Mix of Man and machine “best” for investors

Andreas Weigend, big data specialist and consultant to Alibaba and Goldman Sachs, says the current debate over the merits of passive management over active investment missed the point.

Speaking at FundForum in Berlin, Amazon's former chief scientist said couching discussions in oppositional terms was unhelpful, producing an environment in which active managers increasingly feel threatened by the rise of robo-advisors and exchange-traded funds, and investors' needs are not sufficiently met as a result.

"The debate is currently centred around whether humans or computers are better at investing. I'd suggest the answer is neither. Computers do some things better than people, and people do some things better than computers," he said. 

"Once you accept that, it becomes clear that the best approach combines the best elements of man and machine."

Weigend went on to invoke the centaur of Greek legend, a hybrid of horse and human. The metaphor was originally formulated by former chess world champion grandmaster Garry Kasparov, who was defeated in chess matches with IBM’s computer Deep Blue in the mid-90s. 

Kasparov suggested that in future, chess matches would evolve, and pit paired teams of humans and computers against each other. In short, he felt a combination of human and technological strengths would offer the best of both worlds.

"Technology can undoubtedly make finance more efficient, cost-effective and profitable, but on its own it isn't an answer - just as a solely human approach is no longer a practicable solution today," Weigend said.

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