One Button Capital Investment Thesis
Philosophy and reasoning behind AI-driven investments
Nothing is permanent. No things stay the same. Everything in nature changes with the passage of time.
Financial markets are not an exception but rather the most relevant example of this principle.
The market a year ago is not the same as it is now. Markets are kin to living organisms — dynamic, constantly evolving creatures, transforming and adapting every minute. In technical terms, markets are complex adaptive systems.
Such an environment is prone to surprise. Any changes in the system change the long-term dynamics and influence other parts of the system in a feedback loop. The behavior of agents in the system collectively influences the system, which in turn makes the agents adapt, which changes the system again. The whole system is chaos.
Whatever worked yesterday is not guaranteed to work today. Strategies are bound to obsolescence.
If you’re looking for an edge, you must accept the dynamics of the system. You must be willing to grow and adjust. You must embrace chaos.
Change is the only thing you can consistently bet on. And whoever can make bets effectively in an environment of chaos, noise, and uncertainty will ultimately win.
We use data, technology, and modern sciences to help us navigate in this environment. The conventional “best investment practices” and “rules of thumb” is something that we laugh at.
We research, test, prototype, validate, and then implement. One Button Capital is a lab where we run hundreds of experiments simultaneously. We don’t use something that doesn’t work.
Our team consists of technologists, scientists, and product managers, instead of traders and “investment advisors.” We believe in the scientific approach of cracking the market code.
Humans are predisposed to errors and biases; that’s why we don’t trust them to make investment decisions.
Machines over humans
Computerized technology is at the core of One Button Capital’s investment practices.
We don’t have human traders. We prefer machines to do all the work.
- Machines can process terabytes of data in seconds. Humans cannot.
- Machines are flawless in execution. Humans are prone to errors.
- Machines are systematic and goal-driven. Humans are emotional and biased.
- Humans need to sleep and eat. Machines are working 24/7.
Therefore, we trust machines to make better judgments and investment decisions than humans, which has been proven by the track record of One Button Capital.
And with the use of artificial intelligence (AI) and machine learning (ML) technology, it is possible to elevate the machine’s investment capabilities to the next level.
AI and machine learning
AI and big data technology capture financial markets. The economic revolution is happening right in front of our noses — AI is changing how you, your neighbor, and institutions make investments. The world of investing is never going to be the same.
Initially, AI was designed to simulate human thinking, but it ended up doing much better. AI shows immense problem-cracking capabilities when deployed to solve specific tasks (e.g. make money by trading Bitcoin). AI can process vast amounts of data like no human can and solve problems in seconds that would take a hundred men months to accomplish.
With constantly rising computing power levels, AI will become even more influential. The technology becomes more widespread, accessible, and easily implementable.
In the investment world, AI overcomes rule-based algorithms by utilizing a more creative and dynamic approach to solving problems.
The use of self-learning, deep learning, and neural networks adds a whole different level to AI.
Train a machine how to fish, and you’ll never be hungry.
With machine learning, you can develop a model, assign it a task, give it a dataset, and let it find the most effective way of achieving a goal. After some time, the machine will give you the output with the most optimal solution. Not only that, but the machine will also be able to adjust when given new data and constantly learn how to solve even more complex problems.
Combined with millions of datasets available, there are no limits on how you can apply this technology, especially in the financial world that contains zettabytes of market data.
Let’s be honest, by this point, it should be clear to everyone that markets are not efficient.
Not all assets are created equal. And not all assets are priced fairly given the risk-reward-liquidity parameters. Subsequently, not everyone has the tools and resources to assess the risk and reward of all assets available and give them a fair valuation.
Do you think a 60–40 portfolio is a good choice? Or perhaps you think that Bitcoin and Ethereum are the only two cryptos worth holding? Our AI knows the answer.
With the use of AI technology, One Button Capital aims to include only the best-performing assets in one’s basket and diversify the portfolio for minimum risk exposure.
Not all assets are created equal, and not all of them perform equally through the pace of time.
As time goes by, some assets are worth adding, some are worth reducing positions, and some removing altogether. The goal is to do it fast and effectively.
Dynamic allocation and ongoing portfolio management are vital instruments in constantly changing markets. Machine learning models deployed at One Button Capital monitor the markets 24/7 and help adjust the positions based on the new data.
Summary: the only constant is Change
- We’re getting smarter
- Technology is getting better
- Markets and portfolios adapt to changing conditions
We at One Button Capital employ a scientific and data-driven approach to investment and portfolio management by leveraging AI and machine learning technology.
Markets are chaotic structures where the only constant is change. Let the machines solve it.