Market turmoil: What’s going on?…

Everyone is asking the same question. I will try to sum it up as clear as possible. For a longer version, you can watch me live at 9.30am. We will be streaming live from Altınbaş University’s official Facebook account. Should you miss the broadcast, you can watch it later on both University’s and my Facebook and Instagram accounts.

You may remember that there has been an even sharper decline in stock exchanges than the one we faced two days ago during the recovery period following the financial crisis of 2008 in US stock market. The phone calls I received back then helped me realize two very important facts: countless people from had invested in US stock market, which made me see for the first time the investment appetite of Turkish people.

But the second fact was way more important: No one had any idea about the cause of this sharp decline. Even the highly experienced investors had tried to explain that particular phenomenon through “wave theories” or mathematical equations as they had not been able to fully understand what all was about. According to Richard Feynman, an American theoretical physicist, “If you can’t explain something in simple terms, you don’t understand it”. This was the exact same case back then.

“AI vs. Human Intelligence…”

To tell you the truth, a large volume of trading has been carried out by computers since the beginning of the 21stcentury. Installed with algorithms made from decades of retrospective, computers can now make buy/sell decisions by themselves. However, it may not be entirely right to call them “robots” as their decision-making process is managed by “artificial intelligence”, not by instructions from humans.

Although so many market actors continue with manual trading, all other things they are not capable of keep track all the time are monitored by computers. And the interesting thing is they make money in the end somehow, thanks to the computers. No human can guarantee the same result.

Today, in some world markets, at least 35-40% of daily volume is “algorithmic”, and it is expected to exceed 50% soon, forcing us to forget all we learnt or all we have been taught until today. It doesn’t take a fortune-teller to predict that Artificial Intelligence will beat the Human Intelligence.

In short, AI installed with billions of different algorithms is responsible for market movements which seem irrational to humans. Some of these algorithms are loaded with human reactions to different types of situations. That is why Artificial Intelligence will always be not just one but ten steps ahead of Human Intelligence and will continue to create infinitely many moves for infinitely many scenarios. Today it will help its owner make money, tomorrow who knows?

In today live broadcast, I will touch upon the details regarding the AI. For our international friends, I will provide you with a more detailed report soon.