MBAs Under Siege by Smart Software
March 23, 2017
The article titled Silicon Valley Hedge Fund Takes Over Wall Street With AI Trader on Bloomberg explains how Sentient Technologies Inc. plans to take the human error out of the stock market. Babak Hodjat co-founded the company and spent the past 10 years building an AI system capable of reviewing billions of pieces of data and learning trends and techniques to make money by trading stocks. The article states that the system is based on evolution,
According to patents, Sentient has thousands of machines running simultaneously around the world, algorithmically creating what are essentially trillions of virtual traders that it calls “genes.” These genes are tested by giving them hypothetical sums of money to trade in simulated situations created from historical data. The genes that are unsuccessful die off, while those that make money are spliced together with others to create the next generation… Sentient can squeeze 1,800 simulated trading days into a few minutes.
Hodjat believes that handing the reins over to a machine is wise because it eliminates bias and emotions. But outsiders wonder whether investors will be willing to put their trust entirely in a system. Other hedge funds like Man AHL rely on machine learning too, but nowhere near to the extent of Sentient. As Sentient bring in outside investors later this year the success of the platform will become clearer.
Chelsea Kerwin, March 23, 2017
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