The rise of Artificial Intelligence has led many to question the relevance of established quantitative investment models. They ask: in a world of self-learning algorithms, what value does a rules-based framework from 20 years ago hold? The answer is: more than ever. AI is not a replacement for a sound strategic architecture; it is the ultimate tool to enhance it. Our Markowitz-van Dijk (MvD) model is the essential operating system for rational investment; AI is the powerful application that runs on it, creating a symbiosis that is far greater than the sum of its parts.
The Origin: Solving for a World of Uneven Information
When I had the privilege of collaborating with the late Nobel Laureate Dr. Harry Markowitz, we were focused on a fundamental problem of our time. The investment world was rapidly globalizing. For the first time, capital was flowing meaningfully into Emerging and Frontier Markets. Yet, most financial models implicitly assumed a level playing field of information. They struggled to compare a data-rich US company with a firm in a market like Greece or Portugal, let alone one in a developing nation with shorter data histories and fewer analysts.
This “differential information” was the challenge. A lack of data doesn’t automatically mean a lack of opportunity. We designed the MvD framework to correct for these differences, creating a system that could logically assess opportunities across a varied global landscape without penalizing companies simply because they were less understood by the mainstream.
Our Philosophy: A Unified Framework for Finding Hidden Value
The MvD approach is fundamentally different from traditional stock-picking or the standard asset allocation offered by many private banks. We apply a unified framework that begins with bottom-up security selection. A quantitative analysis first filters the entire global universe into a manageable Long List.
This is where the key difference lies. Mainstream managers often stick to well-known markets and companies, not always because they are the best, but to minimize “career risk”—the fear of being questioned for choosing an unknown name that underperforms. Our model is agnostic. It forces us to look at every case on its own merits, meaning the “neglected” categories of the market get a far greater chance to be selected. The result is a top-down, coherent portfolio built from a truly global search for value.
The AI Symbiosis: Structure Meets Intelligence
So, why isn’t this model obsolete? Because people misunderstand the role of a strategic framework versus the role of raw analytical power. The MvD model provides the architectural discipline. AI provides the analytical horsepower to process the one thing traditional quant models choke on: vast, unstructured, qualitative data.
Think of our AI overlay as a powerful vacuum cleaner for information. It systematically inhales and structures all the qualitative data surrounding a company—news articles, sentiment analysis, management changes. Consider the stepping down of a legendary founder like Warren Buffett. How do you score that in a traditional quant model? You can’t. But it is undeniably a critical factor. Our AI-driven system can analyze such unique, non-linear events, turning them into a qualitative score that helps us transform our Long List into a highly refined Short List. It is the perfect symbiosis: the quant framework builds the house, and the AI furnishes it with intelligence.
The Ultimate Benefit: From Black Box to Brilliant Clarity
In an age of information overload and AI hype, the ultimate benefit for a family office or investor is not just performance, but clarity. Most people are not quants. By using AI to process and articulate the “why” behind our choices, we transform a complex process into readable, understandable reports. We can explain why one company was chosen over another. It is not a black box.
This transparency is critical. It allows our members and clients to learn from our process, to understand our mistakes, and to witness our improvements. This is something you cannot get from chasing a generic AI trading bot. It requires rigorous testing, a deep understanding of different AI models (we’ve found Gemini 2.5 Pro to be exceptionally effective for our needs)*, and a willingness to build a system that works for you. We not only use this system, but through our training programs, we also teach our clients how to build their own, fostering a community of empowered, knowledgeable investors.
Dr. Markowitz would surely have been fascinated by the AI revolution. As a true innovator, he would have embraced its potential not as a threat to his work, but as the next logical step in its evolution. Our integrated system is a testament to that spirit—a fusion of timeless principle and cutting-edge technology.
Notes:
(*) For those of you who want to know more about the choice of the right AI model and/or a great platform to work on such a choice we recommend the AI course offerings of One4All SME Training & Solutions and the AI platform http://monica.im respectively. For more information, do not hesitate to contact us.