All of us have heard the term 'changing the playing field' and while this is normally used as a metaphor it actually refers to something that we can see in the real world - at times literally.
For example, in hockey the playing field changed from grass to astroturf and suddenly a whole different set of skills became important - from skilful dribbling and stickwork of the Major Dhyanchand era, the need of the hour was to be fast and fit. Indians didn't adapt and fell off the top hockey league.
Currently we can see something similar happening in the automobile market where companies who do not adapt to electric vehicles risk becoming obsolete.
On a new playing field, old instruments and techniques don't work, no matter how skilful the player. The legendary Bjorn Borg couldn't make a comeback with his old wooden racket.
Advanced tech is doing to investment management, what it did to many other fields of play.
Traditionally, investment decisions were made only by the human mind.
If you put your money in a mutual fund or portfolio scheme, your "human" fund manager painstakingly analysed Company and industry data in order to decide where to invest...at least you hoped they did!
Almost all investment management practices today, remain frozen in a 1940s-1990s time warp.
But the world has moved on.
For one, a large part of what made the traditional model work was getting additional or differential information by meeting companies and their management. This was true not just of India but of all markets around the world where large fund managers could sit in a closed room with a company and get information.
However, this edge has been regulated away across the world - information availability has been made uniform. All call transcripts for instance have to be out in the public domain.
In fact, now the problem is something quite different, which is an absolute surfeit of data which is humanly unmanageable.
And this is where the machines come in...
Advanced computing power makes extreme data crunching prowess accessible.
Models can analyse more securities AND more data points in each than is possible even for large teams of humans.
Most important, they can do consistently and without bias - something which is impossible for human beings.
Machines do the thinking for you. Machines "learn", quicker and better than humans ever can.
Adaptive learning systems can replicate human inventiveness, only much better.
Artificial intelligence & Machine Learning are set to transform future of investing.
An expertly constructed Quant ML model can do bewildering things: it can read millions of research papers, balance sheets, conference call transcripts, social media feeds!
It can analyse a company's auditor's reports and management commentary. It can distinguish between good accounting policies and bad.
It can granularly analyse ratios, in time series as well as cross section, across thousands of companies.
A well developed machine can expertly analyse reams of data, discern patterns & linkages, across stocks and securities across the world. No set of humans is equipped to cast such a wide and narrow eye, contemporaneously, on data.
Investing, the way it has been done so far, is nothing but luck masquerading as skill, with most gains coming from just a handful of stocks. As Charlie Munger says: "If you take away our few big winners, Berkshire's record is very mediocre".
This, in mathematical terms, is luck. Not skill.
Machines reduce the role of luck hugely, bringing skill to the fore.
Which is exactly why the traditional investment management business worldwide has been in crisis for years - because traditional fund management simply cannot beat markets, owing to their severe cognitive limitations.
Human beings are biased and inconsistent. Plus they have limitations - for example, at First Global we analyse over 20,000 securities globally and about 6-700 in India. Even if a large team if human beings does it, each human being's way of looking at it will be different which means the entire picture can never be consistent.
Machines are consistent. They will look at data with an even, un-jaundiced eye.
And this, in turn, translates into consistent market beating performance which the traditional fund managers simply cannot match.
Another interesting aspect of quantitative investing: the more the data fed into machines, the more accurate predictions they generate. This is absolutely the opposite in humans! Most human brains decline in capabilities, with age and load.
Because humans can process only limited data, they tend to build more concentrated, clustered portfolios, largely around their comfort zones. This increases correlation in the portfolio, leading to very volatile returns. 'I will invest only within my circle of competence' is just a fancy way of saying that I will only invest within my comfort zone. And as an investor why should your investment be constrained by your fund manager's comfort zone?
In contrast, Machines can build far larger, more carefully diversified portfolios, across a wide spectrum of securities: reducing correlation, thereby reducing Risk, while not sacrificing returns.
Also, machines are clinical about acknowledging and analysing mistakes as well as correcting the process that led to these mistakes. Each of these steps is extremely difficult for a human being as we are hardwired to defend our decisions and stories.
Reality is: humans have limited capacity to absorb data and when confronted with vast amounts of data the human brain simply shuts down and resorts to reliance on underanalysed, oversimplified lazy opinions and simple stories.
Quantitative Investing is free from behavioural biases and emotions. The human mind, no matter how intellectually sound, cannot be emotionless.
The Machines are coming to the Investing Game. The playing field is changing. Sticking to the old way of doing things will only mean that you will be out of the game.
Don't become obsolete like the combustion engine will be in an era of Electric Vehicles.
If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!
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Economists Think Dollar's Fall May Explain the Recent ‘Rally’ by Steve Liesman
Einstein taught us about relativity in nature. Now come Devina Mehra and Shankar Sharma of First Global to teach us about relativity in financial markets -- and raise some serious questions about just what is driving stock prices.
First Global reports are quite credible and, on occasion, more than that.
What prompts this mention is Intel's earnings report and the fact that First Global has had a pretty good bead on the company and its stock.
AMD up again following First Global upgrade to ‘buy’ (AMD) By Tomi Kilgore
Analyst Kuldeep Koul at First Global upgraded Advanced Micro Devices (AMD) to "buy" from "outperform," given the "exceptional traction" that the chipmaker's Opteron line of processors has been able to get.
Baidu Climbs on First Global’s ‘Outperform’ Outlook
Baidu Inc., the operator of China’s most-used Internet search engine, rose to the highest price in two weeks after First Global rated the shares “outperform? in new coverage.
Personality counts: Walmart's frugal, but Target charms
"It's better to take a slight hit on [profit] margins and keep on moving and inventing," says First Global Securities. And at least for now, Target is inventing in a way that appeals to consumers with money to spend.
