{"id":560844,"date":"2023-03-08T04:57:00","date_gmt":"2023-03-08T01:57:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros\/"},"modified":"2023-03-08T04:57:00","modified_gmt":"2023-03-08T01:57:00","slug":"mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros\/","title":{"rendered":"#Mark Hulbert: Artificial intelligence is going to replace all but the best stock-picking pros"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2496479e9b3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2496479e9b3\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros\/#%E2%80%9CMark_Hulbert_Artificial_intelligence_is_going_to_replace_all_but_the_best_stock-picking_pros%E2%80%9D\" >&#8220;Mark Hulbert: Artificial intelligence is going to replace all but the best stock-picking pros&#8221;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros\/#Your_future_stock-fund_manager_could_be_an_AI_robot_%E2%80%94_and_youll_be_richer_for_it\" >Your future stock-fund manager could be an AI robot \u2014 and you\u2019ll be richer for it<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros\/#Why_doesnt_AI_do_better_in_the_stock_market\" >Why doesn\u2019t AI do better in the stock market?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/mark-hulbert-artificial-intelligence-is-going-to-replace-all-but-the-best-stock-picking-pros\/#Mark_Hulbert\" >Mark Hulbert<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CMark_Hulbert_Artificial_intelligence_is_going_to_replace_all_but_the_best_stock-picking_pros%E2%80%9D\"><\/span>&#8220;Mark Hulbert: Artificial intelligence is going to replace all but the best stock-picking pros&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Your_future_stock-fund_manager_could_be_an_AI_robot_%E2%80%94_and_youll_be_richer_for_it\"><\/span>\n  Your future stock-fund manager could be an AI robot \u2014 and you\u2019ll be richer for it<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap crawler\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0001754509\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0001754509\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Artificial intelligence poses a major threat to the worst stock pickers on Wall Street. Even the mediocre ones might want to start looking for another line of work.<\/p>\n<p> But the jobs of the best stock pickers are secure \u2014 for now.<\/p>\n<div class=\"paywall\">\n       That\u2019s the conclusion I reached upon analyzing the real-world performance of an AI stock-selection program over the past year. The investment firm that employs the AI emails me, at the beginning of each month, a list of 10 stocks that the AI program predicts will outperform the market over the subsequent 60 days. For each recommended stock I compared its total return to that of the S&amp;P 500<br \/>\n        SPX,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210599714\/realtime\" class=\"negative\">-1.53%<\/bg-quote><span>.<\/span>\n      <\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>The results are encouraging: 63% of the past year\u2019s stocks beat the S&amp;P 500 over the 60-day period following recommendation. That\u2019s significantly better than the 50% you\u2019d expect if the AI program was no better than random.<\/p>\n<p>To put this in context, I conducted a similar analysis for each of the more than five-dozen investment <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>letter model portfolios for which my firm audits performance. For each stock over the past year, I compared its return to that of the S&amp;P 500 over the 60 days subsequent to the date on which the newsletter editor recommended it. <\/p>\n<p>About one-in-five monitored newsletters did at least as well as the AI program, and several did even better. In the case of the best performer among my firm\u2019s sample, 75% of its stocks recommended last year did better than the S&amp;P 500 over the 60 days following recommendation. (I am not naming the AI-focused firm that each month sends me the list of 10 stocks or the newsletters that did just as well or better.)<\/p>\n<p>You shouldn\u2019t be surprised by what I found. The result is similar to what I\u2019ve heard about AI\u2019s potential in other industries. A programmer I know at a leading tech firm tells me AI poses a threat to the job security of the least-qualified developers \u2014 but not to those at the top.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Why_doesnt_AI_do_better_in_the_stock_market\"><\/span><strong>Why doesn\u2019t AI do better in the stock market?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>This discussion isn\u2019t so much a criticism of AI but a caution against the inflated expectations that many have about what AI can do in the stock market. As I described in a mid-February column, we know that expectations are inflated because stocks perform better when they are owned by an ETF with \u201cAI\u201d in its name. This is  reminiscent of the irrational exuberance at the top of the internet bubble, when a stock\u2019s price would jump when it changed its name to include \u201cdot com.