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The Bot Brief Newsletter

POSTED 10/31/2021

"There is no force on earth more powerful than an idea whose time has come."       

- Victor Hugo

 

Bots in The News:Bot Index vs. S & P 500

Despite having four companies whose stock exceeded double-digit performances for the week, the Bot Index only exceeded the S & P 500 by approximately 38 basis points. The bots reached an all-time new high level at 373.63, up 1.71% for the week’s trading. With four additional holdings that gained over 5%, the level could have been even higher except for the continuing weakness in the Asian components and a pronounced decline in two defense-related companies.

Within the gainers the most significant mover was Tesla, whose fortunes were impacted by the announcement that Hertz indicated its intent to purchase 100,000 of the electric cars in the foreseeable future. That factor, plus the impending infrastructure spending on EV charging stations, led the price of Tesla up by a whopping 22.46%.

Following Tesla in the gainer column, was Accuray Inc. who increased 14.19%. Shares of the company have advanced over the past couple of weeks since management indicated that its guidance for fiscal year 2022 revenue was bumped up to $420-$427.

Immersion Corp. rose almost 14% following a report on the significant increase in its position within the portfolios of hedge funds. The current 24 holders are approaching the company’s all-time high exposure within 27 funds.

Other bot holdings that impacted the return of the Index included: NVIDIA Corp (+12.50% that Piper Sandler adjusted the price target on Nvidia to $260 from $225, and on Oct. 22, Summit Insights Group upgraded Nvidia to buy from sell), Brooks Automation (+7.25%), Google (+6.96%), and Faro Technologies 6.55%).

At the opposite end of the performance spectrum were four companies that declined by double digits. As noted, two defense companies, Lockheed Martin (-11.29%) and Northrup Grumman (-12.06%) contributed to the fact that the Bot Brief only exceeded the broad market by a narrow margin.

Oceaneering International fell 11.64% after it reported earnings (7 cent loss) and revenues of $467 million that failed to excite investors.

Cyberdyne, a Japanese company, fell 10.34% along with fellow Asian stock - Fanuc that declined 7.53%.

2020's Decade of Bot Performance

Not So Fast AI:

While the use of artificial intelligence and machine learning have enjoyed increasingly new applications, there is a growing understanding that we are still in the infancy of this new technology. There are still many obstacles to be overcome by AI before it can reach the potentials anticipated. In the October 2021 issue of the IEEE Spectrum, the leading article was entitled, “Why is AI so Dumb?”

The series of articles within the Spectrum looked at a variety of the positives and negatives of AI tools. Specifically, the authors cite the brittleness of visual recognition, embedded biases of programmers, catastrophic forgetfulness that substitutes old learnings with new experiences, inconsistent explanations of conclusions, lack of quantifying of uncertainties, lack of common sense and poor mathematical skills as problems that need to be overcome before AI can achieve its overall effectiveness.

 

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association, Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective views of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of material presented.