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Klaus Wrede's avatar

Your core thesis seems to be that AI can outsmart the market, while Bogle's thesis was just the opposite: since you can't outsmart it ... buy the whole market. He found a way to execute on that thesis.

But in principle - could it be possible to find a system to outsmart the market? Perhaps. But then in the long run the market would either break or adapt to that system so that its advantage would tend towards zero.

So is the market a random walk on Wall Street? Probably not. It's perhaps rather a distribution machine that directs funds where they are best used to create innovation. Otherwise, how would you explain that the market always goes up. Does this help to select certain stocks, strategies, factors etc.? A good but undecidable question. Because of its over-complexity, the market may still be like a random walk to us.

If you could give us evidence that AI necessarily eliminates its over-complexity and makes the market predictable, then you would have something similar to Bezos' unique selling proposition, since nobody would come up and say "Doug, I love Intelligent Alpha; I just wish the market were a little more complex and less predictable".

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KJ's avatar

Enjoyed the read Doug. You are not one to be sitting still that's for sure. Best to you.

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