Recently thought on IBM's deployment on Watson for DBS and the cognitive programming led me lead to a thought that eventually computer will overtaking human being on doing asset allocation. Not sure IBM has already helping Wall Street in doing asset allocation based on real time information feedback
As a comparision, computer vs human in chess playing, as there are discrete steps involving millions of permutation, but in real life investing, there are enormous amount of data being present but human can choose the most important data to analyze and act accordingly, but computer is able to generate trade execution much faster than human being
What i can see from the trend is the profit margin using algo trading will diminished as more computer or algo is trying to grab the profits from the market, while the loser will be those retail player that bet on conventional trading methodology such as cut loss or chart pattern, but Watson coupled with cognitive programming will change this game forever as it is a machine that never tired, and never sleep and trying to find the best opportunities in the market.
But I believe there should be still a few more years to last for value investor, the reasoning is although Watson is intelligence, it won't be able to analyze things that is not presented to it yet, so investing in mid to long term kind of time frame will not be its strategy.
Perhaps the philosophy of value investing which is to invest long term prevent itself from falling into a battleground that it has no competitive advantages.
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