Has Artificial Intelligence Finally Solved The Market?June 18, 2022
Artificial intelligence has become ubiquitous in our daily lives and is impacting the future of humanity in almost every facet—from cancer cell identification to filing claims with insurance through our smart phones.
So it shouldn’t come as any surprise that artificial intelligence would also be making an impact in our financial lives too. Right?
But the real surprise—is that it hasn’t.
For the last 25 years, artificial intelligence has failed to make any significant impact when it comes to our financial lives—especially when it comes to helping navigate the stock market.
Many researchers still believe market prices to be inherently random, a widely accepted facet of the Efficient Market Hypothesis pioneered in 1965 by Eugene Fama. Fama’s theory stated that no edge can be gained to “beat the market” unless an investor is in possession of non-public information.
While Fama’s hypothesis has been widely contested by market practitioners in recent years, any progress that may have been made in financial artificial intelligence was kept private—accessible to only the elite on Wall Street such as Jim Simon’s Renaissance Technologies and Medallion Fund.
However, John Radosta—the founder of Synvestable—says that’s now about to change, and that the democratization of financial artificial intelligence has finally arrived.
“When people look at market prices and charts, they either see technical patterns or randomness,” explains Radosta. “When I look at the markets, I see electromagnetic signals, like radio waves.”
“In every radio wave, there’s noise and there’s signal. The goal of machine learning in financial markets is to focus in on that signal and filter out the noise,” says Radosta.
Radosta began his technology career working alongside Google as a cloud engineer, speaking at many of their offices to help companies take advantage of cloud computing, and eventually became one of Google’s first certified artificial intelligence engineers within the United States.
From Google, he went on to help the United States Federal Government better modernize their infrastructure for artificial intelligence on the $2.6 Billion CBOSS contract awarded to Accenture in 2019.
But Radosta has always been passionate about finance, studying great investors like Warren Buffet and Peter Lynch while in college, which lead him to obtaining his FINRA Series 65 license for investment management.
“Originally, I wanted to start a quantitative hedge fund like Jim Simon’s Medallion Fund, but then I realized that by doing that, I’d only be helping a select few. I had been working on these AI models for many years now, and I wanted to make them more accessible to the everyday investor, which is why I created Synvestable.”
Synvestable, Radosta’s new company, helps the everyday investor manage their own portfolios by providing 30-day predictions from advanced artificial intelligence, as well as access to cutting-edge portfolio management tools.
“The predictions are great, and the models are very accurate. We correctly predict anywhere between 40-70% of the entire market every month for general price direction. However, you won’t get rich using the predictions alone,” Radosta explains.
“The predictions still have to fit into your overall portfolio strategy because you can’t predict volatility. Risk management and diversification are still the only free lunches when it comes to managing portfolio volatility.”
Still, Radosta is optimistic that Synvestable will help millions of people make better investing decisions in the long run.
“The models really help when it comes to making entries for long term positions,” says Radosta.
“If you want to get into Apple and you have a predicted 4% up-trend for the next 30 days, and then you see the today’s price has dipped below the prediction line, that signals a great entry opportunity.”
“The models are really finding true signal in the noise for most stocks because price is just repeatedly bouncing off and respecting this imaginary prediction line. It’s pretty remarkable—every time I see that, it still blows my mind what these models are doing every month.”
Radosta is also planning on offering financial education and online courses for beginner investors later in the year as well, which will be available in Synvestable’s stock market Learning Center.
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