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."

Comments

Re:Bullshit

[Cryacin]

Yes, and short trading works wonderfully until there is some kind of unforseen defect in the ecosystem that can trigger a wild buying/selling spree.

Remember that when one of these systems is working by itself, it has a level of complexity, that exponentially grows when completely different systems are attached to the same ecosystem.

If you can find a programmer that would bet their life on their software not being involved in a substantial crash and destabilisation of the worldwide economy, I can show you a programmer that is either stupid, an insane genius, or a guy that's just had enough and has a death wish.

Just look at the "fat fingered" crash recently on wall street. Was it 9%? (I'm sure that some kind pedant out there will provide citation for that figure) that was allegedly caused by mistakenly putting b instead of m into the terminal?!?