Artificial Intelligence & Neural Nets – Sorting out Truth from Fraud
Posted on October 24, 2015 by Martin Armstrong
QUESTION: Mr. Armstrong, it seems many people are starting to pretend they have artificial intelligence systems and neural nets. It seems that they are using these terms very loosely. Can you explain the real difference? Everyone I have spoken to says you are the father of AI in finance.
Thank you for all you contribute
Cheers
CW
ANSWER: Yes, 99% of what people pretend is Artificial Intelligence is nothing but an Expert System, which amounts to a look-up table. An Expert System is simply a list of, let’s say, diseases with their symptoms. You ask questions and it looks up predefined conclusions and says – wow, you have this disease. There is nothing to it. Real markets are nonlinear and the process by which they move appears to be random on the surface and that causes tremendous problems in modeling for if you cannot see the hidden patterns, you cannot achieve
Real Artificial Intelligence is something that learns and analyzes on its own to create its own conclusion. The countless claims of using AI to forecast markets can be distinguished rather easily from rule-based systems. You can take a chart, calculate the cycles, and then project the potential future pattern. Looks nice, but that is just making a calculation that can be done with a pocket calculator. There is nothing original in this process.
Then we have claims of using neural nets to predict the future. They can predict words and what you are looking for in Google or Apple’s Siri. Yet these are fairly rudimentary and far from the complexity of predicting the world economy. Neural Nets have outperformed subjective analysis like fundamentals. Nevertheless, attempts to forecast the future of markets has a dismal success rate of far less than 50% if not 33%. They have been flat models attempting to forecast a single market.
The problem with forecasting is human bias. This is the number one problem as to why forecasts fail. Take the goldbugs, they will never admit they were wrong even though gold declined for 19 years and this current decline is headed into a 5 year decline. They make excuses that are endless and will never revise their thought process. This is the human error caused by bias.
Then the next greatest failure in forecasting is attempting to predict the outcome of a single market in total isolation. Everything is connected. If you cannot grasp that concept then you are waiting in line to lose your shirt, pants, house, wife, kids, and the dog.
So how do we circumvent these two major problems? Devoted investigations, exploration of knowledge, and how it is attained in relation to the information process boils down to data processing in all systems of all kinds, regardless of whether we are talking about a human, animal, or machine based knowledge acquisition. True AI must acquire knowledge, remember that knowledge, and deploy it in the future without predetermined rules (e.g. if interest rates rise sell stocks) and without human bias. That creates an in-your-face confrontation with people clinging to their biases swearing you are evil and wrong.
The true scope of the subject spans the entire range of interests from classical problems in the philosophy of the mind and psychology into issues in cognitive psychology and sociobiology. This involves the actual mental capabilities of a particular species. Ideas that are related to the Artificial Intelligence field and computer science reveal, not so much the answer of how to create AI, but how to distinguish what is NOT AI.
The primary emphasis is traditionally placed upon theoretical, conceptual, and epistemological aspects of acquiring knowledge. Then we turn to reasoning which many expect will emerge from that data set. This introduces a very fine line, which distinguishes problems that are empirical, experimental, and methodological over time. We need to employ imagination, but it must be tempered and controlled within reality. Otherwise, we can or cannot achieve our aspirations.
There are many aspects to Artificial Intelligence that distinguish both input and output. The output must reach something that, at the very least, matches the human ability to reason without the expert system structure of a predetermined result. Then the input must be broad enough to cope with humans in order to communicate. So there must be an ability to determine what you are feeding into the system as information to acquire knowledge and experience in order to comprehend the result reached. To achieve this, interaction must be comprehensible and that also requires introducing language to be able to communicate but the system must understand what words really mean.
You cannot accomplish these tasks with a simple downloadable program to pretend that you are employing Artificial Intelligence or have a program that makes billions of calculations and call that AI. These are concepts that by no means are easy tasks to create in programming code, no less comprehend. It has taken me my whole life to develop what we have achieved and there is nothing like this. You cannot even create a random number generator for in programming there is the simple fact that it will become too repetitive and thus unable to learn.
