Disrupting the Prediction of Financial Markets with Arnav Sheth
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Disruption Interruption podcast host and veteran communications disruptor, Karla Jo Helms, interviews mathematician Arnav Sheth about how he is disrupting the prediction of financial markets.
On February 19, 2020, the stock market reached its peak before COVID-19 took its toll.¹ While there have been clear winners since the start of the pandemic, such as businesses in the online shopping, remote education, and telemedicine sectors, the market overall has experienced a significant drop.
Now, with the Federal Reserve’s highest rate hike in 28 years, continued tensions abroad, and supply chain issues affecting nearly every sector, investors are understandably wondering what is next to come.² Amidst all this doom and gloom is one disruptor who is looking to change how the prediction of financial markets takes place.
For Arnav Sheth, the love of math all began when he met a professor who showed him just how beautiful the subject could be. This disruptive moment put Sheth on the path he now traverses today as a data scientist, consultant, and formerly a tenured professor and teacher of mathematics at Concourse within MIT.
Today, Sheth is disrupting the prediction of financial markets using statistical and machine learning techniques. While this might sound like Sheth has the magic bullet for financial success, He has a way of reminding his audience that math is a slow and steady march forward.
Sheth speaks about how:
- Disruption for him has always been about trouble-making for good. By making waves in his industry and within academia, he has been able to disrupt the status quo.
- Agreeability is often cherished and even respected in the world of academics. In many cases, extremely agreeable yet highly incompetent people will ascend the ladder. A true disruptor is willing to shake things up amidst these norms.
- Disruption comes with failure. Not every attempt to disrupt the current way of things results in a win. The key is to keep on trying again and again.
- With the Federal government intervening to raise interest rates, the financial market is undergoing its own disruption. Savvy investors will pay careful attention without overreacting to market changes.
- Disruptors in the financial sector can often look like boring people, but they’re busy changing really tiny things within a large machine. It’s a slow process of working on one small cog, taking off the cog, and replacing it with a shiny new, better working, well oiled, smoother one. Slowly, cog by cog, the machine is dismantled and replaced.
- People have a misconception that machine learning is a sort of magic bullet. While humanity has computational power unlike any before, it’s not magic and retains limitations.
- Investors mustn’t impose their own views on the market. The markets are what they are, and they’re going to do what they’re going to do. Whether or not one thinks they should be doing something, they’re going to be doing it anyway. It’s better to accept what the markets are and where they’re going and what they’re doing rather than try to impose one’s own view onto them.
Quote of the show:
13:36 — “People had this belief that these mathematical models, these machine learning tools are going to predict everything. They’re going to change the world. They’re very powerful tools. We have computational power that we’ve never had before, but it’s not magic because of the human element. We cannot predict the way humans will behave in large groups.”
About Arnav Sheth:
Arnav Sheth is a researcher, data scientist, formerly tenured professor of finance, founder of a FinTech program, and former director of an MS in Finance program. Currently, Sheth teaches mathematics at MIT. As Principal at Gaji Analytics, he has consulted in the quantitative finance space for several years. Sheth also works with Minerva University, teaching strategic finance, and consulting in educational technology at Minerva Project.
In prior lives, Sheth was a tenured professor in finance at Saint Mary’s College; and an economist with Deloitte Tax, where he started work on the day Lehman crashed (September 15, 2008) and, as one of his friends put it, “broke the economy on his first day out in the real world.”
- Bradley, Chris and Stumpner, Peter. “The impact of COVID-19 on capital markets, one year in.” March 10, 2021, McKinsey & Company,https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-impact-of-covid-19-on-capital-markets-one-year-in.
- Vaugh, Harlan. “These Experts Predict the Worst Is Yet To Come in the Stock Market. Here’s Why — And How To Prepare.” June 17, 2022, Next Advisor; https://time.com/nextadvisor/investing/experts-predict-stock-market-2022/.
And lastly, if you’re a disruptor…
I would like to chat with Karla Jo about maximizing my Disruptive Thought Leadership — contact KJ Helms.
I’d like to learn about the ROI of Anti-PR — download this ROI eBook.
I would like to apply to be a guest on Disruption Interruption.
