Claire Gallagher, a quantitative analyst at Orbis Investments (Orbis), believes that humans will remain key to the investment processes of asset managers for the foreseeable future, despite technological advancements provided by artificial intelligence and machine learning.
Speaking at a briefing on Orbis’ investment approach, and it use of both fundamental analysis and quantitative tools in the management of its funds, Ms Gallagher argued that although technology could enhance the investment decisions of asset managers human input still remained essential. She spoke about not just the value humans provide that cannot be replicated by machines, but also the limitations with artificial intelligence and machine learning.
Explaining her outlook, she believes that there will always be a place for a human stock picker, and that they still have a place in deciding what machines need to know when assessing data, while providing context to investment choices.
Ms Gallagher said: “We all know that machines are very good at processing large amounts of data, and they do it in a very disciplined way but they are only as good as the data you put into them. If you put rubbish in, you get rubbish out.”
In an effort to clear the fog of uncertainty surrounding the role of artificial intelligence in investment decisions, Ms Gallagher outlined that it was important to understand what machines cannot do, alongside listing potential benefits.
Comparing the benefits of human input and machine input in investment decision processes, she added: “Computers are good at narrow problems, such as chess, where the rules are narrow and constant with a fixed number of outcomes. With financial markets, the rules can change through time, so you need to be more flexible. This is where computers are still struggling.”
Instead of seeing machines and human as a source of conflict, Ms Gallagher noted that Orbis is an active investment manager geared towards three concepts: which are its fundamental investment approach, its long-term outlook and contrarian position in the investment landscape.
She said: “We believe that the best contrarian investment decisions are made by individuals, but we need technology to implement our investment philosophy. Our investment process involves lots of independent decisions.”
Ms Gallagher believed there was an evergreen value to what humans could bring to investment processes which have a long-term perspective.
She said: “Humans are flexible, they know when there are exceptions and when things have perhaps changed. They are creative, and have good general knowledge and are better at abstract thinking. They are better at dealing with broader problems, and that for us as long-term investors remains very relevant. When you have a longer investment horizon the number of outcomes is potentially infinite.“
The best models, as a consequence, combined data with strategy.
Commenting on the company’s current position, Ms Gallagher added: “We have AI, but are still working on AGI, which is artificial general intelligence.”
This would not however affect her position, which is that humans are crucially important in interpreting any models where artificial intelligence is utilised. The imagination, flexibility and long-term outlook people provide is set to remain important to Orbis, and in Ms Gallaghers view, the wider investment world.
