Will this make much of a different to mid - large caps, which already have huge amounts of analysis and market participation pouring over every bit of newsflow?
I can definitely see the capability making information flow and digestion more efficient at the small end of the market.
However, I still question how "intelligent" these technologies are. To what extent do they evaluate the quality of the inputs? I reguarly fall off my chair when I read what gets put by some respected analysts and institutions into some equity research reports. And if this content is an input to the AI algorithm, isn't it a case of more GIGO?
So if we assume that AI turbocharges the efficiency of information flow and analysis of information, will this narrow the spread of valuation estimates by market commentators and analysts? If so, does this present an opportunity for the contrarian investor - someone with deep insights into a firm, its management, its market, the technology and competitors - who is prepared to take a different view to the consensus?
I'm not at all a naysayer on AI. I use it every day and I believe its impact it going to be transformational (Just listen to Matt Joass on the latest Baby Giants pod).
However, I think there is a real edge to be gained in "analysing the probabilities of the future for better forecasting, timeframes and behaviour" and perhaps if tools like AI make many market participants lazy, is it possible that the space for the contrarian investor opens further?
