A Report on FOLIO: An Expert Assistant for Portfolio Managers

FOLIO is an expert system to assist portfolio managers. It interviews a client and, on the basis of expert knowledge, determines the client's investment goals and the portfolio that best meets them. For example, FOLIO may determine that one client requires a preponderance of tax-free investments and a substantial hedge against rising short-term interest rates, while another is best served by a mix of low-risk dividend-oriented stocks and intermediate-term bonds. FOLIO is a test bed for a theory of heuristic reasoning about uncertainty (Cohen and Grinberg, 1983), and its task has many parallels to estab!ished Al paradigms such as diagiosis in medicine and construction of a student model in ICAI domains (Barr and Feigenbaum, 1982). FOLIO uses a goal programming algorithm (Hillier and Lieberman, 190) as a relaxation method for resolving the client's multiple goals into a portfolio that fi'.s them optimally.