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marthabear said :

>>To my knowledge, computers don't learn anything, yet. At the machine level, they are preprogrammed to understand the difference between on and off. All programming, no matter its complexity, is a list of instructions to turn certain switches on and others off, in various combinations. That's it. Beautifully simple, isn't it? Black or white, no gray. A computer will never be able to replicate the subtlety of human thought, because we do see infinite shades of gray, and all the colors of the rainbow besides<<

At the machine level, you are quite right. Just a lot of on and off switches. But the proliferation of graphical digitized images should prove that these switches can represent all the shades of gray needed for most purposes, and hues of colors besides.

But I was referring to Neural Networks, one of the fields of investigation in Artificial Intelligence. I have only the vaguest notion of how it really works but the little that I gleaned indicated that the computers memory was organized into units which represented neurons in a physical brain. The interconnections between these virtual neurons could be set up and reinforced by repeated and varying stimuli ... a primitive type of "learning". The actual resulting configuration of neuronic pathways induced in the network would be the "program" of the network. The original programmer could not predict what this would be.

The example I remember is of a network that was shown thousands ( maybe millions ? ) of digitized images of people and told whether the person was male or female.
At the end of the "training" period, the program had a high rate of success in guessing the sex of people in new images shown to it.

Some of the programs that the "quants" use in stock selection is neural networks stuff. I am not aware of any noted success. But computers don't forget ( unless you pull the plug ) and they can keep on "learning".

Maybe human stock picking will become a lost art, like tape reading. We will be investing in the stock-picking program of our choice.

Just a Halloween thought,
Renato


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