C++ Neural Networks and Fuzzy Logic: Preface

Who Trades with Neural Networks?

There has been a great amount of interest on Wall Street for neural networks. Bradford Lewis runs two

Fidelity funds in part with the use of neural networks. Also, LBS Capital Management (Peoria, Illinois)

manages part of its portfolio with neural networks. According to Barron’s (February 27, 1995), LBS’s $150

million fund beat the averages by three percentage points a year since 1992. Each weekend, neural networks

are retrained with the latest technical and fundamental data including P/E ratios, earnings results and interest

rates. Another of LBS’s models has done worse than the S&P 500 for the past five years however. In the book

Virtual Trading, Jeffrey Katz states that most of the successful neural network systems are proprietary and not

publicly heard of. Clients who use neural networks usually don’t want anyone else to know what they are

doing, for fear of losing their competitive edge. Firms put in many person−years of engineering design with a

lot of CPU cycles to achieve practical and profitable results. Let’s look at the process: