Is Joking Intelligence?

Summary:

  • Jokes are hard to explain and highlight how we cannot explain creativity.
  • Many engineers and scientists have tried to achieve creativity using formulas.
  • Creativity might be something different than formulas.

Background:

David Deutsch thinks that achieving human level intelligence with computers is a matter of understanding the essence of creativity (The Beginning of Infinity). A joke is an interesting example of creativity because humour is difficult to explain.

Is joking “Intelligence”?

One type of joke involves taking something from one context and replacing it with something from another context that is only related in a limited – and often absurd – way.

Girl (holding up an an apple): Mammy, would you like to try this vaccine?

Mother: That’s not a vaccine young lady. It’s an apple.

Girl: Sorry, I thought I’d give it a shot.

Sample joke.

I don’t think I can perfectly explain why this joke is funny, but let me try anyways:

Attempt #1: The joke is funny because the word “shot” is a pun. This is a bad explanation because it now kicks the can to explaining the word “pun”.

Attempt #2: A joke is funny because it explains something non-obvious. People appreciate explanations, particularly non-obvious explanations, and react by laughing. In this case, it is non-obvious why the girl would call an apple a vaccine. The explanation is that calling an apple a vaccine does make sense if it is a reminder of the broader context of the COVID outbreak the girl and her mother are living through. This metaphor is further engrained by the pun, “shot”, which ties together the attempt at a joke and the vaccine. I think this is a bit better as an explanation but it is also a bit circular because I’m saying that the joke is partly funny because it is pointing out that the setup line is a joke.

Ok, I’ve run out of more ideas, but comment below if you have some.

The temptation with creativity is to find a formula

Computers are good at implementing formulas. However, formulas/models seem to be human. Even if the computer is “machine learning” like Alpha Go for Chess, there were people who developed the model.

If we want computers to come up with their own formulas, how would we do that? The temptation again is to come up with a formula that allows computers to come up with formulas.

This leads to the question of whether artificial intelligence could be achieved simply by having sufficient layers of formulas. This is what it seems humans have been trying to do roughly since Alan Turing defined a test of whether an AI is real back around the second world war – use more formulas with more data and more computing power.

Another possibility is that creativity is a separate thing to formulas. The End.

Now is a good time to prepare for your phone and computer getting hacked

Summary

  • I think that the risk of a major cybersecurity threat – of similar economic magnitude to COVID – is under-appreciated.
  • My friend recently got hacked and this highlighted how easily we can lose access to our email, documents and bank account if our computers and phones.
  • It’s good to take steps to avoid being hacked, but, it’s equally – if not more – important to be prepared to recover from a hack.

Background

Last week, one of my friends got seriously hacked and lost control over their phone, computer and internet router. They have made good progress in resolving the issue, but it was a reminder for me to revisit my own preparedness for a computer and phone hack. In particular, it made me realise how much security is now dependent on our phone.

I think that a major global cyber hack is likely over the next decades and will arrive unexpected, much like COVID-19. I’ve taken some time to review the security of my information and am presenting my approach here. I’m not a cyber or software expert, and this approach is imperfect, but I hope that it serves as a reminder to you to check if you could survive a hack.

Plan to survive, not just avoid, a hack

Yes, it’s good to take measures to avoid getting hacked (i.e. someone getting control of your computers and digital information) – and I’ll cover some of those. However, I don’t believe any system can be 100% protected from hacks, so it is best to assume you will get hacked and think about how you can cope in that scenario. (I highly recommend the movie Zero Days as an eye-opening insight into how easy computers are to hack).

0. Simulate a Hack

Even if you don’t read any of the rest of this article, I recommend doing the following:

a. Open up a browser in private mode.

b. Navigate to the website of an important service (e.g. your bank or email provider).

c. Assume that you no longer have i) your password/or it has been changed, and ii) your phone.

d. Try to log in to your account.

If you can’t find a way to log in, then you probably are vulnerable if your phone and computer get fully hacked.

Oftentimes, the only ways to avoid this are i) having back-up codes on paper – if the service allows that, ii) having a backup e-mail to recover your password, iii) calling the company (often a slow and painful option).