To accomplish real Artificial Intelligence, it was possible ONLY because I have the skill set as a programmer and the knowledge base of a trader. Without such a combination, that list of accomplishments becomes impossible and cannot be brought into focus. Programming is understanding how to read and write in many respects. That does not mean you can write a book on how it feels to give birth if you have never gone through such a process. The programming is the skill, but then whatever field you may be in provides the knowledge and experience that can then be captured in code.
This entry was posted in Q&A, Socrates, Technology, Uncategorized and tagged AI, Artificial Intelligence, Neural Networks, Socrates by Martin Armstrong. Bookmark the permalink.
Posted on October 24, 2015 by Martin Armstrong
QUESTION: Mr. Armstrong, it seems many people are starting to pretend they have artificial intelligence systems and neural nets. It seems that they are using these terms very loosely. Can you explain the real difference? Everyone I have spoken to says you are the father of AI in finance.
Thank you for all you contribute
Cheers
CW
ANSWER: Yes, 99% of what people pretend is Artificial Intelligence is nothing but an Expert System, which amounts to a look-up table. An Expert System is simply a list of, let’s say, diseases with their symptoms. You ask questions and it looks up predefined conclusions and says – wow, you have this disease. There is nothing to it. Real markets are nonlinear and the process by which they move appears to be random on the surface and that causes tremendous problems in modeling for if you cannot see the hidden patterns, you cannot achieve
Real Artificial Intelligence is something that learns and analyzes on its own to create its own conclusion. The countless claims of using AI to forecast markets can be distinguished rather easily from rule-based systems. You can take a chart, calculate the cycles, and then project the potential future pattern. Looks nice, but that is just making a calculation that can be done with a pocket calculator. There is nothing original in this process.
Then we have claims of using neural nets to predict the future. They can predict words and what you are looking for in Google or Apple’s Siri. Yet these are fairly rudimentary and far from the complexity of predicting the world economy. Neural Nets have outperformed subjective analysis like fundamentals. Nevertheless, attempts to forecast the future of markets has a dismal success rate of far less than 50% if not 33%. They have been flat models attempting to forecast a single market.
The problem with forecasting is human bias. This is the number one problem as to why forecasts fail. Take the goldbugs, they will never admit they were wrong even though gold declined for 19 years and this current decline is headed into a 5 year decline. They make excuses that are endless and will never revise their thought process. This is the human error caused by bias.
Then the next greatest failure in forecasting is attempting to predict the outcome of a single market in total isolation. Everything is connected. If you cannot grasp that concept then you are waiting in line to lose your shirt, pants, house, wife, kids, and the dog.
So how do we circumvent these two major problems? Devoted investigations, exploration of knowledge, and how it is attained in relation to the information process boils down to data processing in all systems of all kinds, regardless of whether we are talking about a human, animal, or machine based knowledge acquisition. True AI must acquire knowledge, remember that knowledge, and deploy it in the future without predetermined rules (e.g. if interest rates rise sell stocks) and without human bias. That creates an in-your-face confrontation with people clinging to their biases swearing you are evil and wrong.
The true scope of the subject spans the entire range of interests from classical problems in the philosophy of the mind and psychology into issues in cognitive psychology and sociobiology. This involves the actual mental capabilities of a particular species. Ideas that are related to the Artificial Intelligence field and computer science reveal, not so much the answer of how to create AI, but how to distinguish what is NOT AI.
The primary emphasis is traditionally placed upon theoretical, conceptual, and epistemological aspects of acquiring knowledge. Then we turn to reasoning which many expect will emerge from that data set. This introduces a very fine line, which distinguishes problems that are empirical, experimental, and methodological over time. We need to employ imagination, but it must be tempered and controlled within reality. Otherwise, we can or cannot achieve our aspirations.
There are many aspects to Artificial Intelligence that distinguish both input and output. The output must reach something that, at the very least, matches the human ability to reason without the expert system structure of a predetermined result. Then the input must be broad enough to cope with humans in order to communicate. So there must be an ability to determine what you are feeding into the system as information to acquire knowledge and experience in order to comprehend the result reached. To achieve this, interaction must be comprehensible and that also requires introducing language to be able to communicate but the system must understand what words really mean.