Dead Batteries
At 11 times trailing earnings, Energizer is cheaper; Gillette's multiple is 25. But cheaper doesn't mean better, says First Global.
Bipinchandra Dugam @bipinchandra90
@devinamehra @firtglobalsec
invested in both GFF-GTS and Super I50. Thank you very much for such wonderful investing experience with completely new approach. In my 15years of investing first product I felt which close to what customer want.
Shishir Kapadia @shishirkapadia1
@firstglobalsec @devinamehra
by far you are the best, I have not come across transparency, acumen, global expertise, exposure, protection of capital, delivering return from any fund/ fund managers. Invested very small size in 3 products will keep on increasing it over the period
Piyush Bhargava @PiyushB88762654
@devinamehra @firstglobalsec
Thanks you team FG specially Devina, my investment doubled in less than 3 years in SDPB As a investors & PMS distributor of your product looking to have a long-term relationship with the company.
@KarmathNaveen the person with whom I always interact
Sumeet Goel @GoelSumeet
Very happy & relaxed to be invested with first global pms
Shishir Kapadia@shishirkapadia1
Congratulations on super performance, above all transparency and systematic process are unmatchable.
One must opt this, if person consider him/her self as an investor. Very happy to be part of this since invested. FG has managed worst year (ie 2022) so efficiently and skillfully.
SY @SachinY95185924
With so much of volatility in the market, risk management is very important part & considering that FG is doing awesome work!!! Kudos to you Chief
Amit Shukla @amitTalksHere
Truly outstanding. As a retail subscriber to #fghum #smallcase, I can vouch for the Nifty beating returns (8% vs 3%) in last 1 year. Keep up the awesome work @firstglobalsec
We can load above testimonials on site as a scroller, and just below that we can add a section for compliments . Below tweets are comments and praises are related to our content, performance and some our direct compliments to you.
ADIT PATEL @ADITPAT11226924
Good team...
Special mention @KarmathNaveen .. he is soo helpful anytime of the day or night..
Hindustani @highmettle
Bought Peace with FG-Hum.Moving all funds from DIY investing to well managed and diversified PF at low cost.
It has doubled almost, excellent pick.Every small investor must invest in her FG-HUM Smallcase.
Suresh Nair @Suresh_Nair_23
I have 8 small cases and your has been the most rewarding ones .. thank you Devina.
Sayed Masood @SayedM375
There is absolutely no doubt that she is one of the best investors of India in modern times but more importantly, she shares the most sincere and sane advice with retail investors.
SY @SachinY95185924
Wow Superb Returns🔥 Congratulations Chief for being Number 1 among all PMS!!!
You are one of the sharpest mind in Global Stock Market
AnupamM @moitraanupam
Congratulations Devina, results talk in itself!
Abhishek @simplyabhi21
Congratulations ma’am @devinamehra ! The consistency you have in maintaining the top rank position is outstanding! 👏
Mihir Shah @Mihir41Shah
We are learning More about markets (& Life ) thanks to U than we learnt in our Professional courses.A BIg Thank You, Wish all get Teachers Like You!!
Sumit Sharma @MediaSumit
"The ability to be comfortable with being outside consensus is a superpower in investing...and in life." Devina ji hits the nail on its head!
Majid Ahamed @MajidAhamed1
Congratulations @devinamehra mam! All the best for long term returns as well.
Vinay Kumar @VinayKu05949123
This is the wonderful session I have ever attended till date. One of the most fruitful hour of my life. Devina madam, ur clarity on financial mkts is simply superb.The way u portray the facts supported by "data" about stock mkts is really astonishing.I will listen again.Thanks.
VIJAY @drippingashes
I loved to read your journey, insight and philosophy. It's a pleasure to read and know of your takes on market and life.
MNC🏹 @Focus_SME
Check & follow @devinamehra's timeline for lots of post debunking such rosy stories. Also, she gives amazing 🤩 sector directions/hints.
KLN Murthy @KLNMurthy2016
Good actionable insights, great article!
Suresh Nair @gkumarsuresh
Devina Madam is simply terrific... good knowledge, straight and simple thinking.
Very difficult to emulate such traits. I listen her past interviews from youtube.
Respect...!!!!
DD @AliensDelight
One of the brightest minds in the world of finance :)
Radhakrishnan Chonat @RCxNair
📣 Calling all investors! Just had an incredible interview with @devinamehra, Chairperson and MD of First Global. We discussed the importance of global diversification, effective asset allocation, and the risks of sitting on the sidelines. Trust me, you don't want to miss this!
siddarthmohta @siddarthmohta
Excellent performance. Flexibility is the key as you have mentioned it earlier also. Cannot have finite rules for infinite mkt opportunities.
Boom (বুম)@Booombaastic
To be honest, the insights which Devina madam brings in is very enriching..have learnt a lot from them...
Himanssh Kukreja @Himansh02428907
One of the most accurate analysts :)
I always look forward to you interviews mam
Abhijeet Deshpande @AbhijeetD2018
Madam, It is always a treat to read your insight, not only on business but on other topics also!!
Dada.AI @dada_on_twit
Thanks for this wisdom ma'am. Always love hearing your thoughts on everything equity. :-)
adil @zinndadil
Excellent points!
Can clearly feel this thread is a product of marination of many books and years of experience. 👍
Kamal thakur @Kamalgt10
Superb !!
Your knowledge, analysis & articulation is simply great 👍
Tanay @Tanay36232730
Follower on Twitter and Subsciber on YouTube of First Global, really helping me in my investment desicion. Thanks
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