1. Two Factor Authentication

For important accounts, I always turn on two factor authentication (2FA). I use an authentication app like Google Authenticator where possible. Sometimes SMS/text messages to my phone are the only option for 2FA. SMS is better than nothing, but text messages can be intercepted, so two factor using an authentication app is preferable.

2. I use a VPN (virtual private network)

I always use a VPN on my laptops. A VPN helps to hide your IP address (the address of your computer when accessing the internet). This helps to stop your computer from being targeted – especially if on a public wifi network.

For a computer, there are many VPN services available like Proton VPN or Nord VPN or Express VPN that you can buy for a few euro per month.

There are also services that provide VPN for mobile phones. These are less common but becoming more common. Brave VPN is one new option for iOS that I use.

3. Consider putting the most important passwords on paper

Yes, there is a risk that somebody could find/steal these passwords and that risk is worth considering. However, it’s always possible that i) your password gets stolen by hackers if you’ve stored it on your computer or phone, ii) you forget your password, or iii) you just die. Writing your password on a piece of paper opens you up to the risk that someone finds the piece of paper, but it does a good job addressing risks i-iii. My view is that there are many more hackers that can steal stuff from my computer than there are thieves that can find a piece of paper.

The risk of someone finding the piece of paper can also be partially mitigated by setting up the app/service so that you are notified – to your e-mail and/or phone – if your password is updated or if there is a sign-in from a new device. If someone finds your piece of paper, you can – in theory – take action right away once you are notified that they are trying to log in.

4. Save passwords to a password manager

There are many options for password managers – from web browsers to Keepass to OnePass. These are not perfect but are often better than an unprotected Excel or Word document.

The benefit is that you can use different passwords for every website. This is important because it is highly likely that some of the services you use will get hacked and passwords will get exposed to the public. Of the 200+ services that I have passwords for, I know of at least three that have been compromised. If I had used the same password for all services, then the password for all of my services would be compromised!

Of course, holding all of your passwords in one password protected database isn’t perfect. There is the risk that your password database gets hacked – especially if you hold the database on a device that is online. This is why two factor authentication is important to use for critical accounts.

There is also the risk that your password database gets damaged and the passwords can’t be recovered. One way to provide some protection for this is to regularly back up your database to a hard drive that you store disconnected from the internet.

5. I do regular offline back ups of my password database, email account, website/blog and documents

One outcome of a hack is that the hacker uses your personal information to steal money or make use of your identity. Another possibility is that you are drawn into a large scale hack where an attacker gains control of your accounts but their ultimate target is someone else in the larger group being hacked. They may not care about your information, but you may still lose it or be denied access to your accounts. In other words, it’s possible you will simply be collateral damage.

If you do lose access to your accounts and/or information, then you need a backup copy – ideally one or two offline hard drives. I try not to be in a position where my most important information is only stored online.

6. Create a Backup E-mail with a different service than your main e-mail

For example, if your main email is iCloud, use Gmail as a secondary email; if your main email is Protonmail, maybe use iCloud as your backup. The key point is that I don’t want to have your backup e-mail being managed by the same service as my primary e-mail – that’s a recipe for disaster if my main email service is hacked.

7. Prioritise and try to keep things simple

We all have so much information that security can seem overwhelming. Try to prioritise what is most important to you. Maybe that’s your e-mail. Maybe it’s your bank account. Maybe it’s your cryptocurrency.

Work through the exercise of trying to recover your accounts and critical documents if you lose your password, your computer and your phone.

8. Wildcard measures

Take some additional precautions that aren’t disclosed on a public blog 🙂

Invitation for Comments

What further tips do you have on avoiding and surviving hacks? Do you have any concerns with any of the approaches above? Please do comment below.

