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Machine Learning and AI Impacts on the Financial Markets
M
Posted on November 13, 2018 at 7:55 pm
How do investors find and capitalize on alpha generating investment ideas in the stock market when competing with machines that are trading on data in microseconds?

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On November 15, 2018, M commented on Machine Learning and AI Impacts on the Financial Markets :

I would agree with this sentiment. But what happens when the computers are wrong or when the macrobackdrop is wrong? Assuming all the machines are finding the same insights and buying the same stocks, when they are wrong the stock crashes. It inherently is creating bubbles for certain stocks.

On November 15, 2018, M commented on Organovo: bioprinting tissue to speed up drug development :

This is phenomenal. This is just amazing technology. I would be curious to know how patients feel to accepting these printed organs even if FDA approved. Regarding going private, I would agree that it would create less of a distraction not having to see your stock price everyday, but that also being said in the private markets the capital raised would be more expensive not less which might not be something they can afford.

On November 15, 2018, M commented on Printing: Speed :

This is an interesting and cool article. Thank you very much! I would agree with you that the company should continue to invest in 3D printing and patent their findings along the way. The US sneaker industry is growing at 2.6%, which is not that fast and basically slightly ahead of the US economy.(1) This new technology and patents could give the company some barrier to entry as the industry matures and develops which would enable them to start taking share from other under invested players.

(1) “Footwear – United States | Statista Market Forecast”. 2018. Statista. https://www.statista.com/outlook/11000000/109/footwear/united-states.

On November 15, 2018, M commented on Spotify + The Machine: Using Machine Learning to Create Value and Competitive Advantage :

I think your last point of consideration, another way to look at it is how big is the barrier to entry for Spotify? They have created a really strong algorithm to learn consumer preferences, but that can be copied over time or perhaps even be outperformed. Players like Apple are late entrants into the market and already proving to be serious players.(1) I think new entrants is a fear and therefore playlists and other stickiness factors are imperative if Spotify wants to stick around.

(1) https://www.digitaltrends.com/music/why-is-apple-music-beating-spotify-in-us-market/

On November 15, 2018, M commented on The Regulatory Challenge of Autonomous Vehicles :

This is an extremely interesting topic and a topic that leads me to believe that the rollout of AV’s will be a lot slower than people, including CEO’s like Elon Musk believe. Stanford Law School has a good article on Uber Self-Driving Cars, Liability and Regulation, in which it addresses so very big and pressings questions that need answers before AV’s get rolled out. (Link to article: https://law.stanford.edu/2018/03/20/uber-self-driving-cars-liability-regulation/). There are so many questions that needed to be sorted out. If a car gets into accident on a public road – is that the states fault? Is that the car companies fault? Is that the owners fault? On top of the regulatory environment the insurance industry will also face a whirlwind of change.
Another Article that I find to be very helpful at breaking down the stakeholders and areas that will need regulation is one titled The Regulatory Future: Compliance in the Age of Self-driving Cars” from https://www.accdocket.com/articles/regulatory-future-compliance-self-driving-cars.cfm. I find it extremely interesting to see all the areas that will need to be taken into consideration before AV’s start hitting the road.

On November 15, 2018, M commented on Machine Learning in Caterpillar :

I think you’re consideration on how good do the machines have to be before we trust them is a very important one to consider. Elon Musk has a great commentary on this. Below is the link to the interview (minute 3:20) and he discusses that humans will not trust a self driving car if it is a 0.01% chance of getting into an accident. Humans would trust it if the car had a likelihood of a 1 in one hundred lifetimes or 1,000 lifetimes chance of getting into an accident. I am not sure if we would need this high of trust with machinery like Caterpillar machines given the nature of the job but nevertheless trust is an important concern.

https://www.youtube.com/watch?v=oQh3_c6OLRU

On November 15, 2018, M commented on Blockchain Powered Asset Tokenization Protocols Threaten Goldman Sachs’ Investment Banking Business :

This is a great article. Nice job! Having blockchain and tokenization to lower the barrier to entry in terms of cost and access for capital would be great for society. It would reduce the friction between investors and entrepreneurs and potentially could create more access to further disruptive technologies. However, there is one friction that bankers do provide value for and that would need to be addressed as this change takes place, which is in terms of educating the investor. Bankers on their road shows don’t just open the doors and make investors aware of the need for capital. Bankers also create information in the form of presentations, phone calls, and face to face meetings to educate the investor. I would be curious how, as this technology spreads, entrepreneurs can quicker and just as effectively educate the investor to convince the investor to provide capital. I would assume they can make videos and publish their investor decks but I would be interested to see if that is equally as effective as someone coming into your office.