\u201d<\/p>\n<p>In that mid-February column I hinted at why AI doesn\u2019t do better at picking stocks: The market is an efficient arena in which the signal-to-noise ratio is extremely low. That in turn makes it close to impossible to predict the future.<\/p>\n<p>Some readers emailed me to ask what this low ratio looks like in practice, so let me offer <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/opinion\/articles\/2022-07-17\/niall-ferguson-how-long-will-inflation-last-it-s-complex?sref=h614YUgy\" class=\"icon none\">the following argument made last summer by Stanford University historian Niall Ferguson<\/a>: \u201cConsider for a moment what we are implicitly asking when we pose the question: Has inflation peaked? We are not only asking about the supply of and demand for 94,000\u202f different commodities, manufactures and services. We are also asking about the future path of interest rates set by the Fed, which \u2014 despite the much-vaunted policy of \u2018forward guidance\u2019 \u2014 is far from certain. We are asking about how long the strength of the dollar will be sustained, as it is currently holding down the price of U.S.\u202fimports.<\/p>\n<p>\u201cBut there\u2019s more. We are at the same time implicitly asking how long the war in Ukraine will last\u2026 We should probably also ask ourselves what the impact on Western labor markets will be of the [Covid pandemic]\u2026 Good luck adding all those variables to your model. It is in fact just as impossible to be sure about the future path of inflation as it is to be sure about the future path of the war in Ukraine and the future path of the Covid pandemic.\u201d<\/p>\n<p>I read Ferguson\u2019s argument in a provocative essay entitled \u201c<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.oaktreecapital.com\/insights\/memo\/the-illusion-of-knowledge\" class=\"icon none\">The Illusion of Knowledge<\/a>,\u201d by Howard Marks, the respected co-founder and co-chairman of Oaktree Capital Management. He believes that, if anything, Ferguson was too optimistic about what\u2019s possible to predict: Marks wrote that \u201caccurately predicting inflation is \u2018more impossible\u2019 (if there is such a thing) than predicting the outcomes [of the war in Ukraine and the Covid pandemic]\u2026, since doing so requires being right about both of those outcomes and a thousand other things. How can anyone possibly get all these things right?\u201d<\/p>\n<p>The bottom line? Asking AI to be more than just moderately better than average at predicting stock-market winners is asking the impossible. As always, investors need to keep their expectations in check. <\/p>\n<p><em>Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at <\/em><em>mark@hulbertratings.com<\/em><\/p>\n<p><strong>More:<\/strong> How AI can help us become better investors<\/p>\n<p><strong>Plus:<\/strong> ChatGPT may be good at your job, but AI is a terrible stock picker<\/p>\n<\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Mark Hulbert\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/topics\/journalists\/mark-hulbert\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"twitter\",\"url\":\"https:\/\/twitter.com\/MktwHulbert\",\"text\":\"@MktwHulbert\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:contributors@marketwatch.com\",\"text\":\"contributors@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Mark_Hulbert\"><\/span>Mark Hulbert<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><ufc-follow-author-widget product=\"marketwatch\" author-id=\"124_MW\" author-name=\"Mark Hulbert\" signin-url=\"https:\/\/accounts.marketwatch.com\/login?target=https%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fyour-future-stock-fund-manager-could-be-an-ai-program-and-youll-be-richer-for-it-742525b5%3Frss%3D1%26siteid%3Drss\" panda-api=\"https:\/\/follow-api.marketwatch.com\"><\/ufc-follow-author-widget><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C06575-04D4-B545-71AC-58D4D46F050A%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Mark Hulbert: Artificial intelligence is going to replace all but the best stock-picking pros&#8221; Your future stock-fund manager could be an AI robot \u2014 and you\u2019ll be richer for it Artificial intelligence poses a major threat to the worst stock pickers on Wall Street. Even the mediocre ones might want to start looking for another&#8230;<\/p>\n","protected":false},"author":1,"featured_media":560845,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-354454\/social","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-560844","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/560844","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=560844"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/560844\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/560845"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=560844"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=560844"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=560844"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}