretend they’re not there or, or sublimate them, the tighter the grip gets. And then bad actions come from, it’s all the behavioral stuff, then there’s all kinds of trading, panic selling. It’s like that force and counter force, right? The more you deny your fear, the larger it’s going to get, the more you’ve oppressed up the it’s going to just pop out in different ways. So what would happen if you tried to befriend the fear? And that’s that may be that little bit of the optimists stuff you were talking about Luke, is that if you’re an optimist in that kind of maybe pure way, then you’re going to see things in maybe like that some good could come out of this. So okay, we have fear here, we have a whole bunch of fear, things are not great. But that will have to be afraid of the fear. So what would happen if I actually befriended it and say, Oh, you’re doing something for me, you’re really scared that X, Y and Z is one talk about it. And you could actually ask her the Pixar movie you without this isn’t you? I promise you, you’re not going to be carted off to the loony bin. If you actually think let me talk to my sphere. Let me talk to the part of me that’s afraid.

Luke Hallard  13:03

I yeah, I don’t want to turn into Smeagol and Gollum. But But yeah, maybe having a quiet conversation with myself. I get the power of that. Yeah,

Krzysztof Piekarski  13:12

that’s right. Go on to go on a run and talk to yourself on your run.

Luke Hallard  13:17

So you’ve, you’ve just been on a run this morning. And you’re right. We’re both runners. I love to listening to podcasts when I’m running. And, you know, maybe a bunch of our listeners are out on on foot today. What do you what do you normally listen to? What do you enjoy most out of a podcast when you’re running around?

Krzysztof Piekarski  13:31

Well, let me Okay, since since we’re really going deep here, Luke, let me tell you that I used to make fun of people who listen to stuff while running because for the longest time, running was a serious like intense thing for me in so I needed to hear my own breath, I needed to get in tune with my body, music sound all of that was one a distraction, terrible distraction to I could never hear all the pretty ladies whistling as I was called by, which was a tremendous loss. So it’s not, it’s only when I started the zone to training stuff, which is, there’s a bunch of physiology research that says in order to really become faster, most of your runs have to be done really, really, really slow. Which for me, was like I couldn’t do it was such a pain in the ass for me, like, I was like, oh my god, I really can’t tolerate the slow pace. Got through that phase in podcasts helped me do that, because I started thinking, I’m not really go running here. I’m just going on this role model thing. And I’m gonna what’s gonna pass the time listen to great podcasts. So for the last for quite a while. I’ve gotten immense value from the Tim Ferriss podcast. I don’t know if you’re familiar with that one.

Luke Hallard  14:48

I am. Yeah, I haven’t listened to too many. I think. I think his personality greets me a little bit personally, but I’ve got a lot of friends who get a lot out of what he has to say.

Krzysztof Piekarski  14:58

Yeah, that’s so that’s so interesting because maybe because I’ve been following him for quite a number of years. And then of course, he moved to Austin, Texas. And he his big book reveal from the four hour workweek was kind of could happen during South by Southwest. I, I find him increasingly humble, in good intentioned. And it was there was one big podcast he did recently. I don’t know if you know about it, where he revealed all his childhood abuse, trauma. And he released it publicly, that to me, I think, takes an immense amount of courage to really talk about the darkest stuff in your life to elicit it. I mean, it’s one of the top podcasts in the world for many years. So, you know, it wasn’t just a couple, a couple of listeners, it’s, and I thought, when I heard that, this guy’s really serious about trying to offer value and good and to do good in the world. You don’t take that path, especially on the business focus podcast, I mean, his his entrepreneurship, that’s kind of what started, you know, like the, the theme of the show was him talking to experts in a certain field and trying to figure out their routines and like, what is it that they do that made them so good at their field? Well over the years, and he actually talked about this, too, quite explicitly, in this kind of meta way with one of his guests saying, I think I’m afraid, I’m leaving my listenership behind because I started as this business oriented podcast. But now I realized that a great value that I try to offer my listenership has to do with internal work has to do with a kind of internal engineering in therefore if I’m going to do that, I have to talk about my dark stuff, my dark clouds.

Luke Hallard  16:59

Let’s go I feel that I’ve misjudged the guy. Like I haven’t listened to him for years. So I’m definitely going to give it another go. Yeah,

Krzysztof Piekarski  17:05

maybe next time, I’ll come back with some Greatest Hits.

