Will machines replace humans in investing?
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Interestingly, even the area that was believed to be the forte of human mind is being captured by machines. The former was believed to be proficient at 'thinking' rather than the latter's efficiency in 'processing' information. This made the presence of human inevitable in areas like research. However, machines are multiplying the speed of thinking. A report quoted by Business Insider hints at just this. The findings of the report underlie the fact that machines may have been the cause of financial Black Swans. The term used to denote a highly improbable event seems to have been the result of ultra quick algorithms run by machines. Further these machines are expected to soon replace humans for ensuring profitable trades in complex environment.
We are not sure if nano-second thinking by machines can ensure profitable trades. But if that were true in all situations, every entity investing in high tech machines would have been a profitable one. The likes of Lehman Brothers and Goldman Sachs would have topped the list. And the investors who have spent years trying to refine the techniques of investing would have left the job to their machines. Hence, we certainly appreciate the importance of machines and quick thinking. They may be instrumental for success in complex investing. But unfortunately machines have never and will never decipher human behavior. And that we believe is a necessary cue that no smart investor would want to miss out on.
Do you think machines can replace humans when it comes to investing decisions over time? Share your comments with us or post your views on our Facebook page / Google+ page.
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Data source: Economist |
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The move will inject liquidity and do some damage control for the year. However, the trade off may fire back with rising in prices and speculation in real assets. This is something time will tell. What we can surely say now is that being the second largest economy, it's time that China learns to formulate policies so as to guide the markets rather catching them on wrong foot and risking market stability.
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04:55 | Today's Investing Mantra |
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8 Responses to "Will machines replace humans in investing?"
AJ
Feb 22, 2012If machines start replacing the humans and every industry will be running with machines only and the entrepreneurs will be happy jingling their pockets with loads of money in the initial years, only to realise that latter they will be converting the jingling money into more products which will only remain in their godown to rot rather than consumed by anybody. Cos who will have money to buy these stuffs, when you don't have job.
VIJI
Feb 22, 2012AS LONG AS IT WON'T BECOME 'ANTI'(OWN & WRONG DECISIONS ) AGAINST THE CREATORS LIKE THE VILLAIN ROBOT IN THE FILM 'ROBOT'
N.M.R.Shreedhar
Feb 21, 2012Hi, presently "machine trading" already exists in the form of Quant trading and Program trading, I think, but these are not entirely machine based. As long as as greed and fear prevail in the market, machine trading will not succeed. regds
Shreeshail C Kamagond
Feb 21, 2012Market moment is the resultant of minds of investor/trader.It is almost an impossible task for the machine to take an infinite number of inputs(facts) so as to deliver what will exactly happen on the particular day.
Only those whose fifth house(indicates speculative tendency)will strong are the guiding factors for the stock market.!!
Finally, everybody can't be a Warren Buffet/Rakesh Junjunwala
abhishek
Feb 21, 2012Machines can compete with humans in only physical work, it can't have intellectual from which the humans made machines. Markets are influenced by the emotions & phycological behaviour of buyers & sellers which the machines don't have. So it is a trait which the humans still haven't mastered then how come it be mastered by things made by them
J.S.GOGIA
Feb 21, 2012Long back in 1930 'TURING'a Russian mathematician, a dirty homosexual said,'Any logical thinking decision can be made by the machine' This is coming true today in present context.But mind you, all decisions are not 'logical'. Therefore, it will always leave room for human brain to make decisions. Especially,stock market is illogical; it never work like this. We are to make logical decisions in illogical market most of the time.
Kranthi Mark
Feb 21, 2012It will be disastrous completely relying on Machines while investing or taking investment decisions by Machines .... This is high bandwidth & Alogorithimic trading decisions .. go back to May 6th 2010 During the trading Day Dow was down by 1000 points because of this mistereous Algorithimic trading.Ofcouse through machines you can increase the speed and efficacy but giving the steering will be disastrous.
www wealthmills blogspot com
Radhakrishnan
Feb 28, 2012In the present market, which is obviously a 'highly manipulated market' probably machines doing high speed trading are invalidating all the analytical conclusions ( read -the daily backtracking by analysts, constant wondering of wave counters, repeated use of the same props like US , EU situations for explaining what happened in the market ,etc,etc).Can anybody come forward to say that the recent market behaviour is normal by any standard ??!!! I have the feeling that the stock market ( whatever that is left ,compared to the burgeoning gambling market i.e.,the derivatives market)is already a no no place for common man. Enter the machines- exit the man.