AI Can Write a Song, but It Can’t Beat the Market

Despite years of effort, AI has not been successful in beating the market due to the complexity of market data and the adversarial nature of investing. While some AI-based hedge funds have seen success, it remains to be seen whether big returns are possible with AI in investing.

April 12, 2023 . 4:08 PM

1 min read

Wall Street has long used automated algorithms for tasks such as placing trades and managing risk, but investors haven’t made much progress relying on AI to tackle their biggest challenge: beating the market.
Market data is complex and noisy, making it harder to predict future stock moves using AI.
Investing is adversarial and entails competing with rivals eager to take advantage of any mistake.
While some AI-based hedge funds have seen success, their results vary considerably and it remains to be seen whether big returns are possible with AI in investing.
AI may help democratize trading in the future, but for now, humans remain essential in noisy and constantly changing markets.