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two-sigma-s-siegel-says-artificial-intelligence-lacks-smarts

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David Siegel, a quantitative hedge fund pioneer, issued a warning to investors: Artificial intelligence lacks common sense. Siegel, who has used AI to build his Two Sigma Investments into a 37 billion hedge fund firm, said algorithms are limited by the scant amount of training data available to instruct them on how to identify everything from objects in images to trading opportunities. Hedge funds are embracing a form of AI called machine learning years after Two Sigma deployed the technology and as stock and bond pickers struggle to outperform markets. A unit of the firm, called Two Sigma Ventures, seeks to invest in companies focused on data science, machine learning, artificial intelligence and advanced hardware.


Computers Start To Take Over List Of Most Successful Hedge Funds

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Top hedge funds that use computers and quantitative models to trade financial markets have generated $113 billion in net gains over the years, making up a quarter of the total amount of net gains produced by the top 20 hedge funds in history. That's what LCH Investments' annual survey of the top 20 hedge fund managers shows, which for the first time includes data from some hedge funds that use systems-based investment approaches. According to LCH Investments, four of the top 20 hedge funds that have generated the highest amounts of net returns are highly reliant on algorithmic trading. Those hedge funds include billionaire Ray Dalio's Bridgewater Associates, which has produced $49.4 billion in net gains since inception, more than any other hedge fund. LCH has long included Bridgewater on its top 20 hedge fund managers list, but this year for the first time the list also includes three major hedge funds known for their computer and data-driven approaches to investing.


Two Sigma Co-Founder Very Worried' Machines to Take Human Jobs

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David Siegel, co-founder of 35 billion quantitative hedge fund firm Two Sigma, says he's "very worried" that machines could soon cost large swaths of the workforce their jobs. "Most people in the bulk of the job market are not involved in super-high-value jobs," Siegel said Monday at the Milken Institute Global Conference in Beverly Hills, California. "They are doing routine work and tasks and it's precisely these tasks that computers are going to be better at doing," just as combustion engines replaced horses or ATMs replaced most bank tellers. The Australian mining industry already employs robotic vehicles equipped with self-driving technology to extract raw materials, instead of using truck drivers, he said. Facebook Inc. requires comparatively "zero" workers to manage a social network for more than 1 billion people, according to Siegel.


Hedge funds test artificial intelligence

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Anthony Ledford and his colleagues at Man AHL investment fund spent three painstaking years building a machine-learning model to do something mere mortals often can't: find fresh ideas in an avalanche of data. But even Ledford, chief scientist at the $19 billion Man AHL in London, rolls his eyes when he hears people say that machine learning, a type of artificial intelligence, is going to transform hedge funds tomorrow. To Ledford, a lot of the buzz smacks of hype. The technology is more robust than its predecessors but hardly revolutionary. "There is some real science here, but it's not the way it's been portrayed," said Ledford, who holds a doctorate in mathematics.


Why Machines Still Can't Learn So Good

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Anthony Ledford and his colleagues at Man AHL spent three painstaking years building a machine-learning model to do something mere mortals often can't: find fresh ideas in an avalanche of data. But even Ledford, chief scientist at the $19 billion Man AHL in London, rolls his eyes when he hears people say that machine learning, a type of artificial intelligence, is going to transform hedge funds tomorrow. To Ledford, a lot of the buzz smacks of hype. The technology is more robust than its predecessors but hardly revolutionary. "There is some real science here, but it's not the way it's been portrayed," said Ledford, who holds a Ph.D. in mathematics.