Everybody talks about AI. Few people actually explain what it is in a way that makes sense if you’re not an engineer. Phil Pallen fixes that in Chapter 1 of AI for Small Business (ISBN: 978-1-5072-2291-1), and honestly, it’s the kind of foundation chapter I wish more tech books would write.
Previous: Picking Corporate Bonds: Credit-Sensitive Security Selection (Part 1)
In Part 1, we covered value signals and default models for corporate bonds. Now let’s get into the other three investment themes: momentum, carry, and defensive. Then we’ll see what happens when you combine them all. And yes, we’ll talk about machine learning too.
So this is the last post. Eight posts later, we have walked through the entire first half of Artificial Intelligence in Finance by Yves Hilpisch. AI fundamentals, neural networks, superintelligence, financial theory. A lot of ground.
This section of Chapter 3 is where things start to click. Hilpisch moves from talking about AI algorithms in general to showing how neural networks actually work. And then he drops a truth bomb that a lot of people skip over: your model is only as good as your data.
Chapter 3 of Artificial Intelligence in Finance opens with the quote about AlphaGo beating a human Go player. That event was a big deal back in 2016. People thought it would take at least another decade. It didn’t. And that sets the tone for this chapter. AI moves faster than experts predict.
The investment industry loves a good buzzword. And for the last several years, “big data” and “machine learning” have been the ones getting all the attention. Fund managers talk about them in the same breath, like they’re the same thing. They’re not. And the authors make that distinction very clear in this final chapter.
Book: Artificial Intelligence in Finance Author: Yves Hilpisch Publisher: O’Reilly, 2020 ISBN: 978-1-492-05543-3
Here’s a question that bugs me. Can AI actually beat the stock market? Not in a sci-fi movie way. In a real, consistent, make-money-while-you-sleep way.
Book: Systematic Fixed Income: An Investor’s Guide Author: Scott A. Richardson, Ph.D. ISBN: 9781119900139 Publisher: John Wiley & Sons, 2022