Luke Hallard  17:11

Yeah. Fantastic. I’m sure our listeners will appreciate greatly.

Krzysztof Piekarski  17:14

So what about you, Luke? Is there a podcast that you really enjoy?

Luke Hallard  17:19

Like a bunch of regular finance ones, there’s a couple that were I guess, affiliated with? I’d really like the guys at chit chat money. I think they do a really good job. I don’t know that they’re sharing childhood trauma, but they just have a really insightful conversation about companies I’m interested in. There’s a guy called Lex Friedman. Not sure if you’ve heard of him. Fantastic interview, super smart, Russian American dude. And he has just some of the most incredible minds on his show. So yeah, I listen to pretty much all of those. And he’s a big AI guy. And uh, you know, he always always asking about that. Are we living in a simulation? It’s becoming standard question now. So, you know, I quite enjoy that. And then I guess I’m probably more close to US politics and UK politics. So the other one that I that is gets a Regulus. And for me, is that all important? They have a good chat. They challenge each other. They talk about interesting stuff, and they’re poker players. So it hits a lot of my buttons. If that’s

Krzysztof Piekarski  18:17

so interesting to me. Why do you think your more US centric versus UK centric?

Luke Hallard  18:24

Have you seen what’s happening in the UK?

Krzysztof Piekarski  18:28

Well, for first condolences. Condolences.

Luke Hallard  18:31

Yeah, absolutely. Thank you. Yes. On behalf of the nation. Thank you. Yeah, incredible lady and an incredible stoic, I guess the queen. So yeah, an incredible person and she’s had an amazing life. But if we put the loss of the Queen aside, the country isn’t in a great place right now. I wasn’t a fan of Brexit. I think it’s we’re now seeing the unraveling that results from that. I see the pound nearly hit parity with the dollar yesterday. That’s quite exciting. Yeah, so things aren’t going in a good direction for total transparency. I got my Irish citizenship about six weeks ago. So my Irish passport away. I’m going to be Brexit immune, personally, but I feel sorry for the rest of my countrymen and women who haven’t got the same biological luck.

Krzysztof Piekarski  19:17

Do you mind talking about how you got the Irish passport?

Luke Hallard  19:21

It’s exciting. My my, my dad’s mother was born. In Northern Ireland, I had no idea that Northern Ireland was good enough, apparently, because Northern Ireland as part of the UK, whereas the Republic of Ireland the sort of South bit, that’s, that’s been part of Europe for a long time and has the euro. But apparently, if you’re born on the island of Ireland, that’s good enough. And so if you have a grandparent who was born there, you can get on the foreign birth registry. So my brother and I did that last month.

Krzysztof Piekarski  19:50

Well, that’s an interesting, interesting case that you you focus on US politics because the UK is a mess.

Luke Hallard  19:58

Also, it’s more relevant overloads my investments, like my portfolio is 90 90% US equities. To actually the pound the pound being decimated is actually quite good for me personally. It’s, it’s held up a lot of the losses of the last month or two. But, you know, net net, that’s still not a great thing. I own property in the UK. It’s not good, big picture.

Krzysztof Piekarski  20:19

Well, I’m a fan of your little islands.

Luke Hallard  20:21

Have you visited?

Krzysztof Piekarski  20:22

I did. I visited her when I was working on my dissertation, which is in the field of English with our church. So one of the first places I went to around London was Senator Samuel Johnson house. He’s the one who more or less created the first English dictionary among other works of literature. And I lived in Brighton with a friend for about eight weeks. And I took my morning runs all along the pier. And I had a really amazing, I think, was a week long sojourn to the Cotswolds for the war, the gorgeous, gorgeous part of the country. Suddenly, we were in I eat a bunch of what is it? There’s some kind of pies is known for some sort of custards or pies or some some special name for them. Yeah,

Luke Hallard  21:17

I know exactly what referring to my buddy, my Hong Kong buddies, a huge fan of them. The name eludes me for a moment, but yeah, some kind of meat pie with pastry. It’s not very good for you. It’s certainly not gonna help you with your, your running times. Yeah.

