Breaking Barriers: Leveraging AI and Quantitative Strategies for Investment Success

Good evening, everyone!  

I’m thrilled to meet you all at Diamond Ridge Business Academy to explore the latest investment knowledge together. By gaining a deep understanding of market patterns and using AI trading tools, I hope to help everyone enhance their investment skills and achieve steady, long-term returns. I look forward to starting this meaningful and valuable learning journey with you all!

Last night, we dived into the investment trends of renewable and traditional energy, focusing on the characteristics and future prospects of both sectors. While traditional energy still dominates global energy consumption, governments worldwide are actively promoting carbon neutrality goals, accelerating the decline of the traditional energy industry. Investors are now turning their attention to the more promising renewable energy sector.  

Renewable energy industries like solar, wind and hydrogen energy have become global investment hotspots. This is not only due to strong government policy support but also because of rapid technological innovation and growing market demand, showcasing immense investment potential. At the same time, renewable energy tech companies are also catching the attention of capital markets.

However, the decline of traditional energy and real estate is only a glimpse of the broader downturn in traditional industries. Sectors like manufacturing and textiles are also under significant pressure from emerging technologies, forcing transformation and upgrades.  

Take manufacturing as an example, smart manufacturing driven by automation, digitalization and informatization, is showing clear advantages in improving production efficiency, product quality and resource utilization while reducing production costs. It is gradually replacing traditional manufacturing methods.  

It’s worth noting that the financial sector is also undergoing profound changes. Advanced AI and quantitative trading systems are steadily replacing traditional financial models. This, to some extent, explains the slower growth of traditional funds in recent years. Tonight, we’ll study the pros and cons of traditional investment methods to help you better seize wealth opportunities. Before we start, let’s briefly review today’s stock market performance.

Today, global stock markets showed complex and interconnected movements. The UK stock market saw a brief rise after opening but weakened overall. The FTSE 100 ended close to yesterday’s closing price, while the FTSE 250 saw a larger drop, reflecting the broader UK economic trend. Other major European stock markets also declined.  

The UK bond market continued its sharp decline, making the pound the weakest G10 currency today. This mirrored rising bond yields in the US and Europe, reflecting market concerns over inflation and cautious sentiment about the UK’s economic outlook.

US stocks market also fell after opening, with small-cap stocks dropping the most and tech stocks continuing to retreat. This was linked to strong US economic data from the previous day and rising bond yields. Shifts in expectations for the Federal Reserve’s future monetary policy reduced the likelihood of rate cuts, pushing bond yields higher. This impacted not only US stocks market but also global markets, leading to significant increases in European bond yields.  

Today’s continued pullback in tech stocks was mainly driven by fears over Trump’s exploration of using the International Emergency Economic Powers Act (IEEPA) to impose tariffs on imports. Strong economic data has heightened market concerns about inflation and this double impact has further intensified the pullback in tech stocks.

However, the tariff risk might just be the bears’ last outburst. As Trump’s inauguration approaches, market expectations for his actual policies will become clearer. The current bearish sentiment is largely based on uncertainty and potential negative impacts of Trump’s policies rather than their actual effects.  

I understand some of you may feel anxious during a broad market sell-off, but trust that policy impacts are temporary, while the long-term growth in tech value is the true investment trend. As Trump takes office and his policies unfold, this wave of bearish sentiment driven by "Trump policy" expectations will gradually fade. The market will return to rationality and tech stocks are likely to rebound. For those holding COIN, DJT and similar stocks, please continue to hold. I’ll provide real-time updates for trading guidance.

Exactly based on the judgment of market investment trends, let’s dive into another key question: how to effectively allocate funds in the market. Many investors, especially those with more capital, might prefer handing their funds to professional investment teams or purchasing various financial products. Taking the most common investment option, stocks as an example, investors often feel confused when choosing between stock funds and direct stock investments, unsure of which suits them better.  

On the surface, stock funds seem to offer investors a simple and stable option. However, if we take a closer look at how these funds are structured and operate, we’ll find that traditional stock funds might not be as efficient as directly investing in quality individual stocks for long-term growth.

