Worry Begets Worry

One doesn't need to look very hard to find an endless amount of items to worry about. Will AI take our jobs and lead to our extinction? Will your favorite political party win the midterms? Will we enter into a nuclear war at any moment? Will inflation erode the value of our wealth?

Everyone would like the world to be a better place for their children and grandchildren than it was for them, and they worry it won't be.

While I'm not much of a worrier, I do have similar thoughts from time to time as a father of 4 little great souls. Are they going to live in my basement until they're 40? Should we even save for their college expenses anymore? What careers can they pursue that will be useful in the future? What if they grow up to be day traders?!?! Heaven forbid.

Worrying tricks your brain into feeling like you're doing something useful, but mental rehearsal rarely changes external realities. Mood-congruent memory means an anxious state makes anxious memories and possibilities easier to retrieve, so one worry primes the next!

If you're looking for the next potential catastrophe, much of the artificial intelligence talk now is discussed in terms of extreme outcomes, such as:

• Outcome A: AI greatly improves productivity for the world, leading to an abundance of wealth and resources for us humans. We all eventually live a version of Star Trek. The world's richest man predicts this, suggesting we no longer need to save for retirement anymore.
• Outcome B: All of the money plowed into AI doesn't generate the expected return on investment and was essentially thrown in a firepit. This could lead to massive economic consequences.
• Outcome C: AI goes rogue on the internet exposing massive previously undetected cybersecurity risks, meaning nothing on the internet (bank accounts, investments, cloud storage) is safe anymore.

Outcome A sure sounds nice, B and C not so much.

If there is a catastrophe I suspect it will be short lived, and we humans will figure out a way to progress and continue forward as we always have.

What will happen will probably be an outcome that few are predicting at the moment. What if the eventual outcome of AI is not extreme at all?

In this short 7+ minute clip below OpenAI CEO, Sam Altman, discusses both a very scary element of AI as well as an incredible achievement we have seen from it.

Let me paraphrase here what Altman said in regards to cybersecurity "I don't even know a dramatic enough word to use… models can find bugs that are outside of the normal threat model of what we think a hacker can do… hardware-level, insane stuff… I no longer think we're gonna be able to just patch all the bugs."

If Altman is being honest, then this of course highly concerning. Why do I say "if"? There are many critics of the AI industry who suggest the executives are currently using this type of fear-mongering as a strategic tool to promote government regulation. One might wonder "Why would AI executives want government regulation?"

Two main reasons:

1. Regulatory capture: This would establish heavy compliance standards, safety certifications, and oversight that creates high financial and legal hurdles that only major corporations could absorb, pricing smaller competitors out of the market.
2. Crush open-source competition: Suggesting AI is dangerous and uncontrollable helps build political pressure to heavily restrict or outlaw open-source models.

I am not sure if I believe Altman or not. What I've seen with AI is incredible, so I can only imagine they have much more powerful in-house models than what has been released to the public.

Further on in the clip above Altman shares something exciting about AI. In September, OpenAI claims that an internal AI model using 10,000 agents working for 88 hours solved the Navier-Stokes existence and smoothness problem (not yet verified). This is one of the seven official Clay Mathematics Institute Millennium Prize Problems (Navier-Stokes has been one of the seven for 26 years), and had been a mathematical mystery for about 92 years. It is estimated that OpenAI spent $10 million on solving this problem.

This breakthrough did not come without controversy, as mathematicians Tristan Buckmaster (NYU) and Levent Alpoge (Harvard) argued the AI's proof leaned on and borrowed from their own recent, groundbreaking work that had been leaked to OpenAI.

Of course, I don't have all the details to know what the truth is. What excites me is what AI could potentially solve scientifically that we have not yet discovered. A cure for cancer? A way to improve longevity and aging? A way to do 401k rollovers electronically?? A financial advisor can dream.

Other Market News

2026 continues to reward the globally diversified equity investor, while punishing those who chased returns on the Magnificent 7 (Apple, Microsoft, Google, Amazon, Meta, Tesla, and Nvidia). An equal weighted portfolio of those 7 stocks was up 3.10% for the year through October 31st. This significantly lags the return of the global equity markets YTD (11.06%) which is shown in my table at the top.

Apple is the star of the Mag 7 this year, gaining 27.12% while Tesla is the loser at -11.10%.

The market seems to be losing some its patience on the "hyperscalers" and their large capital expenditures into AI. Amazon, Google, Meta, and Microsoft are estimating to spend over $700 billion combined on capital expenditures in 2026 while Amazon has signaled spending significantly more in 2027.

Ultimately, these companies are expecting big returns on these investments but the market may eventually say "prove it."

One benefit of broad, global, equity diversification is that we don't have to worry about what a handful of stocks are doing.

"My ventures are not in one bottom trusted, nor to one place; Nor is my whole estate upon the fortune of this present year: Therefore my merchandise makes me not sad." -Antonio, The Merchant of Venice