Can Computers Pick Stocks?

  • Posted by
  • on November 25th, 2006

You can pick your nose and you can pick your friends, but you can’t pick your family. According to the New York Times – Ray Kurzweil thinks you can’t pick stocks either and you should leave it to computers.

“Artificial intelligence is becoming so deeply integrated into our economic ecostructure that some day computers will exceed human intelligence,” Mr. Kurzweil tells a room of investors who oversee enormous pools of capital. “Machines can observe billions of market transactions to see patterns we could never see.”

This is a big whatever!

Today, computerized trading programs are dominating the futures pits and that trend is likely to continue.

I think, the smart thing to do is leave that crap to the computers. They own it right now.

Think longer term. Think LESS is MORE (ie. less trading). Computers are not being programmed for that.

I think computers and the software that runs them can deliver you the models, but it is the humans that make the models in the end and the humans that decide on the leverage.

Most important, computers CAN’T predict how the CLIENTS (investors) will react in the inevitable drawdowns that occur in any style, human or computer.

UPDATE – Roger has THE post on Black Box Trading.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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