I.B.M.'s Watson

For those out of the loop, The Grouch at Biz of Life has posted  the NOVA program on I.B.M.'s Watson, the IBM super computer entry that took on and beat the top Jeopardy contestants. The ability of the computer to parse sentences, figure out nuances, and weigh different answers at lightening speed amazed the nation as well as DIY Investor.

DIY Investor has mixed reactions. Market observers know that computers are trading the market, making split second decisions, and attempting to capture market anomalies. Studies of market inefficiencies have long found that some exist that happen so quickly that humans are too slow to exploit. Computers on the other hand, as mightily demonstrated by Watson, are fast!

But Watson missed some easy questions. For example, one question had to do with airports in a U.S. city and Watson's answer was Toronto. The audience laughed; but, in fact, Watson had little confidence in the answer . DIY Investor's feeling, though, is that, if computers trading the market  make a poor "judgement,"  you could get a "flash crash."  And the humans stand around dumbstruck - not sure of what happened.

Secondly, the University of Maryland and Columbia University are collaborating to add voice recognition and produce a physician's assistant service. To DIY Investor, these are the types of developments that are difficult to foresee but are the reason for investing. At any point in time, there are always many reasons of why we shouldn't invest. The negatives are clearly foreseen and reflected in prices.  The key is to understand that innovation will bring forth new products that we can only begin to imagine. DIY Investor watches the Jeopardy challenge and recalls playing "Pong" on a small black and white TV.

Now, if only the University of Maryland could  clone a Watson with a 3-point shot, we'd really be in business.