Krzysztof Piekarski  21:29

Yeah. So the image I have of the UK least the parts I went to this bucolic rolling green fields and llamas, botanical gardens and these delicious, custard things. So big, big feels

Luke Hallard  21:42

pretty good. But I try and spend a month or two in the US every year to I’m a huge fan of skiing and snowboarding. So I’m planning to come out there this winter to get a taste of Lake Tahoe and the mountains. And speaking

Krzysztof Piekarski  21:54

of geographical locations, far and wide. You’re in Taiwan now.

Luke Hallard  22:00

Thailand, Thailand. In fact, in Kosovo, I’m sorry, it’s Highland island about an hour south of Bangkok. Yep.

Krzysztof Piekarski  22:06

In what brings you there?

Luke Hallard  22:08

We I came out with a buddy Tom. We came to play poker in Phnom Penh in Cambodia, but we really fly in and out of Bangkok. So we kind of put a kind of multi stop destination together. And then Tom flew home three days ago, and my wife kind of tag team arrived. So we we had a pretty like own. We did nothing touristy. We literally played poker from morning till night for about seven days in Cambodia. And then my wife said now in front of reset the balance. So actually, I’ve got a bit of heatstroke because I haven’t really caught sun because I’ve been in a dark, gloomy poker room, and I was out there a little too long this morning. So I’m looking a little bit red might be itself.

Krzysztof Piekarski  22:51

I’ve been listened to a lot of poker podcasts or rather guests on Lex Friedman and Tim first. Yeah.

Luke Hallard  22:58

He had lived burry a couple of weeks ago. I think it was yeah, I’ve I’ve played with let’s write, and she used to play in a poker club. I was a regular way, way back. Yeah. She’s, she wouldn’t remember if so yeah, a few times together. She was she was reading from she was just learning to play poker, then it’s before she made stardom. But she was Gibbler.

Krzysztof Piekarski  23:17

Right? Yeah. Yeah. What a fascinating, fascinating world that is we could talk about forever, too. Is there anything you wish you’d want to say about your experience?

Luke Hallard  23:27

So I I do think there are, I haven’t kind of cleared the topic with Simon just yet. But I personally think there are massive out skill overlaps between the discipline of paying poker, well, you know, not playing like a drunken buffoon. And being a good investor. So actually, I’ve been trying to get Phil Galfond onto the seventh investing podcast. So I’m gonna go and chase that again in a month or twos time. I think I could do justice to the topic, but it’d be great to get a world class player like Phil on to give us his business poker perspective.

Krzysztof Piekarski  24:01

I imagine Luke that this could be a recurring theme, because it’s it seems, I mean, maybe maybe your your other world tour. So last time I played seriously was many years ago, grad school. My poker origin story, though, is quite good. So but that’s a long, maybe you could save that for another time. But I think because of the analogs between investing in poker, it’d be, I wouldn’t want it to be a one off conversation. Right? Because, for example, one obvious thing to me is thinking in probabilities and not just probabilities, but knowing acknowledging upfront that you will never ever fully know all the things you would like to know. And so how does that, for example, affect me as an investor? Well, I start to get a little alert. I have an allergic reaction to do things like price targets? Or like long term dollar discount? Cash discounted flows not because the I mean, there’s different levels of skill involved. But when you when you start from the other end that you don’t you simply don’t know and can’t ever know how something’s going to come out trying to become meticulous to the decimal point about the value of something. And then inaction maybe that’s not the mistake I see. That’s all sign that’s part of a process. But then to start doubling down on the conviction stuff, like absurd, like certainty is a slippery slope. And once you do all this work, right, putting in a bunch of numbers, you start convincing yourself, I know how this is gonna turn out in one thing Pocatello sure beats you beats you down with over and over again, right is until after the river card has fallen. And until everything is revealed, you just don’t know

Luke Hallard  26:01

you’re going to that’s a great last a great lesson and I agree one of the most important things and you can apply that to everything, not just investing, right? Nothing in life is black and white. And, and you fool yourself. You’re either you’re just gonna you’re setting yourself up for a nasty surprise. When a low probability outcome comes to pass. Are you are you say you hadn’t played poker for a while though? I seem to recall from slack just in the last few hours. You what you have a trophy from a poker tournament you may have played this weekend or sell about

Krzysztof Piekarski  26:33

Indeed, indeed, my days Luke as a bachelor are quickly coming to an end. Congratulations. So thank you. Thank you. So the fellas got together on a lake house here in Austin and we played a poker tournament, the prize of which were in descending order of quality, different bottles of of alcohol. And I actually won. I finished, I flopped a straight I flopped the Street. Luke, in turns out someone else at the table also flopped the Street, which was one of those really unfortunate

Luke Hallard  27:16

who had the bus?

