Post: Woman against machine in the financial markets

Post: Woman against machine in the financial markets

“When stupid money realizes its limit, it stops being stupid,” Warren Buffett said. In recent years, the fund debate has been about who is smart or stupid: those who believe in active management, or those who put their trust in passive index funds.

The debate has stalled in many ways. The “stupid” money should stick to the index, while active management is reserved for the “smartest”. Paradoxically, Buffett himself is an active investor promoting passive management.

Anette Hjertø
More…

Critics now claim that technology will take over: Artificial intelligence and machine learning, combined with the pressure of ever-lower costs, will make us humans redundant in future money management. Last out is former manager Stig Myrseth, who has changed pastures for the browser company Opera: “There will be a battle between technology companies and traditional banks for hegemony in the financial industry. I think the technology companies will win that battle, since they have an advantage over artificial intelligence and machine learning. Traditional management companies will be squeezed “, he says to Finansavisen.

Artificial intelligence and machine learning are already in use by both traditional funds and hedge funds, and not without reason. They are useful tools in what we call systematic management. If there are two trends in management that I believe will prevail in the years ahead, then it is cost pressure and systematic management.

“High fees create low returns,” as Buffett so aptly put it. We are unlikely to have more managers per krone managed in the years ahead. But that the woman is completely overcome in the fight against the machine, I have no faith in that.

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Systematic management – also known as “quantum”, “factor” and “smart beta” – is a relatively new way of managing money. There is a place between active management (woman) and passive management (machine).

I would argue that the management of the future will not try to distinguish between “smart” and “stupid” money, or between woman and machine, but that efficient and cost-conscious management will be a combination of characteristics from humans and computers.

Systematic methods can also be used to achieve index returns.

The first time I heard about this was when a colleague had been commissioned to set up an index portfolio of government bonds. He had neither the capital nor the capacity to do as the biggest managers: Buy rubles and bits. Each state has issued hundreds of bonds with different maturities. However, he managed to recreate the same return by buying only seven percent of the bonds in this universe. He has now repeated that feat for 17 years.

I think more people will do the same in the future, preferably with input from artificial intelligence or machine learning.

Another example, from the active side: With systematic management, one can screen far larger amounts of data than a manager can do alone. This means that you can identify risk factors in the market that you want – or want to avoid – in the portfolio.

For example, one of my colleagues uses a systematic model to reduce the risk of losses in falling stock markets.

A third point that we in the management environment have become aware of in recent decades is how psychology both affects the markets, and how it affects us as managers to make irrational choices. Systematic models can profit from a herd mentality and limit the risk that a manager’s choice is governed by emotions.

Both systematic models, artificial intelligence and machine learning are based on history. If there is one thing the last year has taught us, it is that history does not always repeat itself. Nevertheless, we still believe that we can learn a lot from the history books.

And the alternative – a model that predicts the pandemic, central bank policy and various Twitter messages – does not exist.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other form of use of all or part of the content, can only take place with written permission or as permitted by law. For further terms see here.

These were the details of the news Post: Woman against machine in the financial markets for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.

It is also worth noting that the original news has been published and is available at time24.news and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.

Published at Wed, 14 Oct 2020 21:33:45 +0000

Post: Woman against machine in the financial markets

“When stupid money realizes its limit, it stops being stupid,” Warren Buffett said. In recent years, the fund debate has been about who is smart or stupid: those who believe in active management, or those who put their trust in passive index funds.

The debate has stalled in many ways. The “stupid” money should stick to the index, while active management is reserved for the “smartest”. Paradoxically, Buffett himself is an active investor promoting passive management.

Anette Hjertø
More…

Critics now claim that technology will take over: Artificial intelligence and machine learning, combined with the pressure of ever-lower costs, will make us humans redundant in future money management. Last out is former manager Stig Myrseth, who has changed pastures for the browser company Opera: “There will be a battle between technology companies and traditional banks for hegemony in the financial industry. I think the technology companies will win that battle, since they have an advantage over artificial intelligence and machine learning. Traditional management companies will be squeezed “, he says to Finansavisen.

Artificial intelligence and machine learning are already in use by both traditional funds and hedge funds, and not without reason. They are useful tools in what we call systematic management. If there are two trends in management that I believe will prevail in the years ahead, then it is cost pressure and systematic management.

“High fees create low returns,” as Buffett so aptly put it. We are unlikely to have more managers per krone managed in the years ahead. But that the woman is completely overcome in the fight against the machine, I have no faith in that.

The article continues below the ad

Systematic management – also known as “quantum”, “factor” and “smart beta” – is a relatively new way of managing money. There is a place between active management (woman) and passive management (machine).

I would argue that the management of the future will not try to distinguish between “smart” and “stupid” money, or between woman and machine, but that efficient and cost-conscious management will be a combination of characteristics from humans and computers.

Systematic methods can also be used to achieve index returns.

The first time I heard about this was when a colleague had been commissioned to set up an index portfolio of government bonds. He had neither the capital nor the capacity to do as the biggest managers: Buy rubles and bits. Each state has issued hundreds of bonds with different maturities. However, he managed to recreate the same return by buying only seven percent of the bonds in this universe. He has now repeated that feat for 17 years.

I think more people will do the same in the future, preferably with input from artificial intelligence or machine learning.

Another example, from the active side: With systematic management, one can screen far larger amounts of data than a manager can do alone. This means that you can identify risk factors in the market that you want – or want to avoid – in the portfolio.

For example, one of my colleagues uses a systematic model to reduce the risk of losses in falling stock markets.

A third point that we in the management environment have become aware of in recent decades is how psychology both affects the markets, and how it affects us as managers to make irrational choices. Systematic models can profit from a herd mentality and limit the risk that a manager’s choice is governed by emotions.

Both systematic models, artificial intelligence and machine learning are based on history. If there is one thing the last year has taught us, it is that history does not always repeat itself. Nevertheless, we still believe that we can learn a lot from the history books.

And the alternative – a model that predicts the pandemic, central bank policy and various Twitter messages – does not exist.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other form of use of all or part of the content, can only take place with written permission or as permitted by law. For further terms see here.

These were the details of the news Post: Woman against machine in the financial markets for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.

It is also worth noting that the original news has been published and is available at time24.news and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.

Published at Wed, 14 Oct 2020 21:33:45 +0000

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