Algorithm-based systems that manage investments on behalf of fund manager are getting more and more popular. One of the key advantages of these systems is that they help avoid human emotions like fear and greed, that my lead to bad decisions. But there are some disadvantages too. Raghavendra Rau, Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge says these systems can’t predict the vagaries of stock market: “A big issue is that they have no way of predicting turning points in markets. Human beings can’t do it, and if we can’t do it we can’t programme it effectively either.”
Read the full article [bbc.co.uk]
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