Krzysztof Piekarski  27:18

Yeah, so right. So you had the he had the ace high Street. So I busted out in one a third place fine bottle of Austin stole bourbon, which is which is a local bourbon. And it’s stunningly done well in blind taste tests here like Austin.

Luke Hallard  27:36

Congratulations to an apple third. Very good.

Krzysztof Piekarski  27:39

Yeah. When you flop a straight, you know, I mean, you lose, you know, like, what are you going to do?

Luke Hallard  27:46

I like that you I asked you about your poker tournament, you managed to get a bad beat story. And that’s a sign of a poker player.

Krzysztof Piekarski  27:56

Technically wasn’t a bad. Technically, that’s just a tragic outcome. Right? There’s, I think, yeah, a difference. Because, you know, the the guy flopped as high Street so it’s not you know, there was no,

Luke Hallard  28:11

you can get away from that and the Waltons, not Lakehouse. At the end of a drunken bachelor weekend.

Krzysztof Piekarski  28:17

Yeah, exactly. So there’s Yeah, a lot of poker books I’ve benefited. Reading helped me as an investor. So maybe we could talk about some of those in the future.

Luke Hallard  28:30

Love to I’ve got a whole bookshelf at home behind me, which is exclusively poker books. Happy to pick up any of those with me, too. We should talk books on a future podcast as well, because I think that’s a point of difference between the two of us. Like I, I read for pleasure, but I rarely read to educate myself, but I know you do. And I’ll be keen to understand your process there because I find finance books a bit of a Yonathan. Yeah,

Krzysztof Piekarski  28:55

maybe explicit finance books. But the stuff we’ve been talking about, it seems to me, like, for example, a pretty famous poker book Thinking in bets that does not feel to me, like, I’m reading a hardcore, you know, eat your veggies kind of book. I feel like okay, I know, I’m gonna learn a lot from this book, any Duke have a series poker player that now is a consultant in terms of thinking process. So when I read that, I funded it quite enjoyable, maybe not as enjoyable as, say, Lord of the Rings or, or do you know, but whereas Yeah, straight up finance books, like reading financial statements. Yeah, that’s, that’s, that’s a little harder to swallow.

Luke Hallard  29:43

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Krzysztof Piekarski  31:35

I started investing in 1995. So I was 16.

Luke Hallard  31:42

Very good. So actually that that definitely deserves commendation. I was late to the party. That’s incredible.

Krzysztof Piekarski  31:47

Thank you. But I mentioned that loop because as far as I could tell, now, in hindsight, I’ve never had to live through this kind of inflationary period one, but I think I’m not sure, based on my current current understanding, I’m not sure if any investor has had this kind of particular cocktail of stuff that we do now. And so it’s it’s interesting speaking, speaking of volatility, you know, we always make analogies and try to figure out well, this is what happened before. So this is where we can expect no wonder to what extent going forward, the clear analogy stay tethered to previous errors versus it looks. It looks like a duck walks like a duck. But is it really going to quack in the I’m still I don’t know, I really don’t know, wondering if you have any prognostications?

