Do stock-pickers have a future?

Business Daily

BBC

News, Business

4.4 • 796 Ratings

🗓️ 4 March 2020

⏱️ 19 minutes

🔗️ Recording | iTunes | RSS

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Summary

Research suggests that they underperform robot traders, and most can't even beat the market, so are the days of the celebrity investors and stock market tipsters numbered?

Ed Butler speaks to David Aferiat, whose computer-based trading system Holly has been picking the best performing stock picking algorithms since 2016. He claims that Holly consistently outperforms the market. So why rely on humans to make these decisions?

Among those weighing the case for man versus machine are an old hand of the City of London, Justin Urquhart Stewart of Seven Investment Management; financial journalist Robin Powell; Ken Merkley of the Kelley School of Business in Indiana; and the veteran fund manager and robo-sceptic Paul Mumford.

Producer: Joshua Thorpe

(Picture: CNBC's Jim Cramer on the floor of the New York Stock Exchange; Credit: Steven Ferdman/Patrick McMullan via Getty Images)

Transcript

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0:00.0	Suddenly, there was a big bang. It rocked everything.
0:05.5	Thirteen minutes to the moon. Season two, coming soon.
0:12.8	Hello there, I'm Ed Butler, and welcome to Business Daily from the BBC World Service.
0:17.6	Today, how much trust should we place in the financial wizards tipping company shares
0:22.6	for us to buy? The peer-reviewed academic evidence dating back to 1930s shows that only a tiny
0:29.8	proportion of active fund managers actually beat the market. Yes, today we sift the evidence
0:36.1	over popular share buying and which risks are worth it.
0:40.1	Picking courses and picking stocks exactly the same. If you want to go and have some fun and go and have
0:44.3	a bet, that's why we have race courses. But good investing should be slow and steady over time.
0:50.1	Slow and steady. That's Business Daily from the BBC.
0:56.2	The Dow, tumbling more than a thousand points today as the world economy reacts to the growing coronavirus outbreak.
1:03.9	The Futsi 100 is having its worst week for over a decade, down 8.5%. About 150 billion pounds has been wiped from the value of leading
1:12.6	shares. Coronavirus fears hit Asian stock markets after Wall Street has its worst one-day
1:20.6	points fall ever. Last week, as you may have noticed, was a pretty tough one for anyone working the stock market.
1:29.6	Shares tanked pretty much everywhere around the world and no one will have felt it more painfully, I suspect, than the day traders out there,
1:37.3	the regular guys who fancy themselves picking stocks with a view to long-term gain.
1:42.6	I mean, very few companies were immune. How could they be
1:45.3	to the sudden shock of a anticipated global pandemic? A blow to investor confidence then, but
1:51.2	buried amidst all of this financial news was perhaps another salutary piece of research for us to
1:57.7	chew on. When it comes to guessing the ebbs and flows of shares, it seems, humans might
2:02.4	as well give up. Robots, or computer algorithms, are in fact way better at selecting companies
2:08.1	worth investing in. Ken Markley, from the Kelly School of Business in the United States,
	...

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