Math whizzes with computers helped cause the financial crisis.
Now, they’re at it again — this time with a better outcome, we hope.
The Wall Street Journal is reporting that more investors are turning to the science of artificial intelligence to make decisions.
With artificial intelligence, the WSJ says, programmers don’t just set up computers to make decisions in response to certain inputs. They try to get the systems to learn from the decisions — and adapt.
Essentially, the computer program analyzes huge chunks of data and makes predictions about the future, the WSJ reports.
Rebellion Research, for example, is a small New York hedge fund that has been using a machine-learning program it developed to invest in stocks. Run by a small team of twenty-something math whizzes, Rebellion has a solid track record, topping the Standard & Poor’s 500-stock index since its 2007 launch, the WSJ says.
“It’s pretty clear that human beings aren’t improving,” Spencer Greenberg, 27-years-old and the brains behind Rebellion’s system, told the WSJ. “But computers and algorithms are only getting faster and more robust.”
The programs are effective, advocates say, because they can crunch huge amounts of data in short periods, “learn” what works, and adjust their strategies on the fly, the WSJ says.
“No human could do this,” Michael Kearns, a computer-science professor at the University of Pennsylvania, told the WSJ. “Your head would blow off.”
What do you think? The wave of the future or something to run away from? Why?
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