People today look back at the chimpanzee of 1955 who was thinking about the New York stock market, and they can't help but laugh.
Kokomo Jnr, a young chimpanzee, is sitting in a chair thinking about the stock market in New York
But with the increasingly mature artificial intelligence entering the stock market in recent years, when people in the future look back at the present, maybe we are all chimpanzees.
As a car company, Tesla is also quite successful in the field of artificial intelligence. However, in this "human-machine war", Tesla was only mentioned as a battlefield, and the real "battle" occurred between Ark Invest Fund and South Korean artificial intelligence financial technology company Qraft Technologies.
Ark Invest Fund was founded by Cathie Wood, a well-known fund manager known as the goddess of female stocks. Since 2014, ARK Invest's flagship exchange-traded fund (EFT) ARKK has grown by more than 900 percent, outperforming the S&P 500.
The magical year 2020 kicked off with four circuit breakers in U.S. stocks in 10 days, and in the same year, relying on the strong performance of Tesla, Square, Teladoc and other stocks, ARKK returned 150%, surpassing JPMorgan Chase in December to become the largest actively managed ETF fund in the U.S. stock market, managing more than $17 billion in assets.
In January 2021, ARK became one of the top ten most traded ETFs in the world.
Qraft Technologies, a South Korean artificial intelligence fintech company, is an artificial intelligence investment platform dedicated to innovative investment through artificial intelligence. Qraft launched a series of EKTs in the United States in 2019, of which QRAFT AI-Enhanced US Large Cap Momentum ETF (AMOM) is cathie Wood's opponent in this showdown.
The $27 million small EFT focuses on U.S. large-cap stocks and typically uses Qraft's proprietary AI-powered quantitative investment system, AQUA, to determine possible changes in stock price momentum over a given period, sifting out about 50 of the most promising stocks from 300 large-cap U.S. large-cap stocks.
Tesla's stock trend in 2021 can be described as ups and downs, and Ark Invest's ARKK and Qraft Technologies' AMOM happen to be very concerned about Tesla, and they happen to hold opposite opinions at some key nodes. As a result, the two sides with different opinions have become hidden opponents.
This "battle" is simple to say, nothing more than one side saying that it should be sold now and the other side saying that it is time to buy, who is wrong and who is embarrassed.
Cathie Wood has always been known for her strong beliefs, trusting her judgment more than most investors' multi-faceted valuation of the value line. The same is true of Ark Invest, the "disruptive innovation" fund she created.
But in terms of 2021 results, Ark Invest's investments have not performed well. Although Tesla rose 56% last year, the twists and turns of the trend repeatedly caused Ark Invest to sell a lot of Tesla stock prematurely, coupled with the failure of investment in other areas, and finally suffered a lot of blows.
AMOM accurately grasped Tesla's trend, and several successful low-buy and high-selling results allowed it to achieve a 53% return, higher than the S&P 500 index's 43% return over the same period.
This "battle" temporarily ended with the victory of the artificial intelligence EFT.
Currently, Qraft Technologies has issued a total of four actively managed ETFs, with the highest rate of return EFT (QRFT) having achieved a yield of nearly 80% in three years.
On January 11, 2022, according to the Wall Street Journal, Asian investment giant SoftBank Group will invest $146 million in Qraft Technologies to gain access to the company's artificial intelligence tools and help the startup grow. Qraft said the investment will be used to expand overseas markets, especially the United States and China.
Qraft Technologies launched South Korea's first active ETF to operate entirely ai-driven, but it's not the first in the world.
In October 2017, ai Powered Equity ETF (AIEQ.N), the world's first fund to claim to use artificial intelligence to select stocks and invest in machine learning, was launched on the New York Stock Exchange.
AIEQ. N is managed by IBM's EquBot, built on artificial intelligence platform Watson. EquBot was born in 2017 in the halls of the Haas School of Business at the University of California, Berkeley. Chada Khatua, Art Amador and Chris Nativdad decided they could start a business that used AI to actively manage equity portfolios, so they formed the EquBot team.
As part of the "Start a Business with IBM" initiative, their team can use Watson, an artificial intelligence that has made a name for itself by beating a steady stream of human contestants in the TV quiz game Jeopardy.
So the EquBot team began training AI models to automatically parse data from social media, news projects, SEC financial statements, and more, with the goal of enabling AI to build dynamic portfolios that adjust daily in real time based on the data. Ideally, algorithms are constantly learning and getting better as software systems analyze more data and access its performance.
Although they are both AI-driven funds, the two are fundamentally different in AI algorithms.
AIEQ. N, or the vast majority of AI-based investment products on the market today do not use the company's self-developed technology, but use artificial intelligence models with common applicability such as Watson. Qraft Technologies chose to develop its own ai model that is fully investment-oriented.
AIEQ. Early performance was very erratic. The turnover rate in the first year was 260%, compared to just 3.1% in the S&P 500. During the 2018 market downturn, AIEQ. N plunged 16%, S&P fell 6%. Even now, AIEQ. N There are still flaws that cannot be ignored.
In this way, it seems that Qraft Technologies has chosen an advantageous direction. Unfortunately, Qraft Technologies' artificial intelligence EFT also has its own problems.
Francis Geeseok Oh, head of the Asia Pacific office, said: "AI cannot observe social trends or understand technological innovations the way humans do, so it is not suitable for long-term bets. It excels at using limited data entry to find stocks that are most likely to outperform the broader market over a limited investment horizon and time frame. ”
Francis Geeseok Oh
In addition, if the input data accepted by the AI is flawed, then the results it outputs will also be meaningless.
Ai-powered EFTs were born too short, and they lack a sophisticated and credible track record. They don't explain to investors what they've made so far, and even in many cases, even the people who built the model themselves can't explain why the computer made a decision.
But there is no denying that the development of artificial intelligence is more rapid than people think. It has been said that "the only lesson humans have learned from history is that humans have not learned any lessons from history", but it is clear that AI can continue to evolve from data recorded in the past.
The era when humans became "chimpanzees who study the stock market" may soon arrive. At least for now, investors still have good reason to stay on the sidelines, waiting for time to prove AI's ability to speculate.
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Resources:
https://www.forbes.com/newsletters/jonmarkman/2022/01/03/popular-ai-powered-etf-suffers-from-human-flaw/?sh=4ee9f9f12f18
https://equbot.com/equbot-etfs/
https://www.marketwatch.com/articles/this-ai-powered-etf-sold-tesla-stock-at-its-peak-it-says-shares-are-a-buy-now-51621613714?mod=mw_latestnews
https://www.marketwatch.com/story/this-robot-run-fund-loaded-up-on-tesla-because-it-thinks-the-stock-will-soar-its-been-right-before-11621012673
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