Plotinus has cause for celebration. In June, our firm entered into its third year of using AI decision-based trading. It has been very encouraging to see the power of our technology prove itself in US equities against both the market benchmark and the competition.
The S&P 500 spent the first half of the month in negative territory, followed by a second half rally, which saw it breach the symbolic 3000 mark and eventually leave it behind. The S&P 500 ended the month -10% down from its all-time, pre-coronavirus high on February 19th and +36% up from its March 23rd low.
The residue of the Covid-19 shock to the economies of the world is extreme uncertainty. The US equities market saw a tremendous recovery in April, but this bounce back has done little to allay underlying investor fears going forward.
It may not have been the usual variety but there was March Madness a plenty as world markets heaved, lurched and vomited in anticipation, fear and finally the arrival of the coronavirus. With sanity departed and fear ruling the day, anything verging on logical reasoning must be gently proposed in case it gets dismissed into a looney bin of truly unmentionables. Such toxicity – by mere association (even at a safe social distance of 2m or more) would pollute and taint even the tamest reasonable thought.
February saw stellar heights in US equities get decimated in a highly accelerated plunge that ended up wiping -12.76% off the S&P500, bringing it back down to levels not seen since early October.
The Ancient Mariner would be strangely at home, or rather adrift in our current world of data overfill.
Humans have the potential to allow their foolishness to let them drown in data. It is a little like when confronted with what appears to be sensible logic (at least on the surface) for instance with quantifiable data, humans have an innate desire to meet this with irrational logic.
With the dawn of a new decade there is always speculation as to what influences will define that decade. Some may argue that the 2010s was the decade of data and social media. What will define the socio-cultural zeitgeist of the 2020s that in turn will be measured by its global impact? Will it be AI?
In examining the impact of Artificial Intelligence in finance, one must look at the potential confusion in defining AI-based-investing and where a lack of explanation inhibits investors from gaining access to and benefits from the technology.
Is the propensity to benchmark the success of AI against games misleading and restricting the technology’s development?
As the societal acceptance of Artificial Intelligence as the next significant shift in technology gains ground, we look at the narrow perspective from which its success is being heralded in the media to illustrate how it outsmarts human equivalents.
The troubling swings of US markets during September illustrated how sensitive they are becoming to political and trade turmoil. It is the latest of several indications over the course of the last twelve months that exhibited high levels of sensitivity and sporadic bursts of volatility. Such an observation begs examination as to why this is occurring and what might this mean for the future, particularly as the bets increase that a change of cycle is imminent.