Berkshire’s largest investment in 2020 was itself

Summary:

  • Berkshire Hathaway’s 2020 Annual Report was released on March 1st 2021.
  • Buffett did not make any big sales or acquisitions in 2020, so the business is little changed from 2019.
  • Operating earnings, which excludes stock gains/losses, were down close to 10% in 2020 compared to 2019.
  • Berkshire continues to accelerate the rate at which it is buying back its own stock, spending $24.7 billion on buybacks in 2020, compared to $5 billion in 2019.
  • Buffett notes that Berkshire’s insurance businesses are at a particular advantage over competitors because Berkshire can invest the float in equities instead of low yielding bonds.
  • Buffett breaks down the ownership in Berkshire into five groups: Himself, index funds, money managers, individuals who dip in and out of Berkshire shares, and individuals who invest in Berkshire for the long haul.
  • Buffett presents, for the first time, the business as a combination of four jewels: A 5.4% stake in Apple, Berkshire Hathaway Energy, BNSF Railway, and GEICO.

Why I own Berkshire and why you might not want to:

Being known as the most famous investor in the world sets a high bar for what to write in your annual report. The 2020 report is not Buffett’s finest, but he does provide new perspectives on where value lies in the business, and how he breaks down Berkshire shareholders into different groups.

If you’ve read about how I invest my money, you’ll know I hold 30% of my liquid net worth in Berkshire stock, primarily because I believe in Berkshire’s investing principles – documented in Buffett’s long history of annual reports.

That said, tread carefully before making an investment in Berkshire because i) it is likely that Buffett’s successors will not perform as well as he did, ii) Berkshire is now very large, which makes it harder to find good investments, iii) if you do what I’m doing, you’re putting a lot of eggs in one basket – it’s always possible for a company to be hit by fraud or a scandal that takes it down, iv) Berkshire doesn’t do a lot of “tech”, so maybe the business will fall behind the rest of the economy, and v) cybersecurity risks could impact the business – it’s an under-appreciated risk but listed as the first risk in Berkshire’s annual report!

Berkshire in 2020 in Brief:

Excluding any gains and losses from investments, Berkshire’s operating earnings dropped from roughly $24 billion in 2019 down to $22 billion in 2020. This is nothing remarkable – good or bad – given the COVID background.

Berkshire bought and sold some equities in 2020, but nothing accounting for more than a few percent of the overall business’s value*. The largest line item to report was the repurchase of its own shares, with Berkshire buying almost $25 billion worth of its own stock in 2020 (getting close to 5% of outstanding shares).

Compare this to 2019, when Berkshire repurchased only $5 billion of its own stock, and you can see that Berkshire is very likely to become a large net purchaser of its own stock over time. This is exactly what Charlie Munger – Buffett’s sidekick – has said in annual meetings.

I wouldn’t be surprised to hear that Berkshire buys back even $50 billion in 2021 if the stock price remains in the $200-$250 range (B shares).

A Note on a Moat

Buffett loves to talk up the businesses that Berkshire owns, and that can become fatiguing. One good point he makes this year, given interest rates have reached near zero, is that Berkshire’s insurance business – which includes GEICO – is at a particular advantage over competitors. Pure-play insurance businesses can be restricted – for regulatory reasons – to investing the premiums they receive primarily in bonds (currently earning close to zero income). Berkshire – as a diversified company in many businesses – is able to weight the investment of the insurance premiums it holds much more towards equities.

Note: Buffett isn’t earning a whole lot on the ~$130 billion in cash on the company’s balance sheet. Ironically, the amount of cash he has is very close to the size of the insurance float ($138 billion) where he is emphasising his competitive advantage 😂.

Investor Groups

Buffett didn’t get deep into politics in this year’s report (no surprise there), but he did split up Berkshire shareholders into different groups for the purpose of emphasising his admiration for group 5:

  1. Himself – a shareholder group with a limited lifespan.
  2. Index funds – interesting that he would break out index funds as a category. Buffett has written favourably of the index investing approach in the past. However, the language in this report seems a bit more mixed: “Index funds, it should be emphasized, own Berkshire shares simply because they are required to do so”. Maybe I’m reading too much into it this as a slight on index funds – or maybe I want to read too much into it!
  3. Money managers. An “honourable but difficult occupation”, Buffett says in the report. Maybe because it’s his own occupation too 😂? (A bit harsh from me there. In fairness the whole thing about Buffett is that he has all his net worth behind what he invests in – that’s very different from most money managers.)
  4. Individuals who dip in and out of Berkshire. Enough said.
  5. Long term individual shareholders in Berkshire. Clearly, this group is important to Buffett. He didn’t mention it in this annual report, but he has previously emphasised how many individuals invest their life savings in Berkshire, and this greatly influences Buffett in how he runs the business.

