Flyberry manages what you might call a micro-hedge fund, soon to be on the order of $1 million, though it could be a lot more than that (see below). The firm uses its “global intelligence system” to gather information from hundreds of sources—such as sensor networks, weather patterns, earthquake detectors, government sites, news sites, blogs, and social media—and develops models of how markets react to various events. Then, based on those insights, the team makes trades in commodity futures, market futures, and other common types of trades.
Bridgewate Associates explores the potential of a hybrid of the Big Data tools, which sift through troves of medical literature, and logic tools to identify likely chains of inference — what humans see as logical explanations for the “why” of things. The approach is also a step in the direction of classic artificial intelligence, which relied on knowledge rules and relationships, to create so-called expert systems. The blend combines elements of what Dr. Ferrucci termed “my 30-year journey in A.I.” At Bridgewater, Dr. Ferrucci sees a similar path to modeling the economy and markets. “Their approach to investment,” he wrote in his e-mail, “is based on a fundamental understanding of how the global ‘economic machine’ works.” Its models, he added, are “informed by but not blindly driven by the data.” The opportunity, Dr. Ferrucci wrote, is to build “predictive systems that fit perfectly with my interests. How cool is it to imagine a machine that can combine deductive and inductive processes to develop, apply, refine and explain a fundamental economic theory?”