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Facebook backer Thiel's investment strategy for singularity

Peter Thiel, co-founder of PayPal, has some advice for the coming age of smarter-than-human AI: invest in catastrophic insurance.

SAN FRANCISCO--Peter Thiel, co-founder of PayPal and backer of Facebook, has some simple advice for investing in the singularity, or a coming age of smarter-than-human AI: invest in catastrophic insurance.

That's the strategy, however inadvertent, of investment guru Warren Buffet, whose portfolio has shifted in the last 10 to 15 years to insurance and catastrophic insurance companies, Thiel said. "Buffet used to be focused on value stocks like Dairy Queen," Thiel said here Sunday.

Thiel, president of venture group Clarium Capital Management, spoke here Sunday at the Singularity Summit, a two-day conference on the advancement of artificial intelligence. Thiel played host to the event and has invested $500,000 in The Singularity Institute, a 5-year-old research nonprofit that put on the summit.

"AI, or near AI, is so out of fashion today--the only thing thematically to probably do is (invest) in it," he said.

"In a world where there's a possibility of things going extremely well or extremely badly, the tails of the bell curve are much fatter (and that can) lead to different behaviors. There's the idea that the singularity would be very successful, (causing) the biggest boom ever, or blow up the world, with nothing to invest in ever," he joked.

"The bad versions are not investable. If you believe in this, you have no choice but to bet on it," he added.

Whatever the case, Thiel said, it will be an exciting time: "It's too easy to dismiss people who are predicting the end of the world--those people have been wrong for too long. It's going to be a very exciting time. Buffet may be doing it best."