not just investors - everyone avoids hard work and dismiss the benefits of such.

Because the use of algorithms can lead to the same abuse that led to the 2008 economic meltdown in the mortgage market.

When harnessed correctly they can serve as a guideline but definitely should be balanced with new evidence and up to date information. And federal oversight.

Best Line: "They win acting as a house not as a gambler" .

The markets can not be fitted into the straight jacket of rigid math models. However that doesn't mean that there is no place for math in trading and investing and vice versa that math is the silver bullet for everything. It all depends on time frames, market mechanics, trading strategy (market making, directional, arbitrage, options etc) nature and objectives etc. Also don't confuse "algorithms" with "math / math models" although frequently the difference is blurred. Also don't think that "algorithms" are something too different from "discretionary" trading knowledge.

One of the main problem of the "quant" folks is that they are trying to apply "mechanical" and hence brute force approaches on the markets. Or said in another way they are trying to IMPOSE their beloved math / physics models on the markets - but the markets could not care less about that. Why - because the markets are a) a GAME, b) against a THINKING AND EMOTIONAL OPPONENT, b) a game unfolding in the context of upre

Marcos show us some brokerage statements mate not Forbes articles writhen by journalists who if they really knew anything profitable about trading would not be journalists in first place ....

pure math would be more successful in the markets if they were "well behaved" celestial bodies or even a bit more chaotic weather system still abiding by fixed laws (with the occasional chaotic turbulences). But markets a game between thinking and emotional brains man.

In a market context math is also useful when one wants to "engineer" a "structured" product guaranteeing certain pay offs or at least fixed risk levels

e.g. for an interest rate swap dealer who is just an intermediary between two counterparties and putting a contract between them for exchange of cash flows based on interest rates

Math and Science win - fact! Most systematic asset manager BlackRock = largest. Best performing hedge funds scientific - worst performing funds quantitative but it is naive to believe they force fit mathematical models. These guys scour the planet for alternative data sets that can be analysed to give them edge, they hire the brightest minds and predict future outcomes - they keep it a secret because they are smarter and that allows them to consistently outperform. The broader market place is still playing the information arbitrage game of 20 years ago - bottom up research. The time opportunity is being lost due to communications availability. Wake up people a computer can cover / screen / analyse 25,000 stocks in unison while a human is lucky if he has the cognitive ability to deeply understand 50 to 100. The best of the best can play the information game - the mass will be beaten by the Bots!!!

You knew the answer when you typed this: because quantitative analysis discounts the fundamental approach and is a threat to 90% of the industry.

Bingo Hank. Moreover, purely fundamental methods are typically founded on subjective notions of "value" but largely put the more important matter of managing risk to capital way behind in the equation.Even the best discretionary managers (Paul Tudor Jones most obviously) always stressed risk control first, opinion last.

All systematic investors have risk built in....far superior in the long run.

One can argue that index fund strategy is standard bearer for systematic trading that has delivered superior returns compared to other strategies

The fundamental investor is akin to a dinghy sailor adrift on an ocean of maths, buffeted by the winds of volatility but unable to tame or harness it. For a mathematician life is an endless search for vol...

Ever heard of the "quants" at Long Term Capital? Ever heard of Long Term Capital?? Yeah those PHD's did a fantastic job!!! LMAO!!!

https://evoeftimov.wordpress.com/2016/07/30/trading-and-math/

Hank it doesn't discount "fundamentals" - simply some (but only some) of the approaches focus on Market Mechanics instead of fundamentals. But that's only part of the story - it is a myth that markets and "fundamentals" are closely correlated - there is a lot of speculation and market making and just noise in the markets which is there so the markets can do something most of the time - not because there are changes in the "fundamentals"

I did not state that the approach discounts fundamentals. My comment refers to the approach of fundamental analysis.

Also, unless you are speaking with retail trader and interested in seeding, the comment like "show us statements" is out of place. Institutional funds are ranked on returns by several firms and displayed on their web sites.

Yesss Robert, nearly forgot those " masters of the universe ", good old times, anyway system is getting more fragile whatever massmovement and risktracking is trying to achieve in our industry !

The majority of the world wants to think the humans are better than machines at all things. I'll admit, I would not have let a machine raise any of my three children.

Read the following on fear, doubt and bias:

"The results of five studies show that seeing algorithms err makes

people less confident in them and less likely to choose them over

an inferior human forecaster. This effect was evident in two

distinct domains of judgment, including one in which the human

forecasters produced nearly twice as much error as the algorithm.

It arose regardless of whether the participant was choosing between

the algorithm and her own forecasts or between the algorithm

and the forecasts of a different participant. And it even arose

among the (vast majority of) participants who saw the algorithm

outperform"

Algorithm Aversion: People Erroneously Avoid Algorithms

After Seeing Them Err

by Berkeley J. Dietvorst, Joseph P. Simmons, and Cade Massey