First, let’s understand how traditional stock funds are structured. Fund management generally falls into two categories which is active and passive. Active funds rely on fund managers’ expertise to beat the market and deliver returns above the index through in-depth research and stock selection. In reality, though, most funds are passive, especially those tracking market indices like the S&P 500 or FTSE 100.  

These passive funds work in a simple and straightforward way. They build their portfolios by copying the weightings of the stocks in the index. Fund managers don’t actively pick or adjust stocks, nor do they care about the performance of these stocks, whether the valuation is reasonable or if the industry cycle is right. No matter how a stock performs, the fund buys it passively until the index components change.

This mechanism leads to an obvious issue: investors’ money might end up in underperforming or even poorly performing companies. Take the renewable energy sector as an example. While some traditional energy companies suffer from inefficiency or environmental policy impacts, causing sustained stock declines, they might still be part of certain fund portfolios. This “indiscriminate buying” approach means the fund portfolio includes not only industry leading quality companies but also some underperformers with bleak outlooks, dragging down the overall fund performance and reducing investors’ returns. This is a fundamental issue stock funds can’t resolve.

Of course, stock funds aren’t without merits. One clear advantage is that funds can limit investors from reckless trading, reducing the risk of emotional decisions. During major market fluctuations, some investors tend to act out of fear or greed, making frequent trades that lead to mounting losses. Funds’ “lock-in mechanism” helps minimize such emotional trading and maintain a steadier investment strategy.  

However, this restriction has downsides too. The passive purchasing mechanism might force investors to indirectly buy poorly performing or overvalued stocks. For instance, if an investor is bullish on the renewable energy sector and chooses a related index fund, the fund will likely include several top-performing companies in the industry’s growth phase but will inevitably also include some “laggards”, like those with outdated technology or poor management, dragging down the fund’s overall returns.

In contrast, the biggest advantage of direct stock investment lies in flexibility and proactivity. By deeply analyzing industry cycles or leveraging precise investment tools like quantitative trading systems, investors can enter or exit at the right time, optimizing returns and maximizing capital growth.  

For example, when the renewable energy sector enters a booming phase, directly investing in leading companies like Tesla offers greater profit potential than investing in a single renewable energy-themed fund. Tesla’s stock reflects not only its dominance in the EV market but also its strategic moves in battery tech, energy storage and AI, which add extra growth premiums. This allows investors to avoid overvalued, mediocre or even declining companies, effectively boosting the overall returns of their portfolio.

This difference can be further analyzed with specific data. Let's take Tesla as an example (as shown in the image above). From 2019 to 2022, Tesla's stock price increased by over 1200%, while many new energy themed funds during the same period had an annualized return rate of only 15%-20%. Clearly, while funds can provide the average industry return, they can't capture the extraordinary performance of star stocks like Tesla during the industry's boom period.

This gap is not only evident in the new energy sector but also applies to other industries. For example, in the tech sector, directly investing in companies like Nvidia, Apple, etc., tends to yield higher long-term returns compared to investing in funds that broadly cover the entire industry. Rather than relying on funds to track the overall market performance, the return potential of selecting quality individual stocks is undoubtedly more significant.

In addition, individual stock investment helps avoid the "industry drag" problem. Many traditional stock funds, because they must track indices, may hold stocks of companies from sunset industries or underperforming companies. These companies may experience weak performance during economic downturns, dragging down the overall performance of the fund. However, when investing in individual stocks, investors can actively choose high-growth, trend-driven companies, concentrate their funds and avoid these inefficient companies, thus achieving more stable returns.

Of course from another perspective, many investors choose to buy funds, often to pursue a solution that diversifies risk and provides automated management. Especially in today’s fast-paced world where information flows rapidly, investors hope to achieve diversified investments through funds to reduce the impact of market volatility on their wealth.

But the reality is that the vast majority of traditional funds have completely lost the "risk diversification" function and they can’t even be said to truly offer automated management. In today's digital economy, the speed and accuracy of information transmission far exceed the past. Traditional funds due to their rigid management models, often miss the fast reaction time of the market and fail to effectively respond to rapidly changing market conditions.

