Investment Guide: First Global’s Shankar Sharma on impact of ML and AI on investing

In this episode of ‘Investment Guide’, Shankar Sharma, vice-chairman and Jt MD at First Global, shares his views on the impact of machine learning (ML) and artificial intelligence (AI) on investing.

How rules of investing game has changed?

Sharma said, “The rules of the games today are very different, earlier you could meet management, you could get some privilege access to data or information or get some real-world feel of things and be able to make decisions ahead of the curve. Here today the data is out there, it is publicly available and regulatorily companies are duty-bound to disclose everything to everybody."

"When you have easy availability of data what has changed? That means that you edge has gone, your edge of being able to understand it better and earlier than other people is no longer there. So, the only edge you as a fund manager have any more is the ability to process, make sense of that data and human beings are not capable of processing so much data.”

Talking about takeover by the machines, he said, “Proficient grandmaster armed with computers can beat practically anything. Again, remember everything will have its success rate, as a human being your success rate might be 10-20 percent in normal investing decisions. As a machine, you can easily push that to maybe 40-50 percent if you are really proficient as a fund manager and you have built a great system you can push it to as high as 60 percent that is a huge difference.”

Sharma added, “It is not a magic bullet, you need a proficient human being to be able to build a great machine learning system. Not all machine models are going to be equal, just as not all human beings are equal.

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