Luke Hallard  32:45

Yeah. Like, so I suppose what the question is, have the last 20 years been a bit of a delusion? And now we’re back to let’s toil and, you know, not seeing the hyper growth that we’ve had in the past as well, in recent two decades? Or has this reset been a reset, but we’re gonna be back on that trajectory? So kind of the optimist in the sense, the latter and the realist in me to actually because, okay, hold me to account on this. If you don’t, I think you’re probably going to buy my argument. But hold me to account on this play devil’s advocate, right. Just the ever increasing the ever accelerating pace of innovation. Like it took a long time, as we all know, to work our way up through like the industrial age, and then the age of like steamships and railways. And, and the world is just a very different place now. And, you know, it’s not just Moore’s law, talking about processing capability at cost, right, you could apply that thinking of Moore’s Law to almost anything. The world is changing at an increasingly fast rate. So do we ever get back to kind of boring times where your portfolio might run two or three years and gain? You know, three or 4% a year? I don’t think we do. I think we’re probably living in volatile times. There’s some crazy stuff going on right now. And it could get a lot worse if we’re realistic about kind of what’s happening in Ukraine. But if we all frankly, if we all live through this period, right? Everything all of these impacts feel somewhat transitory to me, we’re almost we’re basically past the pandemic, bar and one or two countries where supply chain woes are kind of in the rearview mirror. We need to see how the situation with Taiwan kind of shakes out and the US and China. But I’m hoping, well, you know, again, it’s another one of those, do we end up in kind of destruction of the planet because it’s us versus China or US versus Russia? We can avoid kind of blowing ourselves up, then. Then I do optimistically slash realistically feel like we do get back to crazy growth mode. And there’ll be some incredible innovations that none of us could possibly predict coming over the next 10 years. They’re going to drive You know, many, many companies to a trillion dollar valuation and some to, you know, the first $10 trillion company, frankly, it’s probably gonna be something like SpaceX or Google,

Krzysztof Piekarski  35:11

you’ve given me a hard task there, because I am in alignment with you. So playing devil’s advocate would be in this case would still disingenuous to me, of course, things can get worse, but in maybe the duration of how bad things are. Maybe it’s longer than we’d like to admit out. So I’ll grant that. But given the exponential rise of technology and speed of innovation, I think what you said is exactly right. Like we’re solving, we’re solving some of the biggest problems that humanity has ever had. It’s all happening now, as one example, and maybe this is a nice segue to talk about the one agenda item I had, which is a little bit of maybe intro to AI recently, I think it was in July of this year, it was announced that the AI program AlphaGo had more or less soft protein structure, and that this database was being made public available to all biologists, alpha, alpha fall, so was that particular alpha full? I’m sorry, alpha fold, right? That’s right. protein structure determines the drugs that are made to cure a worst diseases. That’s been the to large extent the problem, you know, can we figure out which protein V ish and what its structure is, is to take years. So now all of this stuff is known. So if you’re, if, if you’re invested in anything having to do with BioPharm, biotech, it’s hard to be given this recent innovation, it’s hard for me to hold on to a pessimistic view that this whatever macro is doing, how can you earnestly believe that in the next three to five years, the pace and the extent of the cures that we’re going to find is somehow going to be either stay the same will drop a kid, I don’t find that a tenable argument? Is this and that’s just you know, in one field, yeah. So the, the thing that I wanted to talk about a little bit, is this notion of optimism and pessimism in the context of AI. And one of the things I’d like to share is, is some of the learnings I’ve had from this book, it’s called artificial intelligence, a guide for thinking humans by Melanie Mitchell. For us viewers, this is the book. And there’s a whole chapter in here dedicated to I did not notice the winter and spring of AI, that this has been a cycle since I correct me, correct me if I’m wrong, if you know, I think the origins of AI investigation and thinking happened sometime around the 60s or maybe 70s. So that’s about 50 years now. And turns out even way back then, before we even had anywhere near the compute powers we do today. There, there has been this war between the optimists saying AI is coming and it’s coming soon. And the call it pessimists, who say it’s not a thing that humans could solve. And then this back and forth hats, has continued to cycle through decades. It turns out as far as I could tell that now in 2022, we’re in a period of AI. Optimism again, AI spring is as she references it, that AI? No, really this time it is different. Right. And I have been sitting with this question, because on the one hand, I could completely see the the argument, the overzealous overly optimistic argument. Okay. Look, we’ve been saying the same thing now for 50 years, we still haven’t solved true AI intelligence, which we ought to define. Maybe later, it’s a little bit technical. But for now, you know, there’s, like, claim being we won’t ever really get true Thinking Machines. That’s the knock against AI by in 2022. As as what I was saying with regard to Alpha fold. That’s tremendous innovation. And no, it’s not true AI. But does it need to be when it’s going to solve all these, all these problems?