You cannot accomplish these tasks with a simple downloadable program to pretend that you are employing Artificial Intelligence or have a program that makes billions of calculations and call that AI. These are concepts that by no means are easy tasks to create in programming code, no less comprehend. It has taken me my whole life to develop what we have achieved and there is nothing like this. You cannot even create a random number generator for in programming there is the simple fact that it will become too repetitive and thus unable to learn.
To accomplish real Artificial Intelligence, it was possible ONLY because I have the skill set as a programmer and the knowledge base of a trader. Without such a combination, that list of accomplishments becomes impossible and cannot be brought into focus. Programming is understanding how to read and write in many respects. That does not mean you can write a book on how it feels to give birth if you have never gone through such a process. The programming is the skill, but then whatever field you may be in provides the knowledge and experience that can then be captured in code.
This entry was posted in Q&A, Socrates, Technology, Uncategorized and tagged AI, Artificial Intelligence, Neural Networks, Socrates by Martin Armstrong. Bookmark the permalink.
Today at 5:11 pm by Rocky
» Sudanese advisor criticizes Kuwaiti analyzes regarding the development road project
Today at 2:21 pm by Rocky
» Al-Mandalawi stresses the need to strengthen economic and trade cooperation between Iraq and Poland
Today at 2:04 pm by Rocky
» Power maneuvers: America provides defensive weapons to Kurdistan in exchange for withholding from Ba
Today at 10:26 am by Rocky
» Kuwait is drilling an oil well near Umm Qasr, towards Iraqi territory
Today at 10:24 am by Rocky
» In the document... the first Iraqi ministry identifies the obstacles to changing the new official wo
Today at 10:22 am by Rocky
» Italian Institute: Iraq is stuck in its own crises, including Baghdad’s efforts to undermine the “au
Today at 10:21 am by Rocky
» The head of the Integrity Commission announces the holding of an international Interpol conference i
Today at 10:18 am by Rocky
» Planning: Iraqi companies are not efficient in conducting the population census
Today at 10:14 am by Rocky
» utube MM&C 4/24/24 Support - USA- Turkey - Timing- Currency Value - Tabled
Today at 8:08 am by Rocky
» MM&C 4/25/24 National Bank of Iraq goes live with Temenos core banking and payments
Today at 8:06 am by Rocky
» A banking official indicates a "danger" to Iraq by depriving more than half of its banks of dollars
Today at 7:55 am by Rocky
» With the participation of the Association of Private Banks, investment opportunities are on the tabl
Today at 7:45 am by Rocky
» Within a month... an Iranian border crossing recorded a noticeable increase in exports of goods to I
Today at 7:44 am by Rocky
» The Association of Private Banks appreciates the efforts of the government and the Central Bank to c
Today at 7:43 am by Rocky
» Al-Maliki's coalition presents a third candidate for the position of governor of Diyala
Today at 6:57 am by Rocky
» Arab gathering: The Kirkuk problem is getting complicated and the Sudanese must intervene
Today at 6:56 am by Rocky
» Next week.. a Kurdish delegation will visit Baghdad to meet with the Minister of Finance
Today at 6:54 am by Rocky
» Under the pretext of salaries... Al-Party refrains from handing over port revenues to Baghdad
Today at 6:53 am by Rocky
» Association of Banks: For the first time, we are witnessing a clear targeting of depriving half of t
Today at 6:51 am by Rocky
» Parliament does not know the reason for the delay in sending the 2024 budget schedules: Voting takes
Today at 6:49 am by Rocky
» Applicants for the 2024 Hajj are demanding that the Central Bank secure the dollar for them through
Today at 5:09 am by Rocky
» Governmental and private banks will showcase their services tomorrow during Financial Inclusion Week
Today at 5:08 am by Rocky
» Iraq's oil exports rise despite OPEC+ cuts
Today at 5:06 am by Rocky
» A study explodes a "surprise"... Iraq is among the countries that export oil to "Israel": How is the
Today at 5:04 am by Rocky
