“Artificial intelligence is overhyped.”

This is what legendary hedge fund manager Paul Singer wrote in a recent letter to investors.

Paul Singer is the founder of Elliott Management, which according to Elliott’s website, was founded in 1977 and “is one of the oldest investment managers of its kind under continuous management.”

More on this tagline in a moment.

Singer’s letter went on to say:

Technology mega-caps, such as Nvidia, are in “bubble land” and he is skeptical that companies will continue to purchase Nvidia’s graphic processing units in such huge volumes.

And…

AI applications are not yet ready for “prime time,” with many expected uses likely to be cost-inefficient, unreliable, energy-intensive, or untrustworthy.

Singer has a history of making controversial statements like this.

Singer made a similar statement about crypto in a 2023 Wall Street Journal interview:

He stated crypto is “completely lacking in any value,” while adding, “There are thousands of cryptocurrencies. That’s why they’re worth zero. Anybody can make one. All they are is nothing with a marketing pitch—literally nothing.”

Singer‘s hedge fund returned just 4.7% in 2023, clearly missing out on the bull market in crypto and AI we saw last year.

I don’t share these facts to minimize Singer or Elliott Management.

I do, however, share these facts to caution you about blindly trusting the opinions of historically successful investors when they make statements regarding new technologies.

Morgan Housel talks about the downfalls in his book, The Psychology of Money.

He states:

“We tend to over-admire people who have “been there, done that” regarding money, so we follow their advice even if it may not be applicable to the future.

Experiencing specific events does not qualify someone to know what will happen next.

This is especially true in investing.

In fact, in investing, experience often leads to overconfidence more than forecasting ability.”

If investing were a “hard” science, where the variables are known and quantifiable, you could certainly study historical data to accurately predict the future.

Physics and geology are hard sciences, and from what I gather, physics hasn’t changed much.

Sir Isaac Newton’s falling apple experienced the same gravitational pull as an apple that fell yesterday.

Investing is a “soft” science, however. Its variables are difficult to measure.

Investing is a massive group of people making imperfect decisions with limited information about things that will have a massive impact on their well-being.

No amount of experience can predict this.

Again, I don’t share these facts to minimize Paul Singer or Elliott Management.

Singer has been a top hedge fund manager for nearly 50 years, according to his tagline.

Unfortunately, this might also be his problem…

He’s been a top hedge fund manager for nearly 50 years, so his experience has bred overconfidence, which has led him to believe he can forecast the futures of industries he clearly knows nothing about.

This overconfidence has kept him out of artificial intelligence and crypto, both of which have seen life-changing returns and will likely continue to do so into the future.

Now I ask you…

Is this someone whose opinion you should trust regarding new technologies?

Instead, listen to the technology experts here at Altucher Confidential.

We certainly know artificial intelligence and crypto.

Our returns are better than 4.7%, too.