The Man Who Thinks AI Can Beat the Market

0:00This audio is presented by Hacker Nune, where anyone can learn anything about any technology. The man who thinks AI can beat the market, by John Stoyne journalist. The asset management industry has long been dominated by human judgment, from legendary stockpickers to sophisticated quantitative analysts. Yet in an ear-adifined by vast data flows and unprecedented computing power, some believe the next frontier is fully autonomous investing. LDAD Tamir, CEO of FiNQ, is one of them. He is betting that AI can outperform traditional portfolio managers, not just a system, but completely take over the decision-making process. I believe people are bad at making cold, logical decisions, Tamir says. They add feelings such as fear and greed. They easily fall into inherited conceptions, and their computing power, for heavy lifting and online data processing is lousy. FiNQ has launched ETFs that are fully AI-managed, challenging decades of conventional wisdom about index investing in human portfolio management.

1:02Why AI can outperform humans? Many investors assume markets are too efficient to consistently beat. Tamir sees it differently. The whole idea of index investing is based on the merits that humans just cannot process all relevant data in an efficient way, and therefore cannot beat the index in a consistent way. Well, that is no longer true. With FiNQ and its relative continuous ranking, we can always find what stocks are top-ranked and what stocks should be sold short or left out in order to do better than the indexes. By leveraging AI, FiNQ can analyze far more information than any human could manage. A portfolio manager may follow a few dozen companies closely, but it is very difficult to continuously analyze hundreds of companies across many different data sources at the same time, he explains. The AI evaluates financial statements, analyst estimates, news, reports, and public sentiment for all 500 companies in the S&P 500 daily, searching for patterns, correlations, volatility dynamics, and emerging risks.

2:02Different strategies, same AI. FiNQ currently offers two AI-managed ETFs. AIUP, the FiNQ first US-large cap AI-managed equity ETF, is a concentrated long-only portfolio, while ain't the fink-dollar neutral US-large cap AI-managed equity ETF, employs a long short-market neutral strategy. The goal was to show that the AI framework is not tied to a single market viewer strategy, Tamir says. A long-only strategy like AIUP is designed for investors seeking exposure to US equities with systematic stock selection. A market neutral strategy like Aink uses the same rankings but expresses them differently, going long the higher-ranked companies and short the lower rankadones. This dual approach demonstrates that the core value lies in the ranking framework itself, which can be applied across portfolio structures depending on investor objectives. Why today's AI is different? AI investing has a controversial history. Quantitative funds of the past often underperformed outside niche markets.

3:05Tamir believes modern AI is fundamentally different. What has changed in recent years is the scale of data, computing power, and machine learning capabilities. Today, it's possible to process vast lie larger data sets, including unstructured information, and evaluate relationships across hundreds of companies simultaneously. Another key difference is adaptability. Unlike earlier static models, FINQ's AI continuously learns and updates its signals from new data, creating a systematic process that can evolve alongside market conditions. Transparent, systematic, and unbiased. Concerns about black box, investing are common. Tamir insists FINQ maintains full transparency. 100% of parameters are based on long-term established investment theory. Adding a new parameter has to make investment logic, nothing good, even great, will be added if it makes no sense, even if it makes great returns for some reason, for the tested period. Every decision our AI makes IS therefore fully explainable to us.

4:07He adds that during market crises, AI remains systematic. Humans react to greed, fear, headlines, or short-term narratives during crises. The AI continues to collect market data, evaluate all companies, and apply the same analytical process regardless of whether markets are calm or under stress. The future of investing, looking ahead, Tamir sees AI as the inevitable future of portfolio management. Financial markets generate enormous amounts of data, and technology is simply better suited to analyze that information and apply consistent decision frameworks. Human portfolio managers are inevitably influenced by fear, greed, narratives, and incentives. AI systems can process far more information and make decisions systematically without those biases. He emphasizes that humans will remain important, but in a supervisory role, humans will build systems, supervise them, and make them better, but the investment decisions themselves will increasingly be made by AI. For Tamir, the rise of AI is not just about efficiency.

5:08It's a revolution in how investors access systematic, high-quality portfolio management. As he puts it, we are just in the initial stage of the immense opportunity that AI can bring to this market. This story was distributed as a release by John Stoyen under Hackernoon Business Blogging Program. Thank you for listening to this Hackernoon story, read by Artificial Intelligence. Visit Hackernoon.com to read, write, learn, and publish.