Will Artificial Intelligence (AI) Change Investing?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 12 June 2019
⏱️ 32 minutes
🧾️ Download transcript
Summary
How does artificial intelligence and machine learning work and what are some examples of how individual investors can use AI in their investing.
In this episode you will learn:
- What is artificial intelligence, machine learning and deep learning.
- How is AI being used by different industries.
- How are AI models built with supervised and unsupervised learning.
- What are the components of a quantitative trading model and why it is insufficient to have an AI based stock ranking service.
- What are examples of AI based investment services and AI ETFs available to individuals.
- Why using AI to make investment decisions is so difficult.
Thanks to Warby Parker and WIX for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:20] The two types of AI: rules-based & deep learning.
- [3:35] Some examples of artificial intelligence.
- [4:59] How machine learning systems work.
- [6:10] Supervised learning vs. unsupervised learning.
- [9:10] Training deep learning AI models.
- [12:46] Complications with how deep learning models come up with their answers.
- [14:31] The role of AI in predicting interest rates.
- [17:16] Understanding the different factors and components of AI models when it comes to investing.
- [19:43] David’s personal experience with an AI-based investing service.
- [23:29] The Equbot and investing in ETFs.
- [25:46] The difficulties of using AI as an individual investor.
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money. How it works, how to invest it, and how to live without worrying about it. |
| 0:10.0 | I'm your host David Stein.'s episode 256 it's titled will artificial |
| 0:16.8 | intelligence change investing artificial intelligence |
| 0:22.1 | AI the term gets thrown out a lot in many different domains, |
| 0:29.0 | that how it's going to change the world, how it's changing industry, potentially how it's changing investing. |
| 0:37.0 | There are stock research services that you can subscribe to that help you pick stocks based on artificial intelligence. |
| 0:47.0 | There's ETFs that do the same thing. |
| 0:49.6 | We'll take a look at both in this episode. But first, what is artificial intelligence? I like |
| 0:57.3 | this definition by Radu Rassia. It's from Free Code Camp. He writes, artificial intelligence is the replication of human |
| 1:08.7 | intelligence in computers. One of the things humans are good at is recognizing complex patterns and using |
| 1:19.1 | those patterns to make decisions, artificial intelligence, does that. One way it does that is with |
| 1:25.0 | machine learning, which Rasea describes as, it's the ability of a machine to learn |
| 1:31.2 | using large data sets instead of hard-coded rules. |
| 1:35.0 | These data sets are used to train computers. |
| 1:39.0 | This machine learning is about predictive algorithms, the ability to forecast what's going to happen based |
| 1:46.3 | on data. |
| 1:48.1 | Now there's two types of artificial intelligence. |
| 1:51.6 | One is a rules-based system. You have an input and then it |
| 1:56.2 | produces an output and humans are very involved in designing it and these systems are |
| 2:02.1 | easier to understand because they show how do you get |
| 2:06.3 | from point A to point B. |
| 2:09.4 | And that was some of the original artificial intelligence. The second type is much more |
... |
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