Can AI and a supercomputer beat the markets?

vanzandt said:
They don't. The thing is however, over the next few years, the algorithms they're using now will be stone age.

There is so much more to it than just numbers. Predicting elections, changes in weather patterns, changes in consumer tastes... knowing where we'll be tomorrow and a year from tomorrow with an accuracy (that while it'll never be perfect), has heretofore never been seen, and will only get better and better and better with each day that passes.

We are at the tip of the iceberg here. The magnitude of this curve is unfathomable. Think Moore's Law---> squared. That's what's going to happen. This time however, unlike Moore's law, it's not about the processing power of data that is boiled down to zero's and ones.... it's about the processing power of all human intelligence to date. Squared.
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While only a moron would disagree that ai will lead to advancements in almost any category of discipline, it is just a moronic to overlook that ai does not possess the ability of curiosity and imagination.
Today, ai is either task or function oriented. Imagination MIGHT become possible when/if ai becomes self-aware... capable of forming beliefs, wants, needs, curiosity, and emotions.

Here's a quick read about a few inventions that were discovered by mistake, and exist today because of imagination.

https://www.history.com/news/accidental-inventions
 
Tiney Winey said:
"A former investment banker with little previous quantitative-trading experience, Valois-Franklin claimed that Wallace's main selling point over rival AI-powered hedge funds is its ability to constantly refine its own models using evolutionary processes that have been likened to selective breeding."
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This new bunny AI technology might be a terrific purgative for investors with IBD.

https://www.morningstar.com/news/marketwatch/20240120208/can-ai-and-a-supercomputer-beat-the-markets
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Like us mortals, 90% of AI computers will lose money and 10% of AI computers will make a killing.
 
vanzandt said:
I don't know about "beat".... but I suspect in less than a decade's time, the intraday volatility that we all enjoy now across any basket of stocks, futures, or indexes, .... is gonna go away.

The 4 or 5 powerhouses out there, Bridgewater, Citadel, Man, Renaissance, etc..... don't think they aren't in an all out AI spending frenzy right now. And that money being spent isn't to beat retail traders, it's being spent to beat each other. The game gets tighter and tighter, and outside of a few one off occurrences... it gets closer and closer to a stalemate.

The volatility curve is going to flatten... it has to if one considers the power of AI being forecast. And outside of that, the only way retail will make any money is by going back to the basics... the Peter Lynch stuff. And it won't be retail "traders" making any money, because they'll become a dying breed. It'll be those that buy stocks for the real reason they ever came into existence in the first place. Take a teeny tiny ownership stake in a company you think is growing by throwing in as much as you can afford, think long term, and go about your daily paycheck to paycheck existence banking on a retirement that will hopefully come in if your FA homework was right. The writing is on the wall for anyone with enough foresight to see it.
~vz
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I've had the same thought, but hope and think it's incorrect. Renaissance and similar are already using fairly sophisticated machine learning models.

Arguably, technology should be at the most sophisticated ever at the moment, yet volatility over the last few years have been much greater than it was post financial crisis well over 10 years ago by now.

So, if technology is at it's most sophisticated at the moment why isn't volatility lower already?

If intraday volatility were to go away, I think a requirement would be a completely stable world where everyone in the world had the same objectives, time horizon, information and fully agreed on fair value at any moment. I have a hunch that ain't going to happen anytime soon.

But I may easily be wrong.
 
tiddlywinks said:
While only a moron would disagree that ai will lead to advancements in almost any category of discipline, it is just a moronic to overlook that ai does not possess the ability of curiosity and imagination.
Today, ai is either task or function oriented. Imagination MIGHT become possible when/if ai becomes self-aware... capable of forming beliefs, wants, needs, curiosity, and emotions.
More...
Have you tried to use chatGPT or Gemini?

Some of the answers shocked me. They could be getting close, good inferences is not imagination but getting awfully close.
 
vanzandt said:
They don't. The thing is however, over the next few years, the algorithms they're using now will be stone age.

There is so much more to it than just numbers. Predicting elections, changes in weather patterns, changes in consumer tastes... knowing where we'll be tomorrow and a year from tomorrow with an accuracy (that while it'll never be perfect), has heretofore never been seen, and will only get better and better and better with each day that passes.

We are at the tip of the iceberg here. The magnitude of this curve is unfathomable. Think Moore's Law---> squared. That's what's going to happen. This time however, unlike Moore's law, it's not about the processing power of data that is boiled down to zero's and ones.... it's about the processing power of all human intelligence to date. Squared.
More...
I am with you.
 
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