By Michael Maiello – Yale University’s Bryan T. Kelly, Chicago Booth’s Dacheng Xiu, and Booth PhD candidate Shihao Gu investigated 30,000 individual stocks that traded between 1957 and 2016, examining hundreds of possibly predictive signals using several techniques of machine learning, a form of artificial intelligence.
They conclude that ML had significant advantages over conventional analysis in this challenging task.
ML uses statistical techniques to give computers abilities that mimic and sometimes exceed human learning. The idea is that computers will be able to build on solutions to previous problems to eventually tackle issues they weren’t explicitly programmed to take on.
“At the broadest level, we find that machine learning offers an improved description of asset price behavior relative to traditional methods,” the researchers write, suggesting that ML could become the engine of effective portfolio management, able to predict asset-price movements better than human managers.
Of almost 100 characteristics the researchers investigated, the most successful predictors were price trends, liquidity, and volatility. more>
By Annie Lowrey – Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.
Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration.
The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.
In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal.
Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone. more>
Posted in Banking, Business, CONGRESS WATCH, Economic development, Economy, History, Leadership, Regulations
Tagged Banking reform, Capital, Financial crisis, Government, Regulations, Stock buyback, United States
Gridlock: Why Global Cooperation is Failing when We Need It Most, Authors: Thomas Hale, David Held, Kevin Young.
By David Held – The crisis of contemporary democracy has become a major subject of political commentary. But the symptoms of this crisis, the vote for Brexit and Trump, among other things, were not foreseen. Nor were the underlying causes of this new constellation of politics.
The virtuous circle between deepening interdependence and expanding global governance could not last because it set in motion trends that ultimately undermined its effectiveness.
There are four reasons for this or four pathways to gridlock: rising multipolarity, harder problems, institutional inertia, and institutional fragmentation. Each pathway can be thought of as a growing trend that embodies a specific mix of causal mechanisms.
To manage the global economy, reign in global finance, or confront other global challenges, we must cooperate. But many of our tools for global policy making are breaking down or prove inadequate – chiefly, state-to-state negotiations over treaties and international institutions – at a time when our fates are acutely interwoven.
The result is a dangerous drift in global politics punctuated by surges of violence and the desperate movement of peoples looking for stability and security. more>
Posted in Banking, Book review, Broadband, Business, Economic development, Economy, Education, Energy & emissions, Healthcare, History, Leadership, Media, Net, Science, Technology
Tagged Banking reform, Capital, Congress Watch, Crisis, Globalization, Government, Leadership, Super regions, Technology