Marcos Lopez de Prado warns that most companies spending millions on machine-learning programs are doing it wrong"Eventually finance should be something relatively boring, just like going to the doctor. That is my hope: eventually we make finance more scientific and as a result it becomes less of a casino and more of a utility." - Marcos Lopez de Prado.
"There is tremendous hype and very few people have a track record," Mr Lopez de Prado said in a phone interview."It's not helpful." He should know. The machine-learning pioneer stands out in a field flooded with self-styled visionaries. He wrote the book on applying the technology to finance - literally - and has boasted senior roles at both Guggenheim Partners and Citadel.
His diagnosis: Fund managers are routinely throwing data at a robot without forming a theory. If a backtest suggests investors should snap up stocks on a given day of every month and sell them a number of days later, only a joined-up rationale for the trade will work in live markets. With two decades of experience channelling the power of machine-learning at the intersection of math and finance, he's now the go-to guy in this corner of the systematic world. The Journal of Portfolio Management rates him Quant of the Year for 2019. He's the best-read economics author on research network SSRN.
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