Personal Wealth Management / Market Analysis

Fisher Investments’ Founder, Ken Fisher, on Whether AI Will Lead the Next Investment Wave

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher shares his thoughts on whether artificial intelligence will become a prominent tool to help investors gain an advantage. Over the course of his investing career—spanning more than half a century—Ken says he has seen investors pursue many technological fads in search of an investing edge—none of these fads have had a lasting impact on markets.

Like technological advancements of old, Ken says artificial intelligence is bound by the rules that create it. While ‘new’ tools can help decipher economic data in different ways, Ken believes artificial intelligence will always lack insight into the human element that ultimately drives markets. Though artificial intelligence may not fundamentally change the world of investing, Ken thinks it might help investors better understand potentially risky strategies and avoid some pitfalls.

Transcript

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A man appears on the screen wearing a navy suit, sitting in an office in front of a fireplace.

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Ken Fisher doing hand gestures time to time explaining.

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Ken Fisher: It increasingly it's popular to think that artificial intelligence will, be maybe is, the next big wave in dealing with markets, and other things too and in fact, in some things I think it will be, but not with markets. As long as I can remember in my professional career spent more than 50 years, people have looked for IT tech to provide leading edge capability to outdo others and sometimes there's breakthroughs that people have had that gave them a little burst in that for a little while.

Originally, when I was young, this was often referred to as the magical black box, the legendary black box that would let you beat the market, beat other people, etcetera. All that stuff tends to, if it ever works, which usually it doesn't fade pretty fast. This also feeds into the world of pure quants who put together formulas and the formulas feeding into a computer would lead them to beat the market or beat others or whatever. The fact is all of that, including now, where there's been increased chatter, if you will, and I think chatter is an apt phrase to apply to this app GPT, ChatGPT.

In terms of chatter, which is not an app that's got anything fundamentally wrong with it, it's great for some purposes, but it is like all those other ones were before relative to markets, rules based. The rules are inherent built into it and therefore, are certain forms of biases and therefore, stagnant at that level.

And the fact is, markets are never that. Markets are always changing, nonlinear and like a living thing and the non-living thing, rules based never catches up with the living thing. The living thing always morphs ahead of it will and someday it may be true that AI can become better than a human at thinking which overcomes the rules-based part. But as long as AI is limited in its capability, as it is today, to rules-based systems, it will never be able to actually do what is widely presumed. 

Now, it could do some things that could be good, relative to markets. It could simply become the thing you might use to impose wisdom upon yourself, so you don't do something screwy, you go to do X and it tells you never do X. That always fails 95% of the time. Don't do Y, it fails 100% of the time. But when you get down into that realm of the 60, 40% of the time, which is where markets live, it won't go there.

It might keep you from shooting yourself in the foot with something really stupid by rendering you wisdom based off of rules, but it won't go to that other part that helps you beat the market. Do better than everybody else, be smarter than smart, which has never really worked. Thank you very much for listening to me today.

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A series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of Fisher Investments or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.

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