We Will Never Fully Understand How AI Works -- But That Shouldn't Stop You From Using It

The search for alpha can take us to some unusual places -- perhaps none more so than the 13th century works of Thomas Aquinas. His philosophical maxim, "Finitum non capax infiniti" -- "The finite cannot comprehend the infinite" -- makes a compelling argument for an entirely undifferentiated source of alpha: artificial intelligence. To apply this postulate to AI: While there are some types of AI that humans can comprehend, there are others that, because of their complexity and high dimensionality, are beyond the ken of human intelligence. There are clear signs that we have reached a tipping point where certain types of AI have surpassed the human mind: The finite (humans) cannot comprehend the infinite (advanced AI). Yet because of a deep-seated industry bias that investment results must be explainable, investors have been slow to accept the superhuman capabilities of advanced AI and, as a result, are failing to consider unique sources of alpha that could provide better investment outcomes.