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Interpreting Alternative Data in Novel Ways Using AI

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Nick Potts

Nick Potts
A tech geek who has a deep interesting in the role of artificial intelligence within the financial markets. Love to learn and share my insights on how FinTech can assist investors in making better decisions and achieve excessive gains.
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Recent Posts

Oct 10, 2018 1:27:00 PM

What AI can & can’t do for your investment portfolio

The application of AI in automating cognitive processes is on the rise. The launch of J.P. Morgan’s new retail trading platform underscores this trend, and highlights what is rapidly becoming the new normal: that big firms are capable of being as nimble as their smaller counterparts when it comes to deploying new business models. Merrill Lynch is even experimenting with an AI stock-picking tool to help the firm identify value in small-cap stocks that human analysts might have missed. The question is, can AI live up to the hype and deliver excessive gains for investors?

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Sep 26, 2018 12:38:00 PM

Why Analysts Shouldn’t Fear Wall Street’s New AI Toys

In the Pixar film Toy Story, Woody – the favorite toy – worries he’ll be replaced by a flashy new toy in the form of Buzz Lightyear. But after Buzz’s ‘bells and whistles’ help save the day, Woody comes to embrace his presence in the toy hierarchy rather than feel threatened by it. As technology continues to evolve at a breakneck pace, financial analysts are fast becoming ‘Woodys’ in their own right. Once the favorite sons of Wall Street banks and investment firms, analysts are now in fear of being replaced by the newest, flashiest toy on the market: AI.

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Aug 22, 2018 5:50:00 PM

How unconscious bias leads to underperformance, and what investors can do about it!

In December 2016, The Economist studied equity analyst ratings for all stocks in the S&P 500 index. According to the study, 49% of the ratings were "buy/outperform,” and 45% were "hold/neutral." Only 6% of all ratings for the S&P 500 in 2016 were "sell/underperform.” Yet during that same year, nearly half of all S&P 500 stocks underperformed the market index, and a full 30% were in the red.

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Aug 10, 2018 6:09:00 PM

Unstructured data: The limits of human intelligence

On September 21, 2015, at 10:56 a.m., then-candidate for President Hillary Clinton tweeted about ‘price gouging’ in the specialty drug market. By 4 p.m. that day, the entire Biotech sector had tanked. The iShares Nasdaq Biotechnology ETF (IBB) – which had skyrocketed nearly 300% over the previous five years – sunk 5% in the five hours from Clinton tweet to closing bell. The nine biggest losers on the Nasdaq 100 that day were all Biotech stocks, and the Nasdaq plunged into the red on a positive day for most other sectors.

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Aug 7, 2018 9:34:00 PM

The Diminishing Returns of Alternative Data

Not long ago, if hedge funds wanted to gauge the sales performance of a retailer like JC Penney, they would send Junior Analysts out to the stores to count cars in parking lots. This ‘channel check’ approach – and the limited insights it produced – eventually gave way to ‘Alternative Data.’ An example being satellite imagery which offers the same information (number of cars in parking lots), only in much larger, more dependable data sets. When it used to take an army of human analysts weeks or even months to accomplish, a satellite can perform in mere days.

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Jul 26, 2018 8:50:00 PM

M&A in June 2018 was great

The mergers and acquisitions space is on fire! It has been widely reported by leading publications that a record $2.5 trillion in mergers and acquisitions took place in the first half of 2018, of which American companies made up the largest proportion. This far surpasses the level of M&A activity of the same period last year. If this continues, we could see 2015’s record broken with excess of $5 trillion M&A deals made by the end of the year.

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