AI Insights

AI Brings A New Approach for Managed Futures Investors

by Plotinus Plotinus No Comments

Artificial intelligence having captured the investment world’s imagination is facing a crunch moment to prove its worth. Does it do what it claims it does, faster, better, more accurately etc. This is not an unfamiliar issue for us at Plotinus. It is one thing to innovate and create a different way of gaining trading insights by using AI, but ultimately the only relevant question is, does it work. To this end we will look Plotinus’ area of focus, short-term directionality in the futures market and compare it with some established short-term Managed Futures programs.

Read more

Seeing the Trees from the Forest — Why Good Investment Decisions Depend on Understanding the Subjectivity of Data

by Plotinus Plotinus No Comments

The term “Data Science” can convey a certain glow of empirical purity, distilling understanding from observed facts. This is in many cases, unfortunately not the case. “Data Alchemy” on the other hand would sound much less convincing and would imply that those involved in such wizardry were potentially cooking up their results. The reality of data science though is that even when rigorous scientific analytic methods are applied to data, the data itself for the much part is much more subjective than it is assumed to be — not the objective recording of information one might initially think. From an investment perspective this issue poses a problem for all data-based decisions for the sophisticated investor.

Read more

Oh Lá Lá! The French Stock Market Feels the Sting of a Snap Election and What this Reveals About the Complexity of Data.

by Plotinus Plotinus No Comments

President Macron certainly put the ‘snap’ in the snap election with his announcement on June 9 of French parliamentary elections, following his centrist party’s hammering in the recent European Parliamentary elections. That snapping sound seemed to reverberate the loudest beyond the political realm, in the French stock market. It is somewhat rare to see such a direct impact of politics on a financial market. The CAC 40 (France’s leading market index), at time of writing, has lost -5% since the president’s announcement. There is a traditional cliché that stock markets do not like uncertainty—traders, however, know that with the injection of uncertainty comes opportunity and error depending on one’s reading of the data at hand.

Read more

The Unwitting Revolutionary?

by Plotinus Plotinus No Comments

The rain-drenched start outside number 10 Downing Street as Rishi Sunak announced a general election in the UK on July 4th seemed to fittingly parallel the dull prospects for Sunak as he seeks re-election. His Conservative Party is trailing the opposition Labour Party by a gapping 22% according to a voting intention poll conducted by You Gov, the first since the general election announcement on May 22nd.

Read more

Troubling Times, Non-Normal Distributions, and Dangerous Assumptions

by Plotinus Plotinus No Comments

The recent flaring of tensions in the Middle East, with the escalation to the exchange of direct strikes between Iran and Israel, has provoked the general awareness of geopolitical uncertainty and its potential impact on global markets. This creates an occasion therefore, perhaps, to reflect on the effect of shock-factors on stock markets and the general difficulty when grappling with the analysis of the unexpected.

Read more

How European Pensions Could Manage Added Risk in Portfolio Exposures in Pursuit of Higher Returns

by Plotinus Plotinus No Comments

In our previous commentary. we explored the detrimental impact of the profound change in the underlying population demographics on European pensions. As we observed, the financial engineering error European pension funds made was that they did not properly account for the shrinking population of pension contributors and the growing population of longer living pension recipients. This has left pension funds grappling with the prospect of potential future collapse unless some very serious financial re-engineering is engaged in to fix the problem. And we left off with a suggestion that a solution could come through the addition of AI-driven strategies within the asset allocation mix.

Read more

Fixing The Leaning Towers of European Pensions

by Plotinus Plotinus No Comments

What Tourists and European Pensioners Have in Common

It is perhaps only somewhere with the allure of Italy, a bastion of human culture and progress for millennia, that could make an engineering failure a tourist attraction. The Leaning Tower of Pisa has about half a million visitors each year, with millions of euros in investment over the years helping re-engineer a solution to stabilize it and prevent gravity from eventually bringing it crashing to the ground (and Pisa’s tourist revenues along with it). It perhaps could serve as a positive metaphor for the troubling situation for not just Italy’s but Europe’s pension funds and the millions of pensioners they serve.

Read more