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Fund Manager vs. Two (AI) Models
Yesterday, we explored a one-on-one scenario between Google's Gemini (AI) and a Fund Manager. Today, we introduce Microsoft’s (AI) model, Copilot, to compare and contrast it with Google’s (AI).

Results after 40 Weeks
While this is a fun and insightful “thought experiment,” it underscores an important point: (AI) is poised to become a crucial tool for making more informed decisions across a wide range of topics.

(AI) Model Variability
With numerous (AI) models to choose from, I’ve selected Google and Microsoft for a direct comparison. Although trained on different datasets, both models operate under the same instructions. Microsoft Copilot and Google Gemini offer unique strengths that can complement the skills of a human fund manager.



Skate.
 

it might be interesting to run this experiment for more than one year

but if you do so , would one use the same selections or give each a chance to change selections , and then accumulate the gains/losses

( to see if one is consistent or just lucky/unlucky )
 

Why a Buy-and-Hold Strategy Works
@divs4ever running this experiment for more than 12 months is possible but may not be very interesting to others, except perhaps @qldfrog.

Variations on this idea could be more engaging
Another approach is to select 10 or 20 positions and follow them for a year using a simple buy-and-hold strategy, with weekly reports. I could even use the positions currently being reported and backdate the buy to the start of the financial year or something similar.

Why a Buy-and-Hold Strategy?
In the article by Shane Oliver (hyperlink below), one of the mistakes highlighted is trying to time the markets.

Mistake #9: Trying to Time the Market
“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” - Peter Lynch, fund manager.

Without a tried and tested process, attempting to time the market, selling before falls and buying ahead of gains is very difficult. Many of the mistakes mentioned above come into play, making it a sure way to destroy wealth.

Conclusion
A buy-and-hold strategy aligns well with these advantages. By holding investments over the long term, you can avoid the pitfalls of market timing and benefit from the growth potential, compounding returns, and other advantages of investing. Remember, the key to successful investing is patience and a well-thought-out plan.

9 bad habits of ineffective investors: Common mistakes investors make

Many of the mistakes investors make are based on common sense rules of thumb that turn out to be wrong.
www.livewiremarkets.com

Skate.
 
i thought the experiment was about finding the best source of guidance ( for further research )

now sure the expert has had a great year ( so far ) , but maybe one or both AI engines could have learned from the previous year maybe added new selection parameters or data sources and become the new leader

buy and hold only works with good ( well-run ) companies ... look at AMP , IPL , WOW , ORG all stocks i held in 2011 ( i only hold a tiny portion of WOW of those 4 currently )

big caps implode , deflate and stumble just like small caps , buy and hold can be nice but you have to be ready to exit/reduce or accumulate as the opportunities arise .

plan ? , nah not me but i keep my trusty pocket calculator real close , sometimes a deal is just compelling

in 2011 i inherited 4 stocks , QAN ( turned into the flying piglet so sold the squealer years back ) , CSR ( taken over recently ) WOW (currently hold about 30% of the DRP shares accumulated in the last 12 years ) ... APE up a miserable 4X on my last top up price in March 2020 ( but i sold that batch @ $13.51 to help fund a different project 3 years later )

so 3 large cap. ( maybe even 'blue chip ' ) stocks in 2011 , and the hands down winner was the lone mid cap. ( not that i am complaining i did OK cash-wise ).

be watching and thinking .. for me ( BTW i had some cash/liquidity in early 2020 because i expected the banks to implode .. but a virus came along just to make me look clever .. well that is the official narrative ).
 
divs4ever said:
i thought the experiment was about finding the best source of guidance ( for further research )
Click to expand...

@divs4ever, it was a great idea from the start to use (AI) to compete with portfolio managers. However, it's important to understand that free (AI) models are essentially glorified search engines. While they are being used for trading, they are still subject to unpredictable market forces.

Machine Learning
Given the uncertainty around the practical use of free (AI) models, I turned to Machine Learning, using a traditional SuperTrend concept. My goal was to start trading a handful of large-cap stocks to take advantage of trading sizeable sums without significantly affecting the price and ensuring easy exits.

Here are the ASX companies I'm considering
I have a list of companies under evaluation, and to avoid being whipsawed out of positions, the strategy is designed to hold on tight over an extended period.



Skate.
 
in theory AI should improve ( or at least refine/filter redundant input )

good luck with the 20 , given the past 2 years of M&A activities i would think a couple of those would be in focus next year

RIO must nearly be trimmed down enough to look attractive to Glencore

TCL might look tempting to international pension funds

and given the current craze for data centres .. GMG might attract a predator

( i hold none of those three shares )

but all we can do is think ,research , and decide ( if to buy or not )
 
So, you put your trust in a indeterminate stock selection model that varies over time, using a set of input data that you have no idea about how recent/stale the data incorporates, according to rules you can't possibly discern.

Good luck!
LOL.
 
Richard Dale said:
So, you put your trust in a indeterminate stock selection model that varies over time according to rules you can't possibly comprehend.

