We have seen many recent advancements in machine learning. IBM’s Watson beat top human champions in Jeopardy. Google’s AlphaGo defeated top human players in Go. Today, machine learning is no longer limited to corporations with big budgets. Cloud computing has lowered the barrier to entry for machine learning. Cloud computing can now provide the computing power required for machine learning that was previously out of reach for most.
While we have not reached the stage of science fiction, like creating machine intelligence like C3PO, it is possible to do a lot. Some popular uses of machine learning today include forecasting weather, filtering spam and predicting product demand. Those types of activities are within reach for most with today’s technology.
Just how accessible is machine learning today? To find out, I dedicated try out some popular machine learning applications and cloud services. I did two experiments. One model predicted whether people would be accepted or denied for a loan. (more…)
Today, one typically pays investment managers a percentage of assets under management. What if, instead, we pay investment managers for performance? That is the vision of startup Alpha Modus. Alpha Modus has developed new investment tools that leverage cognitive cloud capabilities from IBM Watson to help investment professionals beat the market. The experience of this almost two-year-old company exemplifies how one can rapidly realize business value using the cloud.
Alpha Modus was on stage at the IBM Interconnect 2016 opening keynote. The startup believes that we should pay investment professionals for performance, or alpha. What is alpha? Alpha measures investment performance relative to a market index. An investment with a positive alpha has outperformed the market.
Investment managers seek alpha but, over the past few decades, fewer and fewer have realized it. According to research by Larry Swedroe and Andrew Berkin in their book, “The Incredible Shrinking Alpha”, roughly 20% of active managers generated alpha 20 years ago. Today, however, only 2% achieve statistically significant alpha. Considering those statistics, the investment management industry is ripe for disruption. (more…)