On Value Investing and AI

With the rise of growth investing, and a Fed that comes to the rescue any time there are any signs of trouble, is value investing dead or dying? Value investing is based upon the ability to discover undervalued companies through finding the difference between intrinsic value and market value and waiting for markets to correct. The traditional approach (Benjamin Graham) of value investing focused on margin of safety and quality of investment. Warren Buffett focused on competitive advantage (moats) to identify quality assets. In addition to discovering the attractive assets, value investing now includes:

  • ESG: How to include social responsibility as a variable in determining quality?
  • Across multiple asset classes: How to identify value across different asset classes?
  • Reviewing structural dynamics: How do the economic structures, supply chains, technology adoption, geopolitical environment, and other macro-economic variables have on value?
  • Behavioral: How do behavioral variables factor into value investing?
  • Signals: How to capture and use new and exciting alpha signals?

This leads us to what can be described as the deep value investing. Applying deep learning to discover the fundamentals of value creation and then aligning them with the extended signals is where the future is. With AIPOST you can discover how to?