Dissatisfied with human beings’ powers of intelligence, several firms are trying to use AI to create the ultimate investor.
- Using a branch of artificial intelligence called “machine learning,” some investors are trying to create an AI that can analyze market data, make predictions about the future, decide which stocks to buy and sell, and learn from its mistakes.
- The advantage of using an AI program is that it can process huge amounts of data in a short time. But there is no guarantee that the program’s calculations will remain accurate if fundamental market conditions change.
- One of the companies pioneering this type of AI is Rebellion Research, a small hedge fund based in New York run by a quartet of investors in their 20′s. In recent years, the company has performed better than both the Dow and the S&P 500.
Facts & Figures
- Rebellion Research has beaten the S&P 500 index by an average of about 10% a year since 2007.
- In 2009, the hedge fund increased by 41%, whereas the Dow only increased by 19%.
- Star, Rebellion Research’s AI program, keeps track of approximately 30 factors that affect a stock’s market performance. It usually holds between 60 and 70 stocks at any given moment.
Best Quote
“It’s pretty clear that human beings aren’t improving.But computers and algorithms are only getting faster and more robust.” – Spencer Greenberg, one of the founders of Rebellion Research