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Marks Says Quant Investing Is a `Fringe Activity’ at This Point
Oaktree Capital Group LLC Co-Chairman Howard Marks said quantitative investing isn’t a replacement for the judgment of the best stock pickers.
“Some firms are doing it well,” Marks said in an interview with Bloomberg Television’s Erik Schatzker on Wednesday. “But it’s only a fringe activity.”
Earlier this week, Marks issued a 17-page memo that analyzed the effects of seve…
2018-06-20 00:00:00 Read the full story.
CloudQuant Thoughts: This article’s emphasis on ‘Fringe Activity’ caught our attention. Our first reaction was “Huh? That can’t be right.” After watching the video and reading the full memo we understood what he was really saying. He did call Quant Investing a ‘Fringe Activity’ in the recorded interview but didn’t use that language in the 17-page memo. The memo concludes “Computers, artificial intelligence and big data will help investors know more and make better quantitative decisions. But until computers have creativity, taste, discernment and judgment, I think there’ll be a role for investors with alpha.” (1) We agree. The role of the analyst is still important. We are closer to the quantitative word and therefore we see things differently than Mr. Marks. We know that quantitative investing isn’t on the fringe. The role of data science is expanding. Natural Language Processing (NLP), Artificial Intelligence (AI), and Machine Learning (ML) are dramatically growing “things that can be counted.”(2) This includes using these automated techniques to read CEO generated content to score the likelihood that the CEO could become the next Steve Jobs, or that the company is likely to become the next Amazon.
One of the reasons we know that Quantitative techniques work is that our own NLP algo flagged this post for us to read out of the thousands of articles that were published in the world of Systematic, Quantitative, and Algorithmic trading!
Technical Traders Are Starting to Bet Against Agriculture
With the passing of the summer solstice, many investors have started to turn their attention to agriculture-related commodities. A significant breakdown on the chart of the most widely followed agriculture exchange-trade fund (ETF) suggests that active traders will now likely hold a bias to the downside and view the move as a leading indicator that could drag niche agriculture commodities lower. (If you need a quick refresher, check out: A Primer…
2018-06-22 09:44:00-06:00 Read the full story.
CloudQuant Thoughts: This article has great graphics to argue its point.
Goldman Sachs Is Considering Crypto Trades Beyond Futures, Solomon Says
Goldman Sachs Group Inc., one of the biggest U.S. investment banks, is exploring cryptocurrency trades beyond the publicly-traded derivatives that it already handles, according to Chief Operating Officer David Solomon.
“We are clearing some futures around Bitcoin, talking about doing some other activities there, but it’s going very cautiously,” said Solomon in an intervie…
2018-06-20 00:00:00 Read the full story.
(1) Investing Without People page 16, by Howard Marks, Oaktree Capital Management, L.P., https://www.oaktreecapital.com/docs/default-source/memos/investing-without-people.pdf
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