The new investor

Following up on the importance of keeping your head up, I just finished this paper by Tom C.W. Lin from UCLA law on the entrance of machines as the new investor in the marketplace. The interesting thing I thought was that Mr. Lin came to a similar conclusion that I did earlier (albeit with a lot more time and effort… and maybe more defensible data). The conclusion is that despite the machines and our ability to program the machines. Humans still have alpha over the machines through our executive function. As a parent of two teenage boys, I can attest to the amazing differences between when the human executive function is being used and when it is not being used. If it is well trained and in a position to be used, this is a powerful resource that we have over the machines. Our ability to recognize patterns that were not planned for or not accounted for in the algorithms. The ability to change strategies based on that pattern recognition.

I made the observation based on avoiding a tree branch while out for a trail run, Mr. Lin spent hours in pouring over data. Both are demonstrations of the executive function as both are making sense of a lot of inputs and relating them to reality. This is the one area where our new investor… the machines… is seriously lacking. An area though that lives in the world of science fiction and is one that we are actively trying to overcome.

The New Investor

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