Equity Valuation (AI Augmented Diligence using BayesDB)
- 1. (+ Diligence AI) DARPA PPAML July 28, 2017 Equity Valuation (AI Augmented Diligence using BayesDB) Kripa Rajshekhar (Metonymy Labs)
- 2. With thanks to DARPA and the MIT ProbComp Team In particular, the MIT team at PPAML’17: Feras Saad, Christina Curlette, Ulrich Schaechtle, Veronica Sara Weiner & Vikash Mansinghka
- 3. Traditional accounting misses most of the value in firms
- 4. www.metolabs.com Metonymy Labs: AI augmented diligence (#ADAI) can help
- 5. For references and data: http://pages.stern.nyu.edu/~adamodar/ CURRENT FUTURE? Valuation today trades the big picture for price benchmarking
- 6. Except at some Hedge Funds, Multivariate Normals rule valuation Source: Prof. Damodaran’s estimate of PE as of January 2017, http://pages.stern.nyu.edu/~adamodar/
- 7. But financial metrics are neither Normal nor linearly composable Source: NYSE data, Analyzed using BayesDB
- 8. A more principled way to relate 80+ variables from 1400+ firms? Source: NYSE data, Analyzed using BayesDB
- 9. A reasonable estimate of the joint probability distribution is key Source: NYSE data, Analyzed using BayesDB
- 10. Why? Correlation is not causation, it may not even model relation Source: NYSE data, Analyzed using BayesDB
- 11. Inconvenient Truth: Correlation often misses essential connections
- 12. Future: Intuitive and statistically grounded notions of connectedness
- 13. 2000-02 Dot Com Bubble Burst 2007-08 The Great Recession #ADAI can help The stakes are high, S&P 500 Index (1996-2016)
- 14. “It was inevitable that meaning would force its way back in” Jean-Pierre Dupuy www.metolabs.com Cause:#ADAI Tweet:@metolabs LinkedIn:kripar