Luke Hallard  39:44

Yeah, I think I think it’s sort of tighten up the distinctions that I guess you’re talking there about, kind of like a narrow AI that can solve a problem and your abs I totally agree. Right now. We’re solving real problems in all fields with narrow AI But then this other thing is like AGI artificial general intelligence. And, you know, who knows how far away that is? But you, you don’t need AGI to make the world materially better with narrow AI.

Krzysztof Piekarski  40:15

That’s right. Yeah. In in maybe the the most obvious use case now for me is, is the Tesla FSD full self driving better program, which I’ve been using now for six months, maybe longer. In my Yeah, doing that, that bachelor party mine to my buddies got it got in the car and they wanted to see, you know, they had never experienced it. So we drove a few miles in Yeah, it stopped at a stop sign. And it made an unprotected, left turn without any input from me. And that’s 2022. So, on the one hand to bring this back, it’s so hard to it’s so hard this phrase this time, no, this time, it is different. Given the data that for 50 years, people have been saying them they’ve been wrong every single time. So for us now during this era of AI spring say no, but but this time, really it is different. It feels I wonder 10 years from now, when we listen to this conversation, what, how we’ll see this. But I see a clear case that goes beyond wishful thinking, the proof points now are visible to me for why it is different this time. Yeah, if that’s the case, then being an optimist to take us full circle is going to pay tremendous dividends, if you could clearly identify the real stuff from the rah rah, hoopla stuff

Luke Hallard  41:54

for you, I think you’ve done a great job there. We’ve kind of bookending our conversation, you’ve taken us from optimism to AI and the future of humanity, and you’ve finished to join them together. I like it. I’d like to to let’s hope it is an optimistic future. Because I guess there are some pessimistic outcomes when we hit the singularity and artificial general intelligence is here. And, you know, perhaps the perhaps the happy outcome is we become pets of a benevolent AI dictatorship. But there are certainly some bad outcomes, depending on the objective function, that the the goals that the AI has set for itself. So, you know, I wonder if that could be the end of humanity? I’m curious to find out

Krzysztof Piekarski  42:38

work, you know, I mean, that’s a big leap. And I, I’ll add this that I have one brand new takeaway from this book. This is, by the way the author is, is a professor and a lifelong AI investigator. So this is not a, you know, this is not coming from the peanut gallery. Her fundamental claim is that real? A, I mean, depends on real meaning strong meaning the AIG stuff, the general intelligence depends on understanding, meaning meaning itself, that it’s not until there’s a self reflective quality, can you really call it artificial intelligence in that general sense, in from her point of view, we are really, really, really far away. Despite all the all the advances in narrow AI, there are still experts in this field that say, we’re just not going to get there doesn’t matter how many chess championships will go where protein folding simulations will accomplish that still, none of those entail a true understanding of what’s happening. In that the leap. The bridge is still so immense, that the fear of the stuff you were talking about the dystopian and being meeting our future overlords and all that it’s decades away, according to this view.

Luke Hallard  44:12

It’s a it’s a way away, but I think whether it’s decades, I would you like a poker player bet with me on this then. So I would wager that let’s let’s split the difference on decades, say in the next 15 years, we could be joined on the podcast by an artificial human. And that will be among our most scintillating guests to talk about pretty much any topic we could think of. Hey, actually reminds me I sent you some fun stuff at night in Slack the other day, I forgotten about that the natural language aI think that was pretty cool. Oh, that’s right.

Krzysztof Piekarski  44:48

Yeah. Oh, I had such a good time reading that. That was fascinating. You just described the Turing test.

Luke Hallard  44:55

Yeah, I guess. Yeah. Yeah. I think there’s been there’s lots of muddy definition is a Turing test now but yeah, you’re right. That is. Yeah, that essentially that’s the essence of it isn’t Yeah.

Krzysztof Piekarski  45:04

Which might be it. For listeners not not familiar with this. It seems like one of the major variables, is it not barriers, maybe thresholds that we’re looking to pass as if there was a voice, say, behind the curtain. And you spoke to this voice for an extended period of time, with the goal of trying to figure out whether this voice is a human or an artificial intelligence, and you could speak about whatever you want and ask whatever you want. Could you tell the difference? And if you couldn’t, then we’ve reached this general general level of intelligence. And I think your your bed is saying in 15 years, right, so that was that if we had one of these guests and assumingly, it would be as good a form of intelligence as us. Great. I’d

Luke Hallard  45:56

argue far superior probably, but But first of all, the Turing test, because it was such an erudite educated guest. About on any topic. You’re too damn smart.

