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18 Comments
- Comatose51, on 10/12/2007, -1/+9There isn't just a program that sits and tells you how to invest. I work for a hedge fund. These programs are constantly being updated as the market changes. It's not something you can just run off of your own PC. The computational requirements are enormous as well as the logistical effort. First you need a source for all that data so you have to pay a company like Bloomberg or Reuters for that. Then you have people who do the data warehousing and scrubbing of data for you. Then you have the quantitative analysts who build models using the data. Finally, you have programmers who code the model into software. These models are only good for so long. Strategies constantly change. Anyone who tells you there's a static program that tells you what to invest is ful of crap. These programs/models have to be constantly updated.
The days of gut feeling traders are numbered. Read "Against the Gods" and "When Genius Failed" to get a sense of this. Finance is taking a more scientific/engineering approach. The computer is simply doing the calculating and automating. Someone has to build the black box. On the contrary, I think the process is requiring more, not less, people. It's becoming a process that in many ways parallel physics simulations. People with Ph.D. in physics and mathematics are in high demand in the industry and they get compensated very well. - TheExtendedName, on 10/12/2007, -1/+8What a great idea for an open source project. I can’t wait to download my own mutual fund manager and put it to work.
- krk3561, on 10/12/2007, -1/+5uhhh, not everyone can get rich off stocks, there have to be winners and losers. If everyone has the same software no one is going to make money.
And why would people put in the effort to create the software for everyone if they can make all the money for themself. - dfratz, on 10/12/2007, -0/+3The truth is that for years mutual fund managers have underperformed the market when compared to a baseline index such as the S&P 500. For instance, as far as I know, there is only one fund manager, Bill Miller who has bested the index on for 11-12 conescutive years. One out of THOUSANDS. The real problem, and the reason that hedge funds have become so popular, is that fund managers tend to follow a herd mentality and are really no better at picking stocks than individuals.
While the hedges have also been underperforming lately, their ability to invest in a multitude of different asset classes is their strength. In the end, to get those few extra points of alpha, you need a person with patience, intelligence and an excellent eye for opportunity. The markets are not all based on quantitative measures. For instance, at my firm, we deal with companies whose financials are typically quite poor (early stage), so it really comes down to qualitative analysis and gut feelings, which a computer cannot do. - Flyinace2000, on 10/12/2007, -0/+3That really is true. Two or three of my friends just graduated with Physics degrees and they are working on Hedge Funds and other things i don't understand.
- ConsistentChaos, on 10/12/2007, -2/+5Cue I, Robot reference.
(No, not Will Smith. Kids these days ...) - theHM, on 10/12/2007, -0/+2i know this is irrelevant to the article, but the I, Robot movie is based around many of the Foundation and Caves of Steel books (also by Asimov); notably the concept of the zeroth law was introduced in Prelude to Foundation, Forward the Foundation and Foundation and Earth.
- hbchrist, on 10/12/2007, -0/+2Quant models are alright, but they trend to index performance more rapidly than active managed funds. If you are a passive investor, then this is the next best thing to a good financial advisor, but there is no substitute for the human brain. If you want to invest in mutuals or ETFs, I strongly recommend you seek out a solid advisor first.
- starmanjones, on 10/12/2007, -0/+2thats why we have rules that shut down trading. they don't operate in lock step. they understand what makes a company sucessful and trade accordingly.
ya right.... yikes. - rtakach, on 10/12/2007, -0/+1the easiest way to get it is to go to the bookstore and buy the coursepack.
it doesn't tell you "what to buy" it just helps people make decisions through computational analysis. It can make estimates as well, but still, it's investing and using this software means you need to understand the ins and outs of the market in the first place. you can't just plug it in and make money.
I use yahoo finance pretty heavily, but if I had one software interface to research, compare, project on growth for a whole portfolio it would be much easier to understand my own goals and objectives in my investments, and make better decisions. - hackwrench, on 10/12/2007, -0/+1I found the whole "one shutdown switch to rule them all" bit to be annoying.
- Harry, on 10/12/2007, -1/+2Investing is like poker in that if you know what you are doing and are disciplined, you can earn a solid profit in the long run. Investing is not as risky as you are making it out to be, unless you are in it for the short-term looking to make some quick money.
- cap11235, on 10/12/2007, -2/+3Finally! Someone who read the book! My family thinks the movie is consistent with the book. :(
- rtakach, on 10/12/2007, -1/+2Any mention of where to find this software?
A friend of mine took an MBA investing class and had software like this come with one his text books, they managed a fund with it that outperformed the S&P by more than 100%...he lost the disc though after he graduated... - kkeith02, on 10/12/2007, -0/+1I'd love to find out where to get one of these programs. rtakach, you should have him contact his prof at his school, they may still have it.
The only computer controlled investing I've seen available for the public to use was on fxengines.com. It trades foreign currency though which can be risky. It also take a little active participation to ensure that you make money.
Also, the paragraph in the article mentioning poor tax implications is also a problem you might face. The more trades you have the more you'll get taxed, so those high returns might not be worth much after tax time. - iterrell, on 10/12/2007, -2/+1I rather liked the movie because I found that it managed to subtly maintain the overall theme and the scary climax of the book while completely disregarding the plot and making a fun action movie.
- scheper, on 10/12/2007, -3/+1It's not investors vs other investors. Everyone could potentially win, if they all invest in the right companies.
- starmanjones, on 10/12/2007, -4/+1the whole investing thing and the stock market in the U.S. especially more resembles gambling than any reasonable approach to capitalizing a business. so... we very nearly have the equivalent of a bunch of computers sitting around playing poker... and base our entire economy on it. *shakes head* its a stupid way to run an economy. but it does allow a certain amount of control by those that program the computers. its more about that than smart investing.
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