The algorithm – built by the North Side tech firm StockSnips – is trained to read and process more than 50,000 media articles a day before picking stocks based solely on how companies are being talked about in the news.
Robots have advanced to the point where they can predict stock movements with a high degree of accuracy given their ability to analyse massive amounts of data and spot patterns that would be impossible for humans to decipher. "Markets are driven by sentiment," said Ravi Koka, CEO of StockSnips."It's not just whether the company met its numbers, or revenue and earnings. But it's also investor emotions that drive the prices.
"At the end of 2021, we saw that the models were selecting stocks that were shifting out of tech and growth sectors, and moving into particular stocks that were more in line with consumer staples, energy and some financial," Mr Koka said. "An extreme example of that is when Boeing had the big air crash and the stock tanked," he said."That didn't go away overnight even though Boeing put out a lot of stories about how they're addressing the aftermath." Boeing stock dropped after planes it manufactured crashed in Indonesia in 2018 and China in 2022.
"My focus is not so much on upside capture, but minimising drawdown and allocating to the appropriate areas that are not getting hit the hardest." "We have tested it the last couple of years, and the performance has been really, really good, especially on the downside protection," said Mr Li, owner of Kailasa Capital Management in the Strip District.