Investing Using Machines

Introduction

The consensus from academic studies on investing suggest that very few people can beat the market on average. For this reason, many have chosen passive exchange traded funds (ETF) that broadly follow the market. During periods where smart investors beat the market, those gains are at risk because they revert to the market average.

Howard Marks, co-chairman at Oaktree Capital, published a memo called Investing Without People (pdf) where he discusses the reduced role of people in markets due to the rise of index funds and computer-driven trading.