No. of Recommendations: 9
Yes, the P123 ML project is interesting.
Human stock screens are very different than AI generated screens. For example, Random Forest combines hundreds of decision trees, while a standard MI screen is one decision tree. To reduce overfitting, Random Forest uses simple decision trees, while humans use common sense. Standard AI methods do not have common sense or financial literacy, and so will produce different screens than humans. Modern AI methods might produce better stock screens compared to human expert rules based screens, or they might not.
The stock market has feedback with successful investors gaining more capital. AI methods will have to evolve or die, with a cycle:
First movers make a profit.
Others catch up and the trades become crowded and unprofitable.
New methods are developed and the cycle continues.
Successful AI methods will switch between investing strategies, something that has proven difficult for humans.
There are 2 limits to AI: data and processing. Both improve over time, and new algoriths are being developed, and so AI will overtake humans in investing at some point. But we're not there yet.
AI Powered Equity ETF (AIEQ) uses IBM Watson.
VanEck Social Sentiment ETF (BUZZ) uses sentiment from news and social media.
Qraft AI-Enhanced U.S. Large Cap Momentum ETF (AMOM) This AI picks large-cap momentum stocks.
WisdomTree International AI Enhanced Value Fund (AIVI) This AI model picks value-priced stocks.
Name Annualized Return Annualized Standard Deviation
SPDR S&P 500 ETF Trust 10% 18%
Amplify AI Powered Equity ETF -2% 25%
VanEck Social Sentiment ETF -5% 33%
QRAFT AI-Enhanced US Large Cap Mmntm ETF 5% 22%
WisdomTree Intl Al Enhanced Val ETF 3% 17%
Vanguard Total International Stock ETF 1% 17%
Returns from Apr-21 to Feb-24
https://www.portfoliovisualizer.com/factor-analysi... 