Monday, February 6, 2017

"Silicon Valley Hedge Fund Takes On Wall Street With AI Trader"

From Bloomberg:

Sentient Technologies won't disclose its performance, but is being closely watched by the finance and artificial intelligence communities.
Babak Hodjat believes humans are too emotional for the stock market. So he's started one of the first hedge funds run completely by artificial intelligence.

"Humans have bias and sensitivities, conscious and unconscious," says Hodjat, a computer scientist who helped lay the groundwork for Apple's Siri. "It's well documented we humans make mistakes. For me, it's scarier to be relying on those human-based intuitions and justifications than relying on purely what the data and statistics are telling you."

Hodjat, with 21 patents to his name, is co-founder and top scientist of Sentient Technologies Inc., a startup that has spent nearly a decade—largely in secret—training an AI system that can scour billions of pieces of data, spot trends, adapt as it learns and make money trading stocks. The team of technology-industry vets is betting that software responsible for teaching computers to drive cars, beat the world's best poker players and translate languages will give their hedge fund an edge on Wall Street pros.

The walls of Sentient's San Francisco office are dotted with posters for robots-come-alive movies such as "Terminator." Inside a small windowless trading room, the only light emanates from computer screens and a virtual fire on a big-screen TV. Two guys are quietly monitoring the machine's trades—just in case the system needs to be shut down.

“If all hell breaks loose," Hodjat says, "there is a red button."

Sentient won't disclose its performance or many details about the technology, and the jury is out on the wisdom of handing off trading to a machine. While traditional hedge funds including Bridgewater Associates, Point72 and Renaissance Technologies have poured money into advanced technology, many use artificial intelligence to generate ideas—not to control their entire trading operations....MORE