AI and stock markets

It’s impossible to miss the wild, record swings in the Stock Market. Scary things for investors accustomed to more sensible market behaviors. Expert commentators quickly pointed to traditional factors including higher interest rates, a potential slowdown of the world economy and trade tensions. These explanations haven’t been convincing, given that the US economy is strong and that previous periods of instability didn’t lead to similar sustained, record-breaking volatility. Traditional expert insights, anchored to history and personal experience, are being rendered increasingly obsolete by the relentless march of technology – particularly Artificial Intelligence, machine learning and automated trading. Human experience and intuition are fading as data and algorithms ascend.

In fairness, human analysts have had centuries to dazzle clients with prescient advise, much of which historically missed their mark. It led Princeton University professor Burton Malkiel to conclude in his 1973 best seller, A Random Walk Down Wall Street, that “A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts.”[1] Now it’s the turn of machine learning experts, mathematicians and software engineers to demonstrate that their solutions will outperform monkeys and human investment advisors alike. Read the rest of this article at Ozzie Paez Research.