Money Management & Investment Planning Advice Blog | Advisor's Capital Investments, Inc.

Artificial Intelligence Is Helping Leading Advisors To Create High Alpha.

June 1, 2019 by Bob Mann Leave a Comment

AI is proving a successful tool in the money management business.

Artificial neural networks can absorb massive amounts of data, think faster and learn from subtle changes faster than a human can.

Large companies have invested vast sums in AI to help them dominate their target markets.

You have seen IBM’s ad showing its artificial intelligence system named Watson. Amazon is using artificial intelligence to dominate consumer markets. Salesforce.com uses AI to help its clients dominate competition.

The Renaissance Medallion Fund has achieved a new level of dominance and success reported by Bloomberg but it is no longer available to outside investors.

Bridgewater Associates, LLC long known as an asset allocator managed the top performing hedge fund in 2018. Guess what? This manager is much more sophisticated than one would consider an asset allocator to be. AI is a core contributor to Bridgewater’s incredible success.

As an advisor without 300 PhD’s constantly working to build the ultimate AI system like the Renaissance Medallion Fund what can you do to compete?

Thankfully, you do not have to compete directly with these two great managers. The bulk of your competition are much less sophisticated in terms of AI.

Also, you do not have to invest tens or hundreds of millions of dollars to successfully implement AI into your practice.

Trade-Ideas, LLC is the only commercially available AI service that has delivered positive Alpha over the past three years and even smaller advisors can afford the subscription.

Trade-Ideas has recently been awarded Best Machine Learning Development at FundIntelligence’s 2019 Technology and WSL Awards.

Investors, advisors, traders and hedge fund managers are becoming aware of Trade-Ideas, LLC which ranks number 3,012 on the 2018 INC 5000 with three year sales growth of 134%.

Recently, Trade-Ideas has implemented a specialized service for advisors only, named Trade-Ideas Wealth for Professionals. This service offers access to the Trade-Ideas AI System called “Holly” together with tested algos available daily plus the ability to custom design and test algos designed to fit your specifications.

Implementation requires training and some hand holding. This new service provides elements of both.

Trade-Ideas Wealth for Professionals offers:

Professional portfolio analysis
Subscription comes with a description of the algorithms and the configuration settings of each study optimized.
Dedicated portfolio channels which focuses on current holdings.
Helpful videos for training.
Periodic newsletter .
Daily hand picked “Holly” trades designed for portfolios.
Market observations and tests of developed strategies.
Professional only webinars and weekly Squawk Box Hour.
Semi-annual portfolio/current holdings analysis.
Access to TIQ to create custom algos not capable of being modeled otherwise.

Trade-Ideas, LLC services are designed to produce positive alpha for you and your clients, but in addition this power allows you to differentiate your firm from your competition.

This new service is useful for both large and small advisors, but small advisors can be very nimble and can execute risk management in a way that larger advisors may not be able to do as well. All advisors can find emerging industry sectors and high alpha stocks more rapidly using Trade-Ideas. Trade-Ideas professional value proposition is: “We seek to deliver for market professionals consistent, non random, opportunities to capture alpha.”

This is a strong money ball analogy here: “No man is better than a machine and no machine is better than a man with a machine.” Paul Tudor Jones.

There is much more to discover about Trade-Ideas, LLC and its services. Go to bit.ly/2WcFAtM

The Uptrend In Equity Markets Has ended… Economic Growth Has Not

June 1, 2019 by Bob Mann Leave a Comment

Analysts are focused on earning prospects and generally earning prospects appear favorable.

Stock prices however do not look favorable. We believe the power of the up trending market has ended. American stock market indices have produced a double top and recently have broken their 200 day moving averages. 60% of the stocks in the NASDAQ composite are in downtrends. A narrow group of stocks made new highs when the indexes hit their highs. History shows that stocks peak a year to a year and a half before earnings peak when a major top occurs.

To confuse matters identifying the trend only does not lead to effective results for a money manager.

We have been in pop and drop market environment for some time now. Even the great stocks have a powerful rise and then drop. The reverse is true also, a fast decline has led to a fast up move.

Leadership of the most powerful stocks will likely continue to make new highs as laggard stocks make new lows. Managing risk will become more difficult. Perhaps active managers will have their day in the sun. Just like in the 1970’s the nifty fifty stocks will out perform until most of the rest of the stock market has found its value.

Governments have been more active in attempting to stabilize markets and over the past ten or more years have been relatively successful. This type of activity aids in creating higher than normal and eventually unsustainable values. When the rate of change of a stock or index reaches extremely high values the asset price cannot be sustained. Just like an airplane stalls at a high angle of attack, only a foolish pilot would expect to continue to climb at the same angle.

Inflation, although not a major issue today, will in fact be one of the major issues of our future. In the past when this occurs stock valuations have become restrained. Certainly stock valuations would be much lower than today. This issue will lead to a strain on our consumers and on Government. Socialism may be an emerging force today, but in an inflationary environment it might be unstoppable.

What tact should we take? One example for us all has been Bridgewater Associates, LLC long known as an asset allocator. They managed the top performing hedge fund in 2018. Guess what? This manager is much more sophisticated than one would consider an asset allocator to be. Artificial Intelligence (AI) is a core contributor to Bridgewater’s success.

Risk management has always been a necessary part of money management, but a bull market hides a great many sins.

Advisor’s without a clear plan for risk control will not be successful in the years ahead. When the stock market has risen consistently it is difficult for a money manager to differentiate the firm’s track record from other large diversified portfolios and indexes. Thus the constant pressure to reduce fees.

In a declining market a manager with excellent risk management techniques and a focused portfolio stands out. The reverse of this is that a manager without risk management in place may expect a great deal of litigation costs in the years ahead as well as an intense migration of funds out of the firm. c