Algorithms Prove No Match For Market Tumble

from the all-in-the-data dept

Earlier this year, famed inventor (among other things) Ray Kurzweil announced that he was getting set to launch a new investment company that would employ advanced mathematical techniques to discern patterns in the stock market. Of course, just because Kurzweil is widely considered to be a genius, it doesn't mean he'd have any midas touch when it comes to the stock market. Furthermore, quant funds, as they're known, aren't novel. Lately, in fact, they've been getting slaughtered as the market swings about in unpredictable ways. Top tier investment bank Goldman Sachs has announced that its closing one of its premier quant funds in light of recent losses. Obviously computers have become an indispensable tools in modern day investing, but no algorithm or mathematical genius can guarantee good performance in all markets.

Filed Under: algorithm, quant

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  1. identicon
    Lorenzo, 10 Aug 2007 @ 10:40am

    You can't predict the future... can only guess. If you guess the market will go up, you will likely be right. Why? Because the market bias is up. You can buy a given stock or better yet, an index, and at some point in the future, the index will have a greater value. That's why a chimp can toss darts at a board of stock listings and make money. Pick the stocks a chiken poops on, you'll make money. The illusion of predicting the markets direction gets exposed when the short term bias becomes downward. No one, absolutely no one can predict the future, but you can pretend to do so, by riding the markets bias upward. And better yet, if you have the right swagger and lingo, people will call you a genius.

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