Most people are fascinated by money. And I'm no exception. And the 1 place where it seems extremely easy to make seems to be the equity markets or as is more popularly called, the stock markets. Yet ironically, most people seem to have lost money on the stock market.
And this started a chain of thoughts. Think about it. The stock market has given the best year on year returns of more than 10% as compared to most other indices over a 5 year period, across the last 100 years. And these are significantly higher than the returns on all other kinds of investments. And this begs the question ? Overall the market is giving the best possible positive returns, yet most people are losing, then who on earth is gaining ?
And in the answer lies the secret. A few people gain, and by virtue of simple arithmetic you can figure out that they gain hugely, bordering on the obnoxious. And now that we know this, the problem becomes rather simple. Can we figure out a way to join these special few.
Like all things in life there are only 3 ways to join a select group of people. The easiest way is to be born within the group over which we have no choice or the second to get married into the group. This choice too had many years ago passed by. And so now I was left with only the third option which was to beat them at their own game.
Unfortunately this is not easy. You need to be brilliant and a genius, which I sadly was not. And so would need a lot of help. I remember reading about an experiment a long time ago, where a few analysts made predictions about stocks in the market. And a monkey too was asked to create these predictions by randomly choosing stocks from the same set of stocks. In what seemed to be ridiculous, the results of the monkey and the analysts were similar.
And that's when a germ of an idea popped in. I thought of ourselves as the monkey. So we were already similar to the analysts. What if we had a little help. And when in need of help, I turn to computers. What if, we could figure out a way, in which the computer could help us in making predictions. We knew we could not know more, but what we could do was process data faster. A few thouand times faster.
And this idea was nicknamed APE. Reason being that an APE is the bigger version of the monkey we were trying to replicate. The one with the brute force. Its also a way of saying that we were trying to replicate (ape) a well known methodology more effectively.
However saying this would not be seen as professional. And so we made up an acronym for APE - Analytical and Predictive Engine. Sounds more scientific. And in reality this is what we hope our engine will do. We've managed to sell the concept and idea to a portfolio manager. Unfortunately the condition is that we'll have to prove a success rate of greater than 60%. And so we have our work cut out. Nevertheless, we hope to have the product out in the next 3 months. And whilst we're a little scared and anxious, we're very hopeful.
Look out for an update in April - May about what hapenned to the monkey who wanted to (be an) APE.
An interesting article on the stock market
http://www.wanderings.net/notebook/Main/HowStockMarketWorksMonkeysAndGoats
And in the answer lies the secret. A few people gain, and by virtue of simple arithmetic you can figure out that they gain hugely, bordering on the obnoxious. And now that we know this, the problem becomes rather simple. Can we figure out a way to join these special few.
Like all things in life there are only 3 ways to join a select group of people. The easiest way is to be born within the group over which we have no choice or the second to get married into the group. This choice too had many years ago passed by. And so now I was left with only the third option which was to beat them at their own game.
Unfortunately this is not easy. You need to be brilliant and a genius, which I sadly was not. And so would need a lot of help. I remember reading about an experiment a long time ago, where a few analysts made predictions about stocks in the market. And a monkey too was asked to create these predictions by randomly choosing stocks from the same set of stocks. In what seemed to be ridiculous, the results of the monkey and the analysts were similar.
And that's when a germ of an idea popped in. I thought of ourselves as the monkey. So we were already similar to the analysts. What if we had a little help. And when in need of help, I turn to computers. What if, we could figure out a way, in which the computer could help us in making predictions. We knew we could not know more, but what we could do was process data faster. A few thouand times faster.
And this idea was nicknamed APE. Reason being that an APE is the bigger version of the monkey we were trying to replicate. The one with the brute force. Its also a way of saying that we were trying to replicate (ape) a well known methodology more effectively.
However saying this would not be seen as professional. And so we made up an acronym for APE - Analytical and Predictive Engine. Sounds more scientific. And in reality this is what we hope our engine will do. We've managed to sell the concept and idea to a portfolio manager. Unfortunately the condition is that we'll have to prove a success rate of greater than 60%. And so we have our work cut out. Nevertheless, we hope to have the product out in the next 3 months. And whilst we're a little scared and anxious, we're very hopeful.
Look out for an update in April - May about what hapenned to the monkey who wanted to (be an) APE.
An interesting article on the stock market
http://www.wanderings.net/notebook/Main/HowStockMarketWorksMonkeysAndGoats
Still Waiting to know what happened to that monkey who wanted(to be)APE....:-)
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