High-Tech Hedge Fund Hits Limits of Robot Stock Picking

BERKELEY, Calif.--For Michael Kharitonov, building a hedge fund based on machine learning has been a rule of threes: It was three times as hard, and it took three times as long, as anticipated. "Most of the things we've tried have failed," said the co-founder of a little-known firm called Voleon Group. Machine learning, a set of techniques that empowers computers to find patterns in data without using rules prescribed by humans, has been producing advances in a range of fields, from robotics to weather forecasting to language translation. The technique is at the heart of efforts to build self-driving cars. Why not use it to crack financial markets?