Future Finance
One of Wall Street’s Most Popular Trading Strategies Is Now Failing
Machines that decide when to buy and sell are struggling to keep up with central banks and Donald Trump.
Illustration by Maria Chimishkyan
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Sometimes machines are only as smart—or dumb—as the humans who program them.
Hedge fund investors learned that the hard way last year when data-crunching computers that invest $220 billion based on historical price trends did worse than most other managers, robot or human. The losses were so bad that investors pulled billions of dollars out of an investment strategy that for years had, paradoxically, been regarded as a great way to protect portfolios from downside risks.