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Computer Models Won't Beat the Stock Market Any Time Soon
Article

Computer Models Won't Beat the Stock Market Any Time Soon

Richard Dewey
Bloomberg Businessweek , 2019
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Editorial Rating

8

Qualities

  • Eye Opening
  • Overview
  • Engaging

Recommendation

Many companies sift through masses of data to present highly targeted recommendations to their customers. But except for a few hedge funds, financial firms haven’t found a way to use computer models to identify worthwhile investments. In this informative analysis, portfolio manager Richard Dewey explains why it’s easier for your smartphone to recognize your face in a crowd than it is for a powerful computer to discover undervalued stocks. Financial professionals, investors and anyone interested in the potential of revolutionary technologies will appreciate this fascinating overview.

Take-Aways

  • Despite advances in computing power, most smart machines aren’t smart enough to outperform an index fund.
  • Investing presents unique challenges for technology developers because the stock market is complex and unpredictable.
  • Financial firms can focus on transaction costs and “alternative data.”

About the Author

Richard Dewey is a portfolio manager at the Royal Bridge Capital hedge fund.

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