Plotinus attended Abu Dhabi Finance Week earlier this month and as one can imagine, AI was one of the hot topics. One particular aspect that was discussed, which was of interest to us was data. Given the enhanced ability of AI to speed up analytics, there has been an exponential proliferation of data (financial and non-financial) being made available by data providers, to be tracked by fund managers. With one provider proudly citing a year-on-year increase of 33% in the amount of tracked data being offered. Rather than receiving this information in awe with a “Wow that’s amazing!” response, it provoked in us a wondering if anyone is asking the question “Are we any the wiser for having all this extra data?”
You’d Better Think
If you read at an average speed (240 words/minute), then our introductory paragraph will have taken you approximately 30 seconds to read. Based on research published earlier this year1, it is suggested that your brain consciously processed that reading activity (along with everything else you were thinking about as you read it) at a rate of 10 bits per second. A shockingly low level of processing one might think. However, we need to put this into perspective—while you were reading your brain was also processing one billion bits per second of sensory information.
What we should actually be shocked by is not the low bit rate per second but rather our brain’s astounding ability to filter. What we define as our intelligent thinking, our conscious thought, our rationales, our explanations and understandings, our decisions and actions, are the product of 1×10-8 of the data we are processing—in simple terms one millionth of a percent of what we absorb, which is about 86 trillion bits per day.
Knowledge Versus Wisdom
Let’s pull this back into the use of data to help make better investment decisions. A ballpark figure for the data currently being monitored by the leading financial data providers is in the range of 400–600 billion data points per day. It is dynamic as you can imagine given that it reflects the fluctuations of the real world in real time. Applying a ruthless brain-like filter to make intelligent decisions suggests that one millionth of a percent of these data points are relevant, 4000–6000 data points. To put in context how small that is, there are more than 5000 listed companies on the NASDAQ and NYSE alone.
If we think that all of this data is equally relevant to our investment decisions, then we should be impressed with gaining 33% extra data every year. With this additional knowledge we also should be becoming 33% better investors and 33% richer annually. For the most however, this is an unlikely scenario.
This is where investors need to get real about using AI. There are clearly advantages but what is critical is knowing when, how and what to apply that advantage to. More data can simply mean more noise—at best irrelevant, at worst confusing and muddying the real signal. There are lessons to be learned from the evolution of human conscious activity. It is focused, task-based application of processing power with a broader awareness of what might or might not become immanently relevant.
Investors need to build methods to assess the usefulness of AI as a tool for helping make better investment decisions rather than either automatically being enamored by its impressiveness or on the other hand dismissing it as hogwash.
Key in this assessment is understanding what the value add of the AI is. Is it creating something which without it we would not gain access to? Be that via an investment product trading in a novel manner using AI or by actually gaining meaningly superior analysis, not simply getting more, interesting, but ultimately useless information. Fortunately for investors, our brains are designed to help us be brutally discerning. ■
1 Jieyu Zheng, Markus Meister, The Unbearable Slowness of Being: Why Do We Live at 10 Bits?, Neuron, Volume 113, Issue 2, 2025, Pages 192-204 (https://www.sciencedirect.com/science/article/pii/S0896627324008080).
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