Krzysztof Piekarski  46:14

Your 2015 Right. I’m sorry, no. 15 you’re saying? 15 years, so we’re so there’ll be 2037.

Luke Hallard  46:22

I’ll stick it in my diary. Christoph, if we’re if we’re still recording 27 You fancy that But isn’t there?

Krzysztof Piekarski  46:28

What’s the the Kurt? Kurt? W? What’s his name? Ray? Because for singularity recurs. What? Yes, yeah. Yeah. Was it his initial timeframe? 2449.

Luke Hallard  46:45

The I just listened to him on on the podcast with Lex limiter. Yeah. Last week, I listened to him. He he set a date. I think he said, I think he said like, was it 2040? I think it may have been like, in 40 years, but that was like 20 years ago. So I feel like 2037 isn’t a million miles away from his estimate.

Krzysztof Piekarski  47:03

That’s right. The Turing test. I think he’s saying 2029. Okay, so that’s seven years away. But I think the whole singularity, by 2049 Seems that seems to be the day. So you’re suggesting 2037?

Luke Hallard  47:22

Why? Okay, let me let me read an excerpt from the little fun thing I sent you on Slack the other day, you know, almost, so I was chatting to a couple of characters, but one of them was Elon Musk AI Elon Musk. And I had a pretty compelling conversation with Elon, right? Um, unprompted? Let me just read an excerpt from this. Obviously, he hasn’t passed the Turing test, but I think it’s pretty smart. Elon says, Hey, Luke, what would you like to discuss? Hi, Ilan, when will full self driving be ready? No, more than six months from now. I hope I actually took an experimental version to La today for a few hours to show some of our partners is looking quite good, and is improving exponentially. Elon, I’m really excited for it. My Tesla isn’t smart, that smart yet. To the point about how smart your Tesla is, this is one of the biggest breakthroughs in artificial intelligence, the notion of onboard, we need to evolve the intelligence of your car. By having it train every night against the fleet of all Tesla’s in the world in a highly automated fashion. Elon, will my car go into battle with other Tesla’s they will compete in a friendly match to ensure they don’t crash into each other, to see how well they’ve absorbed the experience of driving around the world. The more they experience, the better they will perform. The conversation goes on. But Elon is clearly understanding what the hell I’m talking about.

Krzysztof Piekarski  48:45

Yeah, I wonder what the reason we’re talking about Elon time, right. So he’s still using his six months from now. So we get out to real time. That’s a year and six months from now. Yeah, but no, I that was so fascinating. What do you remember what the actual website is? So people could go to character.ai? Right?

Luke Hallard  49:05

Or something like that? Yeah, I will. We will stick it in the show notes. Because it was super fun. Oh, yeah. betta.character.ai Go play with it. It’s free to sign up. And they’ve got hundreds of bots to talk about pretty much any call any, any conversation you’d like to have. I had a bunch of fun ones with it. It’s good fun.

Krzysztof Piekarski  49:21

That’s right. So so the interface is you go to this website and you see a page that has icons of say Yvonne and there was a what was it? Who you having a conversation with regarding the platypus and monkey?

Luke Hallard  49:39

That was? Yeah. Who would win? So who would win? He says to me, Luke you name literally

Krzysztof Piekarski  49:47

lose the character, but the kind of story he thinks that the character

Luke Hallard  49:51

was who would win that’s the name of the character. And, oh, he will, he will have a battle with you. Oh, any two things real or imaginary? So Yeah, I had a I had a thought the thought battle with who would win between monkeys and platter. Boy,

