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Alternative Market Briefing

Uses and limits of AI and machine learning in finance

Thursday, April 12, 2018

Komfie Manalo, Opalesque Asia:

Artificial intelligence (AI) and machine learning offer potential solutions in speeding up the portfolio manager and analyst's perspective on what information is relevant in the marketplace and how that affects their thought process and how they should respond to it.

Rick Doucette, CEO and CIO of Antecapio Investment Partners, said that technology comes into play to provide better solutions to such problems.

He told participants of the latest Opalesque Connecticut Roundtable, "My sense of AI and machine learning is that many people are pushing to use the technology as a decision-making function. However I don't look at it as a decision-making function. I don't think that the technology has advanced to the point where you can rely upon it as a decision-maker within a fundamental discretionary strategy."

He explained that the margin of error when using technology as a tool in decision-making is between 15 and 35% range, which makes perfect sense for quant managers. Doucette said that with a strong base of risk management, a manager can still make money being right 52% of the time, but as a fundamental discretionary investor that's too big a margin."

AI as intelligent trolling device for information

According to Doucette, AI is a tool that can also be adapted to the fundamental manager and his or her style or approach to using informa......................

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