The most notable thing about this breakdown for me is that #1 won’t be around for ever, and, in a few decades time, we’ll look back at this as evidence of how index funds became a class of shareholder.

The Crown Jewels

Buffett highlights that the Berkshire business rests on four crown jewels:

  • Berkshire’s stake in Apple (#1) – valued at $120 billion at 2020 year end.
  • BNSF Railway (#2) and Berkshire Hathaway Energy (#3): Generating a combined $8.3 billion in earnings in 2020. [Conservatively, applying an earnings multiple of 15, that would value #2 and #3 at about $125 billion.]
  • Insurance businesses including GEICO (#4): Worth $138 billion, if you value it purely off of float. [actually, Berkshire often runs a profit on insurance so it’s likely worth more, although you could argue the float is worth less than cash because it cannot be invested quite as freely].

So, roughly speaking, the four crown jewels are worth around $360 billion in today’s market.

Add to that about $130 billion in cash, $160 billion in stock holdings excluding Apple, and another $6 billion in operating earnings (worth $90 billion at a 15X multiple) excluding BHE, BNSF and investment income. This brings Berkshire towards a $740 billion market cap, which is equivalent to a price per B share of roughly $330.

At the time of writing, Berkshire is at a price of $250 per B share and a market cap of around $560 billion, so you can see why Buffett and Munger have been buying back the stock from 2020 lows of around $162 all the way up to the present time.

To be clear, I’m not saying it’s obvious that Berkshire’s stock price will go up soon. You could pretty much have done the same calculation as above for the past five years and gotten the same favourable result – but Berkshire stock prices have not seen strong growth over the last decade.

*Rough calculation: $6 billion = $22 billion in operating income less $8 billion from BHE+BNSF less $8 billion in investment income (e.g. dividends from equity holdings).

A note on the annual shareholder meeting:

I’m not really sure why, but the Berkshire annual meeting on May 1st will be streamed from Los Angeles rather than Omaha this year. The good news is that Charlie Munger will be back on stage to share a few zingers. Ajit Jain will also be on stage, which I’m looking forward to because I haven’t really heard him speak much before. He heads up insurance operations for Berkshire.

*Quite awkwardly, Berkshire sold it’s positions in JPMorgan (Todd Combs, who works for Buffett, is on the JPMorgan board) and also in CostCo (Charlie Munger is on the board). Neither positions were large, but the board connection struck me as awkward – certainly for the CEOs of JPMorgan and Costco to have board members who are selling all of their shares. Ouch! 🤯

How to Legally Offer Cheap Antigen Testing within your Company or Organisation (non-US)

Summary

  • Antigen tests give results in 15 mins and are 10X cheaper than PCR tests.
  • There are antigen tests available that are EU approved for clinical use.
  • As an employer or organisation, you can legally do antigen testing if you contract a clinical work to oversee the tests.

Background

Employers/organisations currently have three options to avoid the spread of COVID-19:

  1. Use social distancing and improve workplace ventilation = good idea, not perfect but should be continued.
  2. Monitor symptoms, i.e. give employees questionnaires for symptoms (fever, cough etc.) = inaccurate because i) infected people can spread before showing symptoms, ii) not everyone shows symptoms.
  3. Do PCR testing = $100+ per test and slow to get results.

In the European Union, there is now a fourth option that is legal, which is antigen testing with clinical supervision. This blog provides some ideas on how employers/organisations could implement this approach to make their workplace safer.

The benefits of antigen testing

  1. You can test cheaply (<10 euro per test) and therefore frequently.
  2. Test results are immediate (<15 mins).
  3. Tests are quite accurate at detecting contagiousness (>95% sensitivity).