» Al-Araji emphasizes working to strengthen national identity
Today at 5:02 am by Rocky
» Al-Sudani visits Saudi Arabia to participate in the World Economic Forum in Riyadh
Today at 5:01 am by Rocky
» Iraq is talking about producing one million additional liters of gasoline
Today at 4:59 am by Rocky
» The Council of Ministers approves the implementation of the Baghdad Metro project
Today at 4:56 am by Rocky
» Minister of Commerce: We formed a joint economic committee with Türkiye
Today at 4:55 am by Rocky
» Resources: Government measures have contributed to improving the water situation in Iraq
Today at 4:53 am by Rocky
» Parliamentary Finance: Baghdad will continue to send salaries to the region’s employees until settle
Today at 4:51 am by Rocky
» A parliamentarian describes the corruption of Iraqi ports as “ghouls” and reveals the involvement of
Today at 4:49 am by Rocky
» Obelisk Hour: Basra is the subject of political conflict and ambiguity over the fate of the funds al
Today at 4:48 am by Rocky
» Turkmen leader: An agreement on the local government of Kirkuk is near
Today at 4:45 am by Rocky
» Anbar calls for the operation of its factories despite financial obstacles
Today at 4:44 am by Rocky
» Turki: The crisis of the Presidency of Parliament prompted the Sunnis to amend the Council’s interna
Today at 4:43 am by Rocky
» The Agriculture Committee confirms the existence of Iraqi-Turkish-Iranian discussions on water
Today at 4:42 am by Rocky
» Resources diagnose the challenges facing the water file in Iraq
Today at 4:38 am by Rocky
» Parliament pledges to the Interior Ministry: We will transfer money to buy weapons from citizens
Today at 4:33 am by Rocky
» Al-Issawi is the closest.. Parliament sets the date for deciding the choice of the new president
Today at 4:31 am by Rocky
» Deputy: Iraq's investments have risen and need a comprehensive review of previous years
Today at 4:30 am by Rocky
» Iraqis consume 7 billion eggs annually and import about $900 million
Today at 4:28 am by Rocky
» The Iranian role complicates attempts at open cooperation between Iraq and Turkey. Turkey is trying
Today at 4:26 am by Rocky
» Move in Iran to obtain $242 billion from Iraq in compensation for the eight-year war
Today at 4:25 am by Rocky
» 12 decisions from the Council of Ministers regarding the Baghdad Metro and Najaf-Karbala train proje
Today at 4:23 am by Rocky
» Sudanese Advisor: The path to development has begun... the Baka and the militias “we silence them wi
Today at 4:21 am by Rocky
» Not from Kurdistan.. How did Iraq become a source of oil for “Israeli tanks”?
Today at 4:19 am by Rocky
» Parliamentary Agriculture criticizes the Sudanese and Erdogan agreement: Türkiye will control water
Today at 4:16 am by Rocky
» The Iraqi government issues new decisions
Yesterday at 2:35 pm by Rocky
» The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss?
Yesterday at 2:33 pm by Rocky
» The Council of Ministers takes 12 decisions for the Baghdad Metro and the Najaf-Karbala train
Yesterday at 2:32 pm by Rocky
» utube MM&C 4/23/24 Iraqi Dinar - IQD Update - Development Road Project - Saviour of Global Banking
Yesterday at 10:18 am by Rocky
» Kidney from pig transplanted into deathly ill New Jersey woman — and begins working almost immediat
Yesterday at 10:15 am by Bama Diva
» The most difficult option.. Warnings of the danger of floating the Iraqi dinar without achieving an
Yesterday at 9:48 am by Rocky
» Trade from the “Economic Committee” with Türkiye: It will overcome all obstacles facing the traders
Yesterday at 9:46 am by Rocky
» Washington's hope for stable relations with Baghdad clashes with Iraqi parties' rejection of the Ame
Yesterday at 9:41 am by Rocky
» Karim Badr: Development is America’s will to kill silk
Yesterday at 9:36 am by Rocky
» Oil: Opening of a new port for liquid gas for vehicles in Baghdad
Yesterday at 9:33 am by Rocky
» A media advisor warns of corruption in a draft law on the Parliament’s agenda
Yesterday at 9:21 am by Rocky
» Economist: There is serious work to lift US sanctions on Iraqi banks
Yesterday at 9:16 am by Rocky
» Will the agreements signed with the US Treasury reflect positively on the exchange rates?
