In further evidence robot domination may yet be in our future, a study has shown robot stock analysts outperform their human counterparts, leading to better investments.
There has been a fair amount of hand-wringing about what role robots will play in the future, and whether mankind will be able to control a true artificial intelligence. World domination aside, the economic possibilities and threats robots pose are just beginning to be understood. While many have believed it would largely be physical jobs, such as manufacturing, that would be taken over by robots, recent studies have shown that high-paying, white collar jobs are also at risk.
Now a study by Indiana University professors Braiden Coleman, Kenneth J. Merkley and Joseph Pacelli has demonstrated that robots even make better stock analysts than humans.
“First, Robo-Analysts collectively produce a more balanced distribution of buy, hold, and sell recommendations than do human analysts, which suggests that they are less subject to behavioral biases and conflicts of interest,” reads the study abstract. “Second, consistent with automation facilitating a greater scale of research production, Robo-Analysts revise their reports more frequently than human analysts and also adopt different production processes. Their revisions rely less on earnings announcements, and more on the large, volumes of data released in firms’ annual reports. Third, Robo-Analysts’ reports exhibit weaker short-window return reactions, suggesting that investors do not trade on their signals. Importantly, portfolios formed based on the buy recommendations of Robo-Analysts appear to outperform those of human analysts, suggesting that their buy calls are more profitable. Overall, our results suggest that Robo-Analysts are a valuable, alternative information intermediary to traditional sell-side analysts.”
The study is a fascinating read on the potential of robots to help revolutionize another industry, and especially one that many may not think of as a candidate for robot takeover.