Neural-Net Heads Program Computers to Select Stocks to Trade

Wouldn't it be great if you could sit back and let your computer pick your trades for you? Some people are doing just that, and they claim they're making money.

It's done with a kind of artificial intelligence software called neural networks. On certain levels the software can think and learn, even about things as complicated as the stock market. The only catch: It needs to be programmed correctly before it'll work.

Neural-net heads -- mostly math and engineering types -- swear their software can beat the market consistently. Take Scott McCormick, an operations director for a Detroit-area computer-based design firm who has degrees in math and aerospace engineering, and a minor in theoretical physics to boot. McCormick says he has used neural networks to guide his investing for more than nine years now, producing average annual returns of 50% or more. (Please see our related story on how to get started using neural nets.) ...