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Some of the most successful investors, like Warren Buffet, are old school and also operating on a completely different level than most investors since he can fo
by nwah1 9y ago
Some of the most successful investors, like Warren Buffet, are old school and also operating on a completely different level than most investors since he can force companies to change course, or like after the 2008 crash he was able to come in and offer deals to big banks in return for preferred shares.
It would be difficult to see how to apply narrow AI to this kind of thing. It seems really good for routine tasks, like high frequency trading, but maybe not so great for these big one-off deals which constitute many of the best investments.
Of course, Buffet might still benefit from AI analysis of broad market trends, and the like. If I'm wrong, I'd be interested to know.
- samfisher83 9y agoBuffet was a small time investor at some point. He just made a lot of good investments over a long time.
- krirokeoe2882 9y agoI like how this ignores the very different world that was when Buffet got started Yes here you are, sir, an economy that can only go up given the decimation of manufacturing in the rest of the post WW2 world And to boot, rampant imperialism on the part of your government Let’s see him start at 11 yo today with the same initial investment
- nwah1 9y agoGiven his level of success, even if his talents are considerable, he must've also been extremely lucky and thus even starting a day later or earlier would've probably crushed his entire life trajectory.
- perl4ever 9y agoI agree that he was lucky in starting at the general time he did, but I think that claiming the exact day was critical is going too far. It's like the person who supposedly said that if the earth was an inch farther away from the sun it would freeze and an inch closer it would cook.
- freeflight 9y agoEven a couple of inches, extrapolated over time, can have a massive effect on the final trajectory.
- valuearb 9y agoBuffett started out as an expert in the kind of arbitrate deals that are much more available in bad markets than good. Still he was able to average 40% returns his first decade despite the lack of a good bear market.
- valuearb 9y agoLOL, no. Buffett’s success has been done year by year for over 60 years. Take his best year out and his success is basically the same. Note also that he’s intentionally hamstrung himself for the last 46 years or so by investing through Berkshire Hathaway. Had he kept investing through his partnerships he would have made another $80 Billion from performance fees. Had he just invested his own money his returns would have been much higher given he’d have far more investment opportunities,
- tim333 9y agoHe's still doing well in the current world.
- tjr225 9y agoIt's easier to do well if you have more money than everyone else.
- newyankee 9y agoYes, not sure why you are called out. You can influence the system to your benefit when you have that kind of wealth
- valuearb 9y agoIt’s actially way harder to earn high returns on $400 Billion than it is $4B. Buffett’s returns have been declining for 50 years because of that. As his portfolio size grows it increasingly limits his investment options.
- walshemj 9y agoHe also had a very very good mentor who wrote the original book on securities analysis.
- headmelted 9y agoThis. Also check out The Intelligent Investor, which is arguably Ben Graham's most accessible work on the topic.
- walshemj 9y agoAbsolutely the modern copy I have had some commentary comparing some of Grahams analysis of problems in the 50's and 60's and how some of the problems in the dot.com crash where strikingly similar.
- longerthoughts 9y ago> It seems really good for routine tasks, like high frequency trading, but maybe not so great for these big one-off deals which constitute many of the best investments. I understand what you mean from an opportunity identification perspective, but you have to keep in mind that even the "big one-off deals" require routine tasks at a lower level to verify the merit of such deals. If you think about tasks like reviewing financial statements, AI could provide faster evaluation and potentially identify trends that would elude a human analyst. In any case, Buffett is known for avoiding investments in companies he doesn't deeply understand and I would bet the same stance holds for employing new technology in his investment process.
- headmelted 9y agoI don't see any reason to believe this isn't happening already. As old school as Buffett is (and the man is a legend in my eyes), it just doesn't seem a stretch to think that they're running at least some deep-learning-based analysis over the deals they consider. Whether or not they give any weight to the output is quite something else, but it would be such a (relatively) trivial cost to get that answer that it seems less likely they'd not do it.
- tim333 9y agoI'm pretty sure Buffett doesn't use that stuff. Although he reads the papers so he may pick up on things other people have done.
- valuearb 9y agoBuffett’s investing algorithm hasn’t changed in 65 years. Every day he reads financial reports. If he likes a companies business model, he makes a mental estimate of the companies value, and then looks up their trading price. If there is a big enough discrepancy in his favor he will start buying.