PT - JOURNAL ARTICLE AU - Gary Smith TI - Be Wary of Black-Box Trading Algorithms AID - 10.3905/joi.2019.1.090 DP - 2019 May 10 TA - The Journal of Investing PG - joi.2019.1.090 4099 - https://pm-research.com/content/early/2019/05/10/joi.2019.1.090.short 4100 - https://pm-research.com/content/early/2019/05/10/joi.2019.1.090.full AB - Black-box algorithms now account for nearly a third of all U. S. stock trades. It is a mistake to think that these algorithms possess superhuman intelligence. In reality, computers do not have the common sense and wisdom that humans have accumulated by living. Trading algorithms are particularly dangerous because they are so efficient at discovering statistical patterns—but so utterly useless in judging whether the discovered patterns are meaningful.TOPICS: Quantitative methods, risk management