Honda made a clever marketing campaign based on the old motorcycling insight that “Stupid hurts.” Like many keen observations, it’s applicable in many domains including trading and algorithm development. As a seasoned practitioner recently quipped to me: “The opposite of artificial intelligence is genuine stupidity.” If you’re trying to write smart systems, it may be worthwhile to spend some time reflecting on stupid.
I’ve recently had the opportunity to work with a brilliant mathematician. One of the first techniques he wanted to apply to our strategy development process is the mathematician’s old trick of inversion – instead of being clever and looking for smart algorithms, let’s see if we can happen across a dumb algorithm and invert it! This is a sound idea, but experience with algorithmic trading yields the unhappy result:
The opposite of stupid is not (necessarily) smart.