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
    Anonymous Coward, 10 Aug 2007 @ 8:20am

    Some would question your claim that Kurzweil is a genius. Some would prefer to classify him as a charlatan. As far as I know, he does not personally do any technical work (at least not any more, if he ever did) and publishes no technical documents. At best he outlines an objective and hires people to actually implement his vague ideas. In at least one of his books (the one I have read) he makes several egregious technical errors; obvious errors to anyone with even rudimentary understanding of the subjects. He feels to have the authority to talk on many subject clearly outside his expertise (whatever that is). He has a health book who's promotional material suggest that it would be better sold for "4 easy payments of $14.99" than at Barnes and Noble. It could be said that he is a mountebank, making money from the attention received by making wild claims.

    Even his futurist predictions are highly criticized. In any case, these predictions are speculation and not scientific work, and predictions not withstanding his own technical merit, particularly in the field of AI, appears severely limited.

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