Yesterday at 7:52 am by Rocky
» Iraq continues its quest to join the World Trade Organization
Yesterday at 7:51 am by Rocky
» Iraq completes the completion of the files for the initial offer of goods and services to join the W
Yesterday at 7:50 am by Rocky
» Economist: Travelers' dollars are leaking into the parallel market...and this is what the Central Ba
Yesterday at 7:32 am by Rocky
» President of the Federal Court: It is not permissible to force anyone to join any party, and the pol
Yesterday at 7:30 am by Rocky
» The Council of Ministers holds its session headed by Al-Sudani
Yesterday at 7:27 am by Rocky
» America weakens Baghdad...and increases Kurdistan's military capabilities
Yesterday at 7:26 am by Rocky
» The Iraqi government plans to build 10,000 schools throughout the country
Yesterday at 7:23 am by Rocky
» American threats close the Iraqi Stock Exchange at a loss
Yesterday at 7:21 am by Rocky
» Increase in external transfers at the Central Bank
Yesterday at 7:20 am by Rocky
» Al-Maliki calls on Britain to cancel restrictions on the entry of its companies into Iraq
Yesterday at 7:18 am by Rocky
» Planning and the European Union are discussing signing a number of agreements in the development, en
Yesterday at 7:16 am by Rocky
» Parliament talks about the mechanism for recovering smuggled funds and hints at the next stage
Yesterday at 7:13 am by Rocky
» Interior Ministry: The number of completed national cards reached 37 million cards
Yesterday at 7:06 am by Rocky
» Amnesty International: Violations of freedom and human rights continue in Iraq and the Kurdistan Reg
Yesterday at 7:04 am by Rocky
» Parliamentary Oil: The government is proceeding with the decision to raise the price of improved gas
Yesterday at 7:03 am by Rocky
» A parliamentary committee in Basra to investigate violations of the port company and the local gover
Yesterday at 7:00 am by Rocky
» Revealing the 10 most important American exports to Iraq
Yesterday at 5:31 am by Rocky
» A noticeable increase in the rate of Iraq's import of Chinese cooling devices
Yesterday at 5:30 am by Rocky
» Prime Minister: Working on projects without completing the infrastructure is a waste of money
Yesterday at 5:28 am by Rocky
» Iraq.. Extending the deadline for registration procedures on plots of land
Yesterday at 5:27 am by Rocky
» What is the main purpose of conducting the population census in Iraq?
Yesterday at 5:25 am by Rocky
» A plan to transform Iraq from a barren land to green with 5 million trees
Yesterday at 5:24 am by Rocky
» The Housing Fund announces the acceptance of more than 11 thousand loans through the Ur platform
Yesterday at 5:23 am by Rocky
» The Bank of Baghdad is moving to increase its capital to 400 billion dinars
Yesterday at 5:20 am by Rocky
» The electronic payment system will soon be adopted on Iraqi buses
Yesterday at 5:19 am by Rocky
» “It threatens our interests and destroys our economy.” An Iraqi project “irritates” the Kuwaiti stre
Yesterday at 5:18 am by Rocky
» Warning from the Central Bank about “misuse of electronic payment cards”
Yesterday at 5:17 am by Rocky
» Iraq and the Sultanate of Oman are discussing sending capacities through the Gulf countries
Yesterday at 5:16 am by Rocky
» The fact that a decision was issued to deport Syrian workers from Iraq
Yesterday at 5:14 am by Rocky
» Rice comes first... America exports 10 foodstuffs worth more than 350 million dollars to Iraq
Yesterday at 5:14 am by Rocky
» A sixth licensing round for gas exploration
Yesterday at 5:12 am by Rocky
» Baghdad is preparing to host the 50th session of the Arab Labor Conference
Yesterday at 5:11 am by Rocky
» Scientific symposium on the future vision of the tripartite budget
Yesterday at 5:09 am by Rocky
» Five conversion power stations enter service in Najaf
Yesterday at 5:08 am by Rocky
» Planning: Conduct a population census next November
Yesterday at 5:07 am by Rocky
» Experts: Spreading misleading information harms development and investment
Yesterday at 5:03 am by Rocky
» Economists call for tightening money laundering laws and port controls
Yesterday at 5:02 am by Rocky