Nikkei P/E ratio analysis by fund manager Naoshi Okumura, who uses financial engineering!

Do you know Naoshi Okumura?

After completing a master’s program in artificial intelligence, he studied financial trading using mathematical models at Nikko Securities’ Institute of Investment Engineering, learned from Dr. William Sharpe, the creator of the Sharpe ratio, and he now runs an investment advisory firm that primarily provides guidance to institutional investors, while also being involved in operation as a fund manager for a certain fund.

In the first video, “Naoshi Okumura Discusses Why AI Cannot Win in the Market,” he addresses the question of whether AI can be applied to investments, noting that while AI can surpass human intellect in chess, go, and shogi, in investing where there is an enormous amount of information to cover, it cannot be said to function very effectively.

It is a very interesting topic for those who are interested in investment activities and AI.

In the second video, he explains one of his analytical methods in financial engineering, the PER (price-earnings ratio, i.e., how many times earnings the stock is bought for) and discusses the stock price.

According to him, the PER can be regarded as a sentiment indicator—the mood of investors to buy—and the relationship between PER and stock prices is very deep.

Here, as shown in the figure below, a comparison is made between the Nikkei 225 index price from December 2018 onward and the trend of the Nikkei’s PER.

Source of the graph below: GOOGLE

Indeed, the correlation appears to be high, and watching the PER movement and how to leverage it in trading the Nikkei 225 futures and individual stocks are key points here.

The video discusses that area.

Additionally, they say they will continue to release more videos on investment analysis methods derived from financial engineering, which are expected to be of interest to investors., they say they will continue to release more videos on investment analysis methods derived from financial engineering, which are expected to be of interest to investors.

Written by Hayakawa