A Barron’s article offers an interview with David W. Harding, who founded Winton Capital in 1997 and has grown the fund company to nearly $27 billion in assets in 8 offices around the world “by deploying high-powered computers to crunch data and pick up potential trading signals and ascertain patters in markets.”
In the interview, Harding “eagerly discussed artificial intelligence,” the article says, which he believes is “overhyped.” Here are some highlights:
The idea that advanced mathematical modeling allows a user to “feed in lots of data about financial markets, and then it tells you what is going to happen, is for the birds,” according to Harding.
Winton uses computing power to look for relationships among many factors including Fed announcements, interest rate changes, company values and performance, and volatility.
The article explains that Harding “applies statistics and technology to provide some degree of certainty to markets that are inherently uncertain.” By contrast, he quipped, Warren Buffett’s investing prowess comes from his “knowing everything about everything.”
Harding is drawn to momentum investing in part because of his educational background in natural sciences and theoretical physics—and his observation of “the success of empiricism over theory.” In the aftermath of the 2016 Brexit vote, the article reports, momentum investing was profitable for Winton.
“People like ourselves and our fellow travelers don’t look at individual situations,” Harding said in the interview. “We look at patterns across time and across markets.”