As times change, both financial markets and financial products should be updated using the most advanced tools and technologies to meet the fast-developing market demands. Traditional funds, as relatively outdated tools, have many design concepts and management methods that no longer meet today's investors’ needs for flexibility, efficiency and high returns.

In contrast to traditional funds, there are new types of quantitative funds. These funds make full use of cutting-edge technologies like artificial intelligence and big data algorithms to quickly turn market information into actionable investment decisions. These tech-driven quantitative funds not only significantly improve decision accuracy but also adjust investment strategies in real-time to respond to various market changes.

Quantitative trading systems can quickly analyze vast amounts of data to capture subtle market changes in a very short time, make precise decisions, avoid emotional investing and maximize investment returns. Compared to the “blind following” of traditional funds, quantitative funds can flexibly adjust investment portfolios and continuously optimize investment strategies thanks to the accuracy of their algorithmic models.

In fact, the advantages of quantitative trading systems are very clear. First, quantitative trading eliminates the interference of human emotions. Investors often make irrational decisions due to emotional fluctuations during market volatility, but quantitative systems avoid this problem by strictly following preset rules through scientific algorithms.

Second, quantitative trading systems are capable of processing data efficiently, capturing market information that has not been fully reflected in the market in a rapidly changing environment. This allows quantitative funds to adjust more flexibly during market fluctuations and seize profitable opportunities. Additionally, quantitative trading can perform large-scale historical data back testing to evaluate the effectiveness of investment strategies in different market conditions, further optimizing the decision-making process and improving returns.

As the market continues to develop, quantitative funds are gradually surpassing traditional funds and are set to become the mainstream force in the future investment field. The shortcomings of traditional funds in areas like information processing, strategy adjustments and risk control make them struggle when facing complex and changing markets. In contrast, the rise of quantitative funds offers a more scientific, systematic and efficient investment solution.

To further enhance investment performance and market adaptability, we will launch the beta test of the upgraded quantitative trading system this month. This system integrates the latest artificial intelligence and blockchain technologies, offering unprecedented data processing and real-time analysis capabilities. It not only collects real-time market information but can also process massive data quickly, forming precise investment decisions. Additionally, this system features a self-learning function that continuously optimizes and adjusts with each trade, improving its decision-making ability and accuracy.

Of course, no system’s improvement is complete without practical validation. Therefore, as the quantitative trading system is about to officially launch, we warmly invite all students to participate in this beta test and personally experience the investment transformation brought by this cutting-edge technology. This system will not only offer investors a brand-new investment experience but also provide more flexible and efficient options for investment decisions.

Through this public test, the system will gather a large amount of real trading data, continuously optimizing its practical capabilities and accuracy, laying a solid foundation for the official launch. As a thank you for everyone’s support of the Finance Academy, all participants in the public test will receive a mysterious investment gift package as a reward for their trust and participation.

This is not only an opportunity to learn about the principles of the quantitative trading system, but also a chance to gain deeper insight into its advantages and potential. We hope that after experiencing and familiarizing yourselves with this system, you will be more confident in applying quantitative trading concepts in real investments and actively consider investing in the company’s quantitative funds.

This is a practical example of technological innovation and a gateway to new investment opportunities. The progress of the quantitative trading system represents the future of financial technology, helping every investor make smarter and more accurate investment strategies. We look forward to moving forward on this quantitative trading journey with all of you, reaching a higher level of investment. Stay tuned!

That’s all for tonight’s session. We hope today’s content helps you handle market risks more calmly and rationally, allowing you to make smarter choices in your investment process. Investment always requires reasonable planning, which not only balances risk and return but also helps you stay focused on long-term goals during market fluctuations, avoiding emotional decisions.

Starting next week, our Chief Analyst, Mr. Charles Hanover, will bring more in-depth content. He will not only set up an investment plan for you before Trump’s presidency but also explain the “Asset Arbitrage Theory” in detail, helping students grasp the core strategies for cross-cycle asset allocation from a more professional perspective, providing scientific support for wealth growth. Let’s look forward to Mr. Charles Hanover’s exciting presentation!