Software Will Replace Your Financial Advisor
As a data scientist, I find it hard to believe that anyone would trust their financial portfolio to an advisor who doesn’t understand the basics of statistics and probability. Yet, how many investors do you know who blindly trust their advisor or financial planner? How many of those advisors are even qualified to give advice? How many of them have spent countless hours learning about finance and economics? Do any of them understand how to calculate the Sharpe ratio on a risk/return matrix? Do any of them know what a Monte Carlo simulation is or what it means when they see one in Excel? The answer is probably no.
In my opinion, if you want to learn something new then it needs to be fun and engaging. If not, then why bother learning at all when there are so many other things competing for your attention (e.g., Netflix)? That is why I created this article series titled “How Data Science Can Help You Build A Better Financial Portfolio” because I think everyone should learn something new every day!
- Showing how important probability theory is when making decisions
- Explaining how important time-series analysis can be when analyzing historical data (e.g., stock prices)
- Showing how important regression analysis can be when modeling future results (e.g., returns)
- Using Python code snippets throughout each article so readers can easily follow along with the examples
- Explaining some basic concepts behind Python programming — such as functions — so readers who have never programmed before can still follow along with the examples
Before getting started, I want to address any hesitation you might have about data science, or a computer/machine, making financial decisions for you. Could you even tell the difference between a machine making a financial decision and a human? How about the difference between a machine writing a blog post versus a human? My guess is probably not. In fact, everything prior to this paragraph was written by artificial intelligence (AI). This article was simply a fun experiment using some of the most sophisticated pre-trained AI models (i.e. DALLE and GPT-3) currently available. If you want to know what the hell I’m talking about, head over to another recent article where I explain how AI helped me build a climate change meme generator.
~ The Data Generalist
Data Science Career Advisor
PS: I don’t think software replaces your financial advisor anytime soon. It will simply automate more of their job and push them into providing other advisory services.
PPS: The image in this article was generated by Dalle