Krzysztof Piekarski  50:06

there was so good. Yeah, it was so good. And maybe last thing to, to add to today’s episode, just what was it four days ago or maybe this weekend? Within this past week anyway, there’s a new big AI development called Open whisper. Did you come across this? I believe it’s an open platform available to all developers, there’s a technical barrier to installing it in your own computer. So it’s not quite ready yet for technology noobs. But open whisper is a AI program that translates human voice basically completes the translation task at at a level exceeding human capacity. And I’d listened to some of the samples. So so. So there was one that was kind of like the voice of a auction bidder, you know how fast they talk, like deliberately, deliberately fast, and it got every single word, translated accents and foreign languages. And I mean, you name it and in the translation was, was just so spot on. It’s kind of making the ripple, it’s kind of sending ripples in the AI world. But this is exactly the to bring this back home one more time. This is an example of narrow AI, where if you throw enough data at a thing, and you’re smart about how the data is organized and processed, it seems AI could solve so many problems. Yeah. But it’s not general intelligence stuff. So just to make sure that’s, that’s clear,

Luke Hallard  51:50

but you’ve hit on the key point there, right. It doesn’t need to be at AGI to add value. And I think taking like narrow AI or AIs, and augmenting a human being or a team with those, suddenly you get kind of exponential capabilities, you’re making just helping us all be better at the stuff we want to do. We then have to do, because got these AI assistants helping us with, you know, kind of mundane tasks. That’s that’s where the acceleration comes from. That’s, you know, if we bring it all the way back to finance, because it is, I guess, supposed to be a finance podcast, you know, that’s where some of the really big companies, the future are going to be born from the weather, you know, helping us all just be more efficient, get more out of our day,

Krzysztof Piekarski  52:33

right in the Norway recommendations for seven investing, I’ve made it my mission to include in the AI checkbox, quality, but to what extent can this company benefit from narrow AI even today? And like, yeah, and my recommendation for October seems, as a little bit of a teaser seems primed perfectly for this kind of problem. It’s like, and so when I see that I get excited, it’s just gonna be that much more quick, powerful, and solve so many more problems on the scale and speed and level of efficiency that we’re just not familiar with. So it gives me a little bit of maybe that safety of margin, like, if it has a, if it’s sort of primed to benefit from Ai. I’m like, Okay, I’m definitely looking in that direction. If it doesn’t, then I get worried, or maybe not worried, I get less confident, because then it’s just, the business just won’t benefit from this huge, huge thing. So why would I recommend that is my new framework,

Luke Hallard  53:39

it’s good. It’s good to make it an objective thing you think about I don’t do that. But maybe I should. I like it. And I do like your October stock recommendation. It’s one I’ve owned for a few months. I think it’s not very widely known out there. So, so good to have a new name on the seven investing scorecard. I’m really excited to see where this one goes. Me too.

Krzysztof Piekarski  53:58

Rook. What do you think? Have we do?

Luke Hallard  54:00

I think I think we did pretty good. I enjoyed our chat today. I apologize for muting myself on and off, because I’m just coughing away like a lunatic. I’ve spent a hard couple of weeks at the poker table, but I can feel hard with

Krzysztof Piekarski  54:15

the poker. You see, we could talk forever, but I want one of the things that that people maybe don’t understand about poker, which is similar to chess in this way that if you’re a high level chess player, you have to be in exquisite physical condition that people train like they go. If they good chess players go to the weight room and they do their cardio, because your brain uses more energy than any other organ. So if you’re sitting there thinking nonstop, you’re really gonna deplete yourself and you need to be strong. And if you’ve ever played any amount of poker in your life, right when you’re sitting at that table, you I mean, it’s like a marathon.

Luke Hallard  54:58

You got it. You got it. So I just saw I know you’ve reminded me where my game fell down then in Pnom pen because it didn’t go very well and it’s probably my not being a finely tuned instrument

Luke Hallard  55:15

I’m coughing again is the evidence that well, hey, look, I think we should round this out with a congratulations to you, too on your impending nuptials is the big day coming up soon.

Krzysztof Piekarski  55:24

October 15. Wow. So maybe the next time we record that will be my last last podcast in bachelor in the Bachelor herd state.

Luke Hallard  55:35

Fantastic. I’ll think of a agenda topic related to that.

Krzysztof Piekarski  55:39

Cool, awesome look. It was. It was great doing this first podcast with you. Hopefully, hopefully, it’s something we continue in and we’ll see if folks dig it. So

Luke Hallard  55:52

I think that if nobody else did, and but I think we’ll find some. Thanks, Christoph. Great chatting today.

Krzysztof Piekarski  55:57

All right, Luke. Take care of yourself. Speak soon.