AlphaGo And The Future Of The Stock Market
Google’s AlphaGo, an artificial intelligence (AI) computer programme, once again made news in the game of Go last week by winning three straight games against the world’s top-ranked player, Ke Jie. Ke Jie even commented that AlphaGo plays “like a god of Go.”
AlphaGo first made headlines in March 2016 when it beat the highly-ranked Go player, Lee Sedol, in a five-game match.
With the March 2016 win and the recent victory over Ke Jie, AlphaGo reached a milestone for AI as many experts had previously seen the game of Go as too complex for computers to master.
AlphaGo’s most recent win also once again highlights the fast pace of the development of AI.
After the defeat of Ke Jie, the programme’s creator, DeepMind, announced that AlphaGo would retire from the game of Go. The research team behind AlphaGo would like to focus their attention on tackling some of the world’s most complex issues, such as “finding new cures for diseases, dramatically reducing energy consumption, or inventing revolutionary new materials.”
As an investor, I wonder if AlphaGo could also master the game of investing. After all, the data on listed companies are easily accessible. If AI programmes such as AlphaGo is to be deployed in the stock market, what would be the future for investors? How would a potential “god of the stock market” be used then?
AlphaGo Fund Management?
If highly-advanced proprietary AI is to be used by fund management firms, it would create a huge unfair advantage over common retail investors. Such technologies could easily be misused to manipulate the market as well.
If such a situation arises, there may be a need to write new regulations on the rules of engagement for AI in the stock market. We may also end up with two distinct types of stock markets; one for human investors, and one for the computers.
AlphaGo Open Source?
On the other hand, if the technology of AlphaGo would become open source, it means that anyone can potentially harness the ability of AlphaGo for their investments. If that happens, everyone would have the “power” to become the “god of the stock market.” But if everyone is a god, then no one would truly have an advantage over the others.
Thus, if this scenario becomes a reality, we may not see much changes in the stock market, except for how stock prices may become more efficient in general.
Final Foolish Tthoughts
I think AlphaGo has shown us that it is inevitable that the day will come when a computer will become the best investor in the world. The question is how should we be positioning our portfolios for such a future?