Retail Investors Have Been Burned, Should Startups Be Using AI To Get Them Back?
The post Retail Investors Have Been Burned, Should Startups Be Using AI To Get Them Back? appeared on BitcoinEthereumNews.com. Getty Getty Stock markets have always leaned in the favour of those with the most resources. While technically the same information is publicly available to all investors, from billion-dollar Wall Street hedge funds to enthusiasts in their basements, the reality isn’t quite as simple. It’s like those scenes from Hollywood where the high-powered, big-city law firm drops 17 truckloads of paper files on the young, just-passed-the-bar, Matt Damon-lookalike junior attorney. The information is there, but finding it is another thing entirely. Trying to beat the stock market has been exactly the same. Finding the relevant and valuable information amongst the sea of noise has taken vast amounts of time and money, which most retail investors don’t have. It’s why the average retail investor achieved an annual return of 4.25% in the 20 years to 2019, when the S&P 500 achieved a return of 6.06% over that same time. With the rapid expansion of AI investing capabilities, does this create an opportunity for startups to offer investment solutions that finally change this? The Wall Street advantage The difference between institutional investors and retail investors comes down to two main components. Data analysis and operations. It’s the hedge fund’s ability to throw huge amounts of cash at both of these areas that allow them to identify trends and investment opportunities faster and more frequently than the individual—and then act on them. The data analysis edge Data has been an edge for as long as stock markets have existed. The investors with the best, most relevant data and information are able to make more informed and, therefore, more likely accurate, decisions. It’s the reason why insider trading laws came into effect way back in 1934. Regulators realized that the availability of information was so valuable that it needed to be policed. It’s no…
The post Retail Investors Have Been Burned, Should Startups Be Using AI To Get Them Back? appeared on BitcoinEthereumNews.com.
Getty Getty Stock markets have always leaned in the favour of those with the most resources. While technically the same information is publicly available to all investors, from billion-dollar Wall Street hedge funds to enthusiasts in their basements, the reality isn’t quite as simple. It’s like those scenes from Hollywood where the high-powered, big-city law firm drops 17 truckloads of paper files on the young, just-passed-the-bar, Matt Damon-lookalike junior attorney. The information is there, but finding it is another thing entirely. Trying to beat the stock market has been exactly the same. Finding the relevant and valuable information amongst the sea of noise has taken vast amounts of time and money, which most retail investors don’t have. It’s why the average retail investor achieved an annual return of 4.25% in the 20 years to 2019, when the S&P 500 achieved a return of 6.06% over that same time. With the rapid expansion of AI investing capabilities, does this create an opportunity for startups to offer investment solutions that finally change this? The Wall Street advantage The difference between institutional investors and retail investors comes down to two main components. Data analysis and operations. It’s the hedge fund’s ability to throw huge amounts of cash at both of these areas that allow them to identify trends and investment opportunities faster and more frequently than the individual—and then act on them. The data analysis edge Data has been an edge for as long as stock markets have existed. The investors with the best, most relevant data and information are able to make more informed and, therefore, more likely accurate, decisions. It’s the reason why insider trading laws came into effect way back in 1934. Regulators realized that the availability of information was so valuable that it needed to be policed. It’s no…
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