Good luck! LOL.
Click to expand...
but it has been nicely successful in my case

and yes i often quote 'luck is my super-power '

i MIGHT wake up tomorrow morning and decide to put more cash into the consumer staples .. and THEN go looking for targets

and conversely i waited 3 years for an entry price into BPT before being successful , and i usually spend a week in researching a new ETF target

and yes i have had my share of train-wrecks , but you can only lose 100% of the investment cash whereas 400% 500% and over 10000% are possible on the upside ( over 10 years ) ( and they aren't always micro-caps either )
 
ALL = S&P/ASX 20
ANZ = S&P/ASX 20
BHP = S&P/ASX 20
CBA = S&P/ASX 20
CSL = S&P/ASX 20
FMG = S&P/ASX 20
GMG = S&P/ASX 20
MQG = S&P/ASX 20
RIO = S&P/ASX 20
TCL = S&P/ASX 20

COH = S&P/ASX 50
CPU = S&P/ASX 50
DXS = S&P/ASX 50
MPL = S&P/ASX 50
SHL = S&P/ASX 50
WDS = S&P/ASX 50

ALD = S&P/ASX 100
JBH = S&P/ASX 100
REA = S&P/ASX 100
REH = S&P/ASX 100

HVN = S&P/ASX 200
NSR = S&P/ASX 200

Seems pretty top-heavy to me.

You talk about "machine learning" versus AI - perhaps you could provide details about which ML algos you have used and which data sets you have used to train such models, and what sort of in-sampl and out-of-sample modelling/sequencing you are using.
 
divs4ever said:
but it has been nicely successful in my case

and yes i often quote 'luck is my super-power '
Click to expand...

There will always be a set of "lucky" traders in any defined market period.

The real holy grail is:

Over the long term, to increase your equity at a rate that significantly exceeds inflation with drawdowns that are demonstrably less than the broad market fluctuations.
 
@dis4ever my comment "So, you put your trust in a indeterminate stock selection model that varies over time, using a set of input data that you have no idea about how recent/stale the data incorporates, according to rules you can't possibly discern."

was directed at Skate, not at you!
 

If only you used your superpowers for good.

Skate.
 
Share, Learn, Grow
This is the very heart of the “Dump it Here” thread. We sometimes forget that this thread is an educational space, to help and encourage others to share their views. We all have some trading knowledge, and sharing it is invaluable.

The “Dump it here” thread is an opinion thread
Hearing various perspectives is especially valuable for beginners learning the ropes of trading. Constructive feedback and alternative suggestions are always welcome.

Instead of just picking apart ideas
Offering helpful alternatives can benefit everyone. This thread provides an opportunity to share knowledge and explain concepts that can be useful to others.

Skate.
 
the 'skill part ' of my style is looking at those gains ( when they happen ) and taking the cash off the table letting the profits run

it might not propel me into the billionaire class , but it sure takes the anguish out of big market falls ( as they sometimes do )

the Holy Grail ' for me ( yet to be achieved to my satisfaction ) is to have a useful number of 'free-rides ' that produce a useful income over the coming years

and resist draw-downs on the portfolio , expecting inflation will cause plenty of decay , without my help

my portfolio is fairly light ( $value wise ) in the top 20 as i decided i needed the extra growth the smaller caps. were likely to have
 
Maximising Trading Decisions with Charting
After making a post in the (WDS) thread, it allows me to make a few extra comments in this thread. Trading systems that chart buy and sell signals are invaluable tools for traders.

The chart for Woodside Energy Group Ltd (ASX:WDS) in the image is a great example. While these systems may not always be accurate, they provide crucial insights and guidance for making informed trading decisions.

Visual representations like this help traders quickly identify trends, patterns, and potential entry and exit points, making the complex world of trading more accessible and manageable.

Most traders want to know:
  1. What to Buy
  2. When to Buy
  3. When to Sell
System trading helps in all three.



Skate.
 
Richard Dale said:
Views on the perceived lack of a rational/proveable methodology/process are good.

You need to reflect on that.

PS - Don't post some AI-generated (or otherwise) motherhood statements responding to this.
Click to expand...

@Richard Dale making money in the markets is complex, and there are many ways to approach it. This is where we differ.

Skate.
 

I’ve been thinking
Can you review a few charts of selected companies over a short period to determine if the generated signals of a trading system have merit? While signals may not always be accurate, they provide valuable guidance for navigating the complexities of trading.


















Skate.
 


Faulty Thinking: Jumping to Conclusions
Jumping to conclusions can lead to poor decision-making, especially in trading. This type of thinking involves making assumptions that can lead to errors. It could be our worst enemy when trading. It’s better to respond thoughtfully rather than react impulsively. Below are three questions that start off easy and progressively get harder to answer.

Question 1: If there were 6 apples on a table and you took two away, how many would you have?

Question 2: A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? _____ cents

Question 3: Look at the graphic below. Which table is bigger, or are they the same size?



Skate.
 
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