Slashdot Mirror
Quant AI Picks Stocks Better Than Humans
Mr_Blank writes with this excerpt from an article at MIT's Technology Review:
"The ability to predict the stock market is, as any Wall Street quantitative trader (or quant) will tell you, a license to print money. So it should be of no small interest to anyone who likes money that a new system that works in a radically different way than previous automated trading schemes appears to be able to beat Wall Street's best quantitative mutual funds at their own game. It's called the Arizona Financial Text system, or AZFinText, and it works by ingesting large quantities of financial news stories (in initial tests, from Yahoo Finance) along with minute-by-minute stock price data, and then using the former to figure out how to predict the latter. Then it buys, or shorts, every stock it believes will move more than 1% of its current price in the next 20 minutes — and it never holds a stock for longer."
Short term trading generally creates market liquidity, which is necessary for the market to function even remotely efficiently.
Without liquidity, we would likely see wild fluctuations in the prices of stocks, creating an even more unstable and unsure environment. Take a read of the wikipedia page (http://en.wikipedia.org/wiki/Market_liquidity) to get a better understanding. This behaviour can be seen today in exchanges where trading volumes are low and on stocks with low trading volumes (penny stocks, etc). The concept follows over to many things in life. Imagine if you were required to keep any object your purchased for a minimum amount of time before reselling it (house, car, iPod, etc). You would lose control of selling it at a time that works best for you. Very likely, you'd stop buying. This is fine for non-essential items, but the same applies for base needs like food, water and fuel. Crazy fluctuations in those items costs would likely lead to some pretty bad problems. Likely, strategies for flattening out the craziness would appear, and they would work by creating liquidity somewhere in the system that wasn't regulated.
If you crippled liquidity, you'd likely get *more* insane bullshit, not less.
There's a pretty good explanation of why liquidity is generally a good thing to have in the lecture given here: http://www.gresham.ac.uk/event.asp?PageId=45&EventId=640/p
http://www.robschumaker.com/publications/IEEE%20Computer%20-%20A%20Discrete%20Stock%20Price%20Prediction%20Engine%20Based%20on%20Financial%20News.pdf
No its anyone who has sane budget and doesn't believe they have a sense of entitlement to everything. The vast majority of people could build up enough wealth within a couple of years if they wouldn't spend all their money on trivial things. When I worked at a store clerk I got to see what people spent their money on, in general the "wealthy" people spent their money on off-brand food, little to no booze, etc. the "poor" people who paid in food stamps usually paid for their "food" in food stamps while buying lottery tickets, large cases of booze, and generally other expensive stuff.
If you want to get ahead you have to stop buying HDTVs, new cell phones, expensive laptops, booze, and other expensive stuff and -save- that money to invest or open up a business. Look at the successful people in history, the vast majority of them started with low paying jobs and saved, invested or otherwise gained capital to take risks.
Taxation is legalized theft, no more, no less.
There are HFs using this strategy now using dedicated reuters feeds and trading in microseconds. This means new information is impounded into stock prices well within a second. In the article they used yahoo news and minute by minute stock data? That's laughable. I suspect the reason for their returns is that they they are indexing the time information arrived, and the price you could trade at that instant incorrectly. In other words the information arrived at t + 5 seconds, and they execute the trade at the quotes available at time t. Also I suppose they are not including margin and transaction costs, reasonable slippage, and risk-adjusting their returns?
Go check out a kibbutz and tell them communism doesn't work. The soviets failed because they did it wrong.
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
We don't tax all capital gains at the same rate already. There are already two buckets, one for investments held more than a year, and one for less. You're just suggesting more buckets, and it is actually quite reasonable to think we might achieve that.
http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States
"Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
A large quotient of luck. Bill Gates had average business savvy, but happened to be in the right time at the right place.
Bill's family was rich. His mother was on the national board of the United Way - as was IBM's CEO. She put the two together.
So, yes Bill was "in the right place at the right time" - but the only reason he arrived at the right place was because his parents were loaded.
When information is power, privacy is freedom.
This is factually wrong. Only about 10-20 % of millionaires in the US inherited the wealth. This is easily google-able.
Three things I found immediately upon googling:
1. According to a study of Federal Reserve data conducted by NYU professor Edward Wolff, for the nation’s richest 1%, inherited wealth accounted for only 9% of their net worth in 2001, down from 23% in 1989. (The 2001 number was the latest available.)
2. According to a study by Prince & Associates, less than 10% of today’s multi-millionaires cited “inheritance” as their source of wealth.
3. A study by Spectrem Group found that among today’s millionaires, inherited wealth accounted for just 2% of their total sources of wealth.
There are many other studies with similar statements about total wealth, wealth compared to parents, etc.
The simple fact is that inheritance is a boogey man in the eyes of the populists, but is statistically demonstratably not a very big factor in making rich people.