I was introduced to the concept of the Robot Investor by Dennis Mangan´s blog (Mangan's Miscellany: Beating the Market: An Occasional Series: The Robot ). (Dennis is one of those versatile intelligences you suspect from the books that they exist but never meet in real life. Maybe nowadays you have no opportunity to develope the long friendship required to discover the inner life of another human being.)
The Robot ranks stocks according to Price/Earnings or Book Value/Market Value or some indicator related to Graham's Value Theory. The Robot buys at the beginning of the year the first ten shares and sells them at year end. Then reviews the market and repeats the cycle.
It is simple and sensible. Graham's concept had been around for 70 years, and it has been demonstrated time after time. Buffett made his 64 billions applying it. The Microsoft internet site has a software that allows to rank shares according to any parameter. So why very intelligent people keeps trying to beat the market picking stocks through professional analysts's advice (which is in my personal experience very bad. Most recently my Bank organized a campaign to make us buy emerging market shares and to use its foreign exchange speculation facility. Those who acted on their advice, lost much money and very fast, and Fishman lost his large fortune on the Turkish lira devaluation.) or their own imperfect knowledge?
If the Robot beats the market, why no one uses it? Because we people are massively irrational and can go on being irrational even when knowing that we are irrational? Because we are herd of savannah animals, and we have never evolved an organ for rational thinking? Maybe rational thinking is bad for savannah survival, so we dont have it? Certainly the animal from which we are descended never played the stock market, so could not develope a instrument to swim safely in that environment.
Ergo, we can survive and succeed in the market only with the help of robot intelligence. The problem is that the robots of my acquaintaince are unintelligent. Another is that computer modelling of the market has been around for a long time but human stock pickers are still managing most portfolios.
And if my own chimp troupe is passionate about analysing and deconstructing stocks, how can I - a chimp more chimp than most - be a robot investor?