AI Update: This Could Change Everything
I never thought in a million years that I’d be writing to you about artificial intelligence.
The truth is, I’m just not that kind of guy… or at least, I’ve never thought about myself that way.
My columns and the recommendations that go with ’em usually involve compelling stories, great analysis, and huge profit potential. Normally I thrive on discovering opportunities most investors can’t see, let alone imagine.
Only, in this case, it’s my imagination that IS the story.
The work I’m doing could literally change everything, at least when it comes to identifying big profit potential.
Before we go any farther, I owe you a huge THANK YOU.
As you know from prior updates, I’ve been pursuing the use of artificial intelligence to predict the stock markets for more than 30 years now and, frankly, it’s been one heckuva ride.
Commonly held wisdom is that it can’t be done.
I beg to differ.
In fact, saying that something is “impossible” or “has never been done” is like handing me an open invitation to go try it… a personality quirk that drove my Mom right up the proverbial wall when I was younger.
Today, my wife Noriko has taken over that responsibility with aplomb. She just smiles when I get a brain cramp and, on more than one occasion, has handed me a pen and paper at the dinner table, or at the theater, or when we’re out skiing.
She is also unquestionably supportive when I bolt out of bed for the office on an hour’s sleep to get something out of my head, which admittedly happens all too regularly around here!
Most people are stunned by the hours that I keep and the joke around the office is very accurately that if, “Keith’s up, everybody’s up.” It took years, for example, for my publisher, Mike Ward, to believe I actually sleep at all.
Turns out that’s not as unusual as you might think, though.
Scientists now know that many people – including yours truly – tend to do their best and most creative work when they’re dog-tired and at odd hours because their brains aren’t functioning as efficiently as when they’re rested.
Case in point, I’m actually writing this column at 2:30 a.m., with Led Zeppelin, Jimi Hendrix, and AC/DC cascading through the office sound system and a big pot of my favorite Italian coffee on full brew. That’s a story for another time, though, musical inclinations aside.
Anyway, people a whole lot smarter than me have determined that our brains are apparently less capable of filtering distractions and less able to remember existing connections between data we know well when – you have to read this twice – we can’t think clearly. It’s a pretty cool body of research, pun absolutely intended!
By the way, there’s a great article in Scientific American called “The Inspiration Paradox: Your Best Creative Time Is Not When You Think” if you’d like to read up on how the brain works, why this makes sense and why our brains are such an area of intense research at the moment.
My take is that being tired simply forces us to make new neural connections which, in turn, allows us to see existing data differently and to consider alternative possibilities. Both skills are critical when it comes to lining up huge profits.
That’s why I’ve spent more than a few early morning hours since my last update with my team refining the predictive math we’re using. Effectively, I want to make the computers as tired as I am so that they, too, can think clearly.
The results have been terrific, not to mention surprising.
For example, here’s a data run on the S&P 500 from Monday, November 25th for December 2nd, 2019 as well as the actual close recorded on December 2nd.
You’re not imagining things.
The formulas I’m using to do all this predicted a close of 3,116.55 and the actual close was 3,113.87… a mere 2.68 point difference on where my research suggested the markets would close a week in advance.
I couldn’t help but sit at my desk with my jaw on the floor. Truth be told I came into Monday’s open fully expecting to have to rework the math and figure out how the projections could have been so far off.
Keep in mind that this projection – for a 0.20% change – was made at a time when the markets were in rally mode and the headlines reflected new highs. Traders were looking for the runup to continue.
What they got instead was a gut-wrenching 27.11 point sell-off into the close that brought the S&P 500 within 2.68 points of the projection I’d laid out a week earlier. Why there was a massive selloff doesn’t really matter; that the math “worked” does.
Close enough “for government work” as the old saying goes, eh!
The other thing that stands out is something I call “% accuracy of predicted trend.” That’s an internal statistic we developed to let us know how the model is behaving over longer periods of time including the specific “end” point projection for any given date we run it.
This data point is routinely between 86% and 92% so the reading of 93% in this example is a new record and something I’m watching very closely as you might imagine. I’ve still got to understand why the accuracy jumped like it did because I can’t explain it just yet.
At the same time, we’ve been working “how” to trade information like this most effectively and profitably. I’m exploring longer term investment strategies and shorter term trading tactics alike.
You’d think those things are one and the same but both terms – “effective and profitably” – mean entirely different things from a financial perspective.
I don’t have any specific answers to this conundrum just yet either, but that’s only a matter of time. Much to my wife’s chagrin, it’s also probably quite a bit more coffee, too.
As always, I’m game!
I suspect you are, too.
Speaking of which, please take a moment to let me know how I’m doing by leaving a comment below.
- Are updates like this helpful?
- What information would you like to see from me going forward?
As always, thanks for reading along and for your continued encouragement.
Your support means the world to me because it lets me know that I’m no longer doing this on my own. Rather, that I’m operating in the company of like-minded and very savvy investors who want an edge.
A true Total Wealth Family.
Of course, unlocking millions in profit potential isn’t so bad either!
Until next time,