For reference, this question has come up in multiple conversations and webinars in June 2020. For reference, the stock market since the dip in March has gone up significantly. Anybody who bought into the stock market in April would have made some good returns. Our AI model “Midas” was not recommending stocks since December of 2019; so we were not in stocks throughout the December to June period.
My clients still made 30% for the calendar year as of the end of June 2020. But the question keeps coming up; if your AI model is that smart, shouldn’t it have recommended stocks? I tried to answer the question here; but it keeps coming up.
The AI model looks at various parameters to predict return and more importantly risk. Leaving the “math” aside; even if the return projections are high; the model will appropriately present smaller positions if the risk projections are also high. In the process it will leave “money” on the table.
What is the right thing to do at a black-jack table; when you are holding a 18 in your hands. Do you hold or ask for an additional card? Sure; you can take the risk and ask for another card; but probability-wise should you?
If you hold and the next card that the dealer throws is indeed a 3; how will you feel? How will you react for the next hand, when you are back at 18?
Going back to the AI model “Midas”. It is not “emotional”. It does not day-trade; the average number of trades a month are 4-5. It is engineered to reduce “risk”. If that does not work for you; there are other AI engines that you can leverage.
“Midas” is also not infallible. There are periods of economic structural adjustments when the economy as a whole is a little uncertain. Hence stocks, bonds and gold all tend to fluctuate for a while. This happened in 2018 and will happen again. If you are looking for a trading model that makes money every month; you are in the wrong place.
