🎧 AI Hype & Reality in Investment Management
A reality check
Hi this is George. As an ex-financial markets pro, I love (re)thinking about investment management, and of course, I’ve got a podcast for that, Investology. You may also know me from the Investorama YouTube channel, where I separate investment facts from financial fiction, with clips from movies and series. My day job is to produce podcasts for smart B2B brands.
This post is based on my Investology conversation with Richard Saldanha. Listen to the episode on every podcast platform, or watch it on YouTube.
Aren’t we all AI so-called experts these days on social media?
To stay true to my critical thinking approach, I though I needed to speak with someone with actual expertise and experience in the field through his studies and professional life: Dr Richard Saldanha
Ex Quant Hedge Fund manager
Doctorate (DPhil) in graph theory and multivariate statistics from the University of Oxford
Fellow and Chartered Statistician (CStat) of the Royal Statistical Society
Science Council Chartered Scientist (CSci)
Fellow and Advanced Practitioner in Artificial Intelligence of the Institute of Science and Technology – FIScT(AI).
AI for Control Problems Project at The Alan Turing Institute
Teaches at Queen Mary University of London
If I had just said, He’s the real deal, without listing those, it wouldn’t have the same impact, wouldn’t it?
A few highlights from our conversation
There’s no AI (but it’s ok to use the term AI)
I'm gonna make the bold statement that I don't believe that artificial intelligence exists at this precise moment in time. It's a beautiful generator of seemingly coherent language in context.
Ok, this should be obvious; it’s not intelligence. There’s no Ghost in the Shell (great movie though; I’d say it’s superior to the better known Akira). I knew that. You knew that. But I feel it’s easy to forget it because we call it AI, and Chatbots feel intelligent when they provide answers. We had to start with this reminder.
Nevertheless, we agreed that we’d still talk about AI for the rest of the interview because “we all need to play the game.”
Balancing Optimism & Skepticism
I don't know why we don't celebrate what we've built from a machine learning perspective because we have truly fantastic automated systems, but it doesn't have to be artificial intelligence. At the end of the day, we are still dealing with our most reliable type of computing, binary computing, zeros and ones.
Although Richard calls AI for what it really is, it doesn’t make him negative on the industry and its potential beneficial applications. We discuss the potential in investment management and other fields, such as medecine. But the old data science adage remainns true:
Garbage in garbage out is as true now as it always was. So you really want the correct corpus . Also you want to have some guardrails around the output.
Democratization of AI
We discussed the DeepSeek effect, and that’s one of the exciting developments of AI. It’s become more accessible than we previously thought.
Are these large language models the preserve of everyone, or are they just for the big firms?
I think they are potentially for everyone. We are exploring the limits of what is doable as it were. And I think at a grassroots level, it is still expensive; you probably need a few million dollars to develop a reasonable, small language model for finance.
Now, how reliable that is, and whether you wanted to actually release that into the wild is another matter. But if you were looking to fundraise, or if you wanted to sort of show people a prototype, then why not?
What about Quantum?
Now at a quantum level, I don't know. If we get quantum computing working, will we even understand the answers that are being sort of given to us?
After a grounding conversation on the current state of AI, it was worth opening it up to further possibilities... Q day anyone?
We covered a lot more in the conversation, from fundamental stuff to personal stuff (Dr. Saldanha’s chess habit) and it’s a new style of video edit, more animated, as we’re moving from a ‘podcast’ to a ‘YouTube video that you can also listen to’.
I will also release a second episode where we dig into Richard’s hedge fund past and quantitative finance in the age of “what we call AI”.
I’ve also been interviewing startup founders who innovate with AI in the investment space; you can access the individual interviews here. I’m planning to pull my findings together in one or a series of articles.
Stay tuned!
Listen to the episode on every podcast platform, or watch it on YouTube.
More information:
Oxquant (Richard’s consultancy)
Related episodes:
Jim Simons, Renaissance Technologies & The Quant Revolution | Greg Zuckerman
Quant Investing & the Quest for Alpha | Nicolas Rabener - FactorResearch
My Investing & Investment Management channels
Investorama - Separating Investment Facts from Financial Fiction (YouTube)
Investology - Re-Think Investment Management (YouTube)
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