Stock price prediction

If we are really good at predicting(ML/DL) the stock market price. Then why is not everyone doing it, and why everyone is not a millionaire.

If we are really good at predicting(ML/DL) the stock market price. Then why is not everyone doing it, and why everyone is not a millionaire.

  1. We are not “really good” at predicting stock prices. :man_shrugging:
  2. If anyone does figure out how to predict well, they will not publish the method. :speak_no_evil:
  3. If the method is published, everyone will use it and the method will cease to work. :cry:

Predict the stock market price based on what?

You can’t use the past history of prices because that doesn’t have enough information in it to make good predictions.

THere is company called Renaissance tech who’s revenue are 63% from the stock price prediction.
Warren buffet makes 23% of it. This company has i guess 250 employees out which more than 200 are Phd scholar in mathematics and statistics. So we know how to predict stock price. Btw founder james simons he himself is mathematician.

The stock market is driven by fear and greed. Your model may tell you to invest at the moment with Covid19 but as Covid only appeared in October do you want to risk your money. Your model may tell you to sell but when the money is rolling in are you prepared to quit. There is a Canvas course on asset pricing from University of Chicago which shows with a stochastic element it replicates all the various economic cycles. AI methods work well in near term variation but then something happens and the model fails. Long term the stock market has grown massively against the government bond market but that long time may be in decades. Can you imagine a model predicting negative oil prices. You may remember the Davie Bowie - man who fell to earth - going into the stock market and building an empire to build his spaceship. The stock broker copied his investments but at the end he stopped because he made more in one day than his whole life. So humans generally do not maximize their opportunities they have a satisfied point.