OPINION
That extensive gap between market knowledge and results does not exist in any other field. There are people with no financial training or background who on average statistically do better than trade professionals with investing money into the market.
The real problem is investing money rarely follows the rules of finance
Today algorithms based on artificial intelligence do better at supporting decision-making in medical, engineering and many other technical fields. Furthermore the financial market suffers, in part, from….
- Often subjective and bias reporting
- Mixing of entertainment and news
- Where investor sources information and who they trust
- Manipulation of various types of stock trading that effects pricing
- Lack of understanding how investors make decisions
The Solution
Working with algorithms that return superior clinical/ structural results, don’t rely on an individual to make decisions. Artificial intelligence works better to mimic and capture human behaviors.
In finance the solution starts with studying data sets of how people behave with investing money a) identifying stakeholders b) measuring data sets c) defining those patterns d) testing e) replicating ongoing results, further refining f) repeat
Simplifying how investors make decisions, my personal approach
Most decisions follow a pattern: personality type (ENTP) + motivation (i.e. greed) + risk tolerance (fear level) + time in the market (term) + source of information (your community) = decision.
Conclusion
I believe that the next generation of market leaders will rely more on AI to predict both index and sector movements. Decisions will rely on artificial intelligence that more accurately “than finance folks and pundits” mimic and capture human behavior.