Here is my demo of taking an antigen test.

Here is a great resource for antigen tests in general – www.rapidtests.org – built by a Harvard professor.

The one caveat is that antigen tests are currently only approved in the EU for clinical use for symptomatic patients. However, you can comply with this requirement as an organisation or employer by contracting a nurse/doctor to oversee testing. You could maybe even get creative and do this by video.

How to implement this in your workplace or organisation:

  1. Get some antigen tests:

The test with the highest sensitivity I can find is the Flowflex Antigen test (EU approved but not approved in the US yet). These can be purchased in bulk for less than 10 euro per test. Comment below or contact me and I can connect you to a bulk supplier (minimum order is 800 tests) if that would be of help.

2. Hire a nurse or doctor to oversee testing:

I’m a bit green on this front but I think it should be possible – potentially via locum nurse/doctor hiring services. There may also be insurance matters to consider.

Please contact me if you know how to hire nurses/doctors on contract. I think the ideal would be to contract with a locum agency that can provide a nurse’s or doctor’s services for a certain number of hours per week.

3. Get the nurse/doctor in once or twice per week

Either send antigen tests to people’s homes and then have the nurse/doctor instruct them by video call OR have people tested as they arrive at work.

Some caveats:

  1. Testing is not a replacement for social distancing, masks and good ventilation. Good practises should continue.
  2. If there is a positive test, the person should go for a confirmatory PCR test, if possible.

What is the benefit for you – an employer or organisation?

  1. Simple – you’re going to catch more people early on that are spreading the virus but don’t show symptoms.

Comment below with other thoughts OR if you would be interested in this kind of service as an employer or organisation. The service could be: a) remote video antigen testing for your employees – probably could work for even small organisations, b) on site testing, probably only makes sense for sites with 50+ employees/people.

Lastly, my view remains that the Irish government should provide emergency approval for rapid antigen tests (that are already allowed for clinical use) be allowed for self testing. This would be much better than people relying on symptoms for diagnosis. Here is my analysis of why.

Two things to Try for Twenty Twenty One

Summary

Journaling and Planning

For four to five years – when I was about 17 to 21 – I kept a daily journal. It was too much effort and I wasn’t enjoying it, so I stopped for almost ten years.

Over the last year, I just keep a few notes roughly once a week about things that happened and intentions I have for the next day/month or year. A few of my short learnings on making journaling easier:

  1. Pick out a dense book and read a page when you do a diary entry. If there’s a quote I like, I write it down in my journal. So far, I’ve used Letters from a Stoic (Seneca) and Meditations (Aurelius) for this.
  2. Buy a nice little diary. I’ve spent a more than just buying a cheap book. It put more love/soul into it. Splash out and get a wooden cover or something.
  3. I write down a few things that happened and how I feel about them.
  4. I write down a few intentions. I try to avoid setting myself up for failure with things outside of my control (e.g. do a fundraise for $X) in favour of things I can control (e.g. remain calm in handling upcoming difficult conversation y).

Even all of this stuff can be boring and/or not enjoyable. An alternative option is to just write once a year or once every few years.

You can do that on futureme.org for free and have the letter e-mailed to you in 1, 3 or 5 years (or whatever). It can be nice to do it with a friend or a partner/spouse. Hat tip to my brother for this idea.

Improve the News

A lot of people are always harping on about how X is so divided or polarized (and it’s getting worse). X can be people, the country, the world… insert your word of choice.

My favorite question to ask back (actually I usually just stay quiet) is: Well, what are you doing to make things less divided, if you think that’s a goal?

There’s a dude at MIT (Max Tegmark) who actually is doing something on this front with www.improvethenews.org – it’s a website that allows you to move sliders between left and right to see the news change. Try it for yourself.

Sliders set to “Left” and “Pro Establishment”
Sliders set to Right and Anti-Establishment

Lastly, my favourite tab settings:

Sliders to the middle

Might save me a bit of time compared to alt-tabbing between CNN and Fox…

Lastly – my January newsletter will be coming out later this week for subscribers. Sign up to get ahead on new business ideas:

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