The Online Investing AI Blog

Happy New Year. Welcome to 2010.

The next decade promises to be the most revolutionary period in our history.

Researchers and scientists believe that the theory and technology is already there to make technological leaps in energy, medicine, computing and communications. And they should know. They’ve seen behind the screen that separates the laboratory and the marketplace.

The technology and the theory are already in place. The last decade included some of the biggest laboratory breakthroughs ever. These are called transformative technologies.

Once these innovations filter from the labs into the marketplace, they’ll change–if not revolutionize–the economy.

Based on the work of some great bloggers, like Next Big Future, Future Current, Singularity Hub, Kurzweil AI, and Future Pundit, here are some exciting ideas that are poised to make dramatic changes to our world in the next decade.
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I wrote a post yesterday on the failure of wealth redistribution. Money ends up finding it’s way to the same hands.

But, wealth-building technology has a much better chance of succeeding if it finds its way to regular investors. We have reason to hope this will happen. With the amazing computing power available, it’s just a matter of time before the types of technology that drive hedge funds and private equity funds is available to self-directed investors.

Where’s the source of our optimism?

It relies a lot on our own experimentation, but the bulk of this expectation lies in the path of technological process and Moore’s law. It’s something we’ll explore in depth in our forthcoming eBook, the Wealth Singularity, but here’s an overview.

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Sid Caesar said that comedy has to be based on truth. You take the truth and you put a little curlicue at the end.

The truth is that the Singularity is happening all around us. Technology is increasing rapidly. So, according to comedian Lewis C.K., is our human ability to complain.

I was thinking recently about how I used to turn the channel of the television manually. With a little  knob. Inevitably, the channel turner would break off and we would channel surf with a pair of pliers.

But, over the years, I forgot how much of a pain that was.

After I watched this, I don’t think I’ll mind much that when I’m lying on my couch, sometimes my remote has to be in a certain angle to switch channels.

(Note: The embedded video doesn’t work, so please click on the link to watch the video on Youtube. Damn technology…)

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cesarastudillo@Flickr

It’s a little early for Halloween, but Paul Farrell manages to scare up a spooky vision of an investing singularity at MarketWatch.

Farrell’s view of the Singularity is dead on: machines are getting smarter and they’re being used in investing. Although this isn’t something new, computers are much more powerful today thanks to the law of exponentially increasing returns.

For Farrell, this is a bad thing. A dire thing.

Farrell points out that HFT-Quants (High Frequency Traders who use Quantification techniques to trade) are using this incredible technology to snap up returns before anyone else gets a chance to take advantage.

This is leaving the retail trader, i.e. me and you, out of the market.

How accurate is this assessment? How scary is his conclusion?

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The pictures of the Singularity include some unflattering visions of humanity:

Large gelatinous shapes, reaching for Cheetos with one flipper and resting the other flipper on the remote for the three-dimensional virtual reality environment. Meanwhile, an Automated Trading system will earn money for this creature.

This is silly. Cheetos will cease to function as a snack food during the Technological Singularity.

OK. Seriously.

There are some trader who look at Automated Trading as the lazy way out. They, after all, enjoy trading and don’t think a machine can trade for them.

Fair enough.

If Automated Trading isn’t a servant for a trader, it can be a boon companion.

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An interesting debate is percolating about the new book, “Free,”  by Chris Anderson.

I haven’t read it (yet), but apparently Seth Godin and Malcolm Gladwell have. Anderson’s book says that as computing power increases and its cost decreases, information products are essentially going to be free.

In a New Yorker article, Gladwell disagrees with the theory. He, pretty adroitly, brings up reasons why Anderson’s theory will flop: from the inability for YouTube to turn a profit to the failure for nuclear energy to produce super cheap power.

In response, Godin declares a mighty, “So what?” Whatever the price of nuclear power in China is, Godin points out, the digital world is getting cheaper, faster, and more powerful. Whether or not there’s a business model to support it, the info-Singularity approacheth. Godin counters:

The first argument that makes no sense is, “should we want free to be the future?”

Who cares if we want it? It is.

The second argument that makes no sense is, “how will this new business model support the world as we know it today?”

Who cares if it does? It is. It’s happening. The world will change around it, because the world has no choice. I’m sorry if that’s inconvenient, but it’s true.

There’s a similar debate on Automated Trading.

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There’s an old military adage.

Generals always fight the the last war.

Rows of men executing Napoleonic tactics were mowed down by increasingly accurate and sophisticated weaponry in the American Civil War.

Gallant European cavalry units galloped into World War I battlefields to meet tanks and machine guns.

World War II generals saw Vietnam like a conventional battlefield, even though it was anything but conventional.

After reading a Discovery Channel report, I’m convinced we’re fighting the last war on health care.
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This clip of Peter Diamandis, founder of the X Prize foundation, has some really interesting ideas.

He says,

The day before something is truly a breakthrough, it’s a crazy idea. You have to be willing to take risks.

And that is really consistent with my experience. As we develop Automated Trading systems to create financial freedom for humans, people think that we are crazy. Or they say that creating an artificial intelligence system to make money in the markets is impossible.

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What is an Automated Trading system?

An Automated Trading system is a computer program that buys and sells stocks or other assets without human interference. It’s like taking a stock broker and replacing them with a computer. These systems can detect patters in the markets, and then buy and sell assets to make money.

What is the singularity?

Everyone knows that technology is getting faster and faster, and our world is changing at an ever increasing rate. The Internet has only been around for 14 years, but has already been reborn (Web 2.0) and completely revolutionized many industries. It’s easy to think of many examples of technology that are rapidly changing the world: cell phones, computers, medicine and robotics are just a few.

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For years, during the late 1980s, I was a disc jockey.

The shifts ranged from six hours to 12 hours, six days a week. During that time, I had a stack of records from the list of top 40 songs to play. I would play about two songs from the top 40 list.

And then I would mix in an “oldie,” a non-current selection from a library of a couple hundred songs.

Over. And over. And over.

Day in. Day out.

Now, there are entire eras of music that I used to love that I can no longer listen to. I’m sick of those songs. Lynyrd Skynyrd is ruined. I can barely listen to a couple of Led Zep songs without wanting to reevaluate my lunch.

Had AI been around I might not have had such a bad reaction.

A group of University of Granada students have created, Immamusys.

The developers say, by using Artificial Intelligence, the software they created can produce original, copyright-free and emotion-inspiring music that can change continuously.  No more six-hundred repetitions of Freebird!!!

But the lack of classic rock is just the beginning of AI’s capabilities.

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