Look beyond the algorithm: why investing needs a human touch
Algorithms run your Facebook newsfeed and Netflix recommendations, but how well do they work in the world of investment?
Algorithms have an important role to play in our lives – investing included – but it’s important to know their limitations. This was brought home to me recently when I decided I should wean myself off Facebook. I’m not leaving the social media platform completely; I want to keep my account because I like the function it performs of being a repository of distant friends’ contact details – a virtual black book. However, I am increasingly wary of the algorithms that drive what my newsfeed looks like. Facebook has the resources to employ the best minds in the world and its aim is to keep you interested and using it – to the extent that I wonder how much real choice we have in the matter. It is not just Facebook either. The Economist explored this topic in some detail recently in a piece entitled “How to devise the perfect recommendation algorithm”. It expands: “At last year’s consumer-electronics show in Las Vegas, Reed Hastings, the CEO of Netflix, set out an ambitious goal for serving...
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