Combining machines and humans in investing- An analyst from the (near?) future

Neil Dwane (Allianz) |  The Machine will be better at seeing patterns:

  • Seeing a pattern in the combination of stock prices and commodity prices, and recommending trades to exploit this.
  • Monitoring satellite imagery of tankers and finding a pattern between oil prices in different regions reflective of local supply and demand.
  • Monitoring all company filing documents and earnings transcripts to pick up cautious tones, new risk disclosures and inconsistencies in management teams’ messages.
  • Following all the commentary and estimates of Street analysts to pick up contradiction in sentiment to better understand how companies are doing.

The human will be better at understanding change:

  • Evaluating the impact of a new drilling technology on the industry.
  • Understanding changing geopolitics and implications for oil cartels’ policies and pricing.
  • Evaluating a change in a company’s strategy or a proposed merger.
  • Understanding changes in the industry structure or changes in the relationships between energy companies and their suppliers or customers.
  • Accepting what machines are better at and refocusing skill set and investment focus!

*Photo by kjetikor on Foter.com / CC BY-NC