Watch: Rats Trade Stock Better Than Seasoned Fund Managers – They Have Consistently Outperformed Their Human Counterparts

Alap Naik Desai

Fund managers have always been considered an evolved breed that has much better knowledge and sense about the financial markets. However, a bunch or rats are racing past them in making right decisions in the stock market., based in the Cayman Islands, claims it has installed rat trading systems of 300 to 1,000 rats for pension funds and international banks. What's surprising is that the company claims the rats have cracked the code of successful financial trading, and have been surpassing seasoned fund managers when it comes to taking right and correctly timed decisions involving shares and foreign exchange (Forex), reported Biz News.

Michael Marcovici, the man behind the bizarre concept, claims these rodents are being trained to make trading decisions for wealthy individuals, hedge funds, and other financial institutions. The company even offers interested parties a chance to own this unorthodox trading technique and assures it has "more business than we can supply".

Michael says his motivation behind the experiment was to find out what kind of highly paid jobs will eventually be replaced by machines — or, as was the case here, by rats. In this technology-driven age, many jobs do not mandatorily require human-to-human interaction. Though the rats are competing with jet-setting brokers, essentially their job is based on the ability to recognize patterns, while avoiding distractions.

Hence Michael set out to create a system that could be understood and operated by rats which applied to buying and selling of stocks and forex. Since he was aware that rats are partial to piano sounds, he devised a system that outputs sounds which correspond to real-time price data. Using Sonification Sandbox, a program provided by the School of Psychology at the Georgia Institute of Technology (the software is an ideal environment for transforming data into sound, a process known as sonification), Michael created sound clips which were linked to price movement.

When stock price went up, so did the pitch and vice versa. Depending on how long it took for the next trade to happen, Michael used different kinds of piano modulations. Using the traditional training methodology of reward or punishment, Michael successfully trained his team of rats to correctly predict patterns. After four weeks of practice, Michael had four highly capable share trading rodents whom he has fondly named Ms. Kleinworth, Ms. Coutts, Mr. Morgan, and Mr. Lehmann. Needless to say, their performance was comparable to that of the world's best fund managers. Their ability to recognize sound patterns generated by the market's ticker tape was incredible, claims Michael.

With the rodent team now swollen to 28 rats, Michael claims that the ability to deal correctly has become genetically ingrained, and now it takes even less time to make successful fund manager of these rats.

[Image Credit | Twin AVI, RatTraders]