Of Artificial Intelligence, Natural Stupidity and a Higher Wisdom

“Artificial Intelligence is going to completely change investing” said Swami excitedly as we met for our coffee. Jigneshbhai did not react, and continued sipping his black coffee, as usual. Swami was not the one to be discouraged by that, at least immediately. So he continued with even more enthusiasm.

“Machines will be reading through stock prices and market movements and predicting what’s going to happen next!” he proclaimed.

Still seeing no response from our broker friend, Swami turned to me and said “With Artificial Intelligence technology, humans are going to be redundant.”

I gave him a polite nod, while trying not to take sides. He quickly realized I had no idea about this AI and investing stuff, so he turned impatiently back to Jigneshbhai.

“So are you going to say something or just stay silent?” Swami asked, with a tinge of protest.

Jigneshbhai looked up and finally said, “Yeah, machines are getting smarter.”

Happy that he had finally got some response, Swami slowly got ready for what he thought was going to be a long argument with Jigneshbhai.

“I read that AI programs will read through earnings reports and identify trends. And AI will also track social media and measure sentiment about a company.” Swami happily boasted of his new-found knowledge.

He wasn’t done yet though. “And so many news reports on a company or a sector come out every day. AI will go through all these things and predict how it will impact prices in real-time.”

I nodded at Swami in appreciation, making him feel good about his knowledge and that he had a receptive audience, though I was a relatively easy audience to impress.

Jigneshbhai though didn’t seem too impressed. Turning to him, Swami confidently said, “So with all this analysis and real-time prediction, this artificial intelligence is going to change the face of investing!”

Swami seemed done with his side of the argument, now expecting Jigneshbhai to start. But all that our broker friend nonchalantly said was “Maybe, but more likely not.”

Obviously this wasn’t acceptable for Swami, and even I expected a more elaborate response. So we waited for Jigneshbhai to say more.

After a longish period of silence waiting for him to speak, our broker friend finally said, “Investors don’t need to increase artificial intelligence. All they need is to reduce natural stupidity.”

Swami and I looked at each other confused. Swami had read so much on AI, and the whole world was gung-ho on how AI was going to impact everything, and here was our broker friend more worried about natural stupidity! Before I could say anything, Swami was ready with his question.

“What do you mean? AI is not going to change investing?” he asked.

Again he got a smile from Jigneshbhai. Again we waited for him to speak. Again there was a longish silence.

Jigneshbhai finally spoke.

“Well, it may change trading. They anyway look for so many variables like MACD and moving averages and global cues and what not! Now they can add trends from news and earnings reports and social media sentiments to that mix if it suits them. Someone I am sure will come up with software to do it and sell it.”

He said this with a sense of wry despair. Swami and I were thinking about what he said, and thought perhaps he wasn’t wrong. It looked like Swami was also beginning to question his recently acquired knowledge.

Meanwhile, our broker friend continued.

“But for investing, all you need is to avoid natural stupidity. I hope they come up with some AI technology to detect that!” he said, and laughed loudly.

Just as he was laughing, Swami and I saw the wealthy man from the sprawling bungalow sitting at the table next to us. It looked like he had been listening to our talk on AI and investing all along.

As we were getting ready to leave, he tapped Jigneshbhai on his shoulder and said, “To avoid natural stupidity in investing, no AI can help. You need a higher wisdom!”