Make a fortune with AI?
Not surprisingly, there has been a marked upsurge in
promotional activity for the impact of artificial intelligence on forecasting future
movements of individual stocks and the stock market as a whole. Gee whiz, where have I heard that kind of
thing before?
Whether it’s AI or some other brilliant scheme, what
are always part of the pitch are references about the powerful computers that
have developed these miraculous techniques, which (for a hefty fee) can be
yours to outsmart all the other people with Ouija boards and similar mystical
devices for seeing the future.
This kind of situation reminds me of my years with the
Value Line organization, which was periodically contacted by would-be Super Investors
who had come up with “extraordinary” breakthroughs that would lead the way to
great wealth. Often, we’d respond by inviting the folks up for a meeting, which
seemed interesting until we asked for results over the last five or 10
years. The inevitable response was silence
and the meetings then ended.
The current bombardment of get-rich-quick schemes is
online and in the media. Many include
claims of extraordinary gains in relatively short periods of time. One of my favorites is the fellow who said
his gains were on the order of 5% a month.
I’m guessing that he used 5% so it would sound reasonable and it might
well have been if the period discussed was a year, not a month.
The reality is that no system, however clever, can be
prepared to deal with the impact of changes in investor psychology. There is certainly a significant difference
between dart throwing and sophisticated professional investment analysis and
that difference may provide a reward of increased returns. The cost of the reward, however, may largely
erode the bottom-line advantage.
If, indeed, someone came up with a startling
breakthrough, it would make more sense to keep it a secret and make a ton of
money, rather than hawking it as the greatest invention since indoor plumbing.
N. Russell Wayne, CFPÒ
Any questions? Please contact me at nrwayne@soundasset.com
Comments
Post a Comment