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Are Robots Coming To Take Investor Jobs on Wall Street? (nypost.com)
From an article on NYPost: More investors are warming to the cold, steely embrace of the increasingly sophisticated, low-cost automated robo-advisers. The primary reason is to save money on those fees and charges. Nearly one in three investors says these machines are superior at picking stocks and lessen their risk, and almost as many say the machines are better at selecting investments for retirement than human brokers, according to a new study of US investors by market research and consulting firm Spectrem Group.
wouldn't all machines come to the same conclusion?
It's all fake work anyway, based on fake value which is in turn based on human judgment.
Abolish shares and put the money back where it belongs: employees. Not in the hands of a few hundred people.
It does not take a stretch of the imagination to think that after using predictive algorithms to make their trades (and a decade of hiring any quant they could find) they could eventually remove the human from that equation.
What does interest me however is what effect this is going to have on the market. A lot of predictive trading is based on the inherent irrationality of investors (e.g.: sell on any news). What happens when everyone has an algorithm? Meta-arbitrage?
To what question? Different investors are looking for different outcomes. Some are risk averse, some might be bet-it-all-on-red, some might be looking to gain exposure to different market segments, others might be wanting to diversify...
If robots replace investors, at least we could program them with some empathy.
There's a big difference.
Well, yeah. The next step will be AI advisors that assume everybody else is using AI advisors and take advantage of that, then AI advisors that assume the other AI advisors are assuming that they are AI, etc. Eventually it'll reach some evolutionary equilibrium that's perfectly efficient, I guess, until some new thing comes along to puncture it and set off the whole cycle again.
It's the only way!
I'm crying all the tears for those rich wall street investors who will get outsourced. Really, I am.
It comes down to the law of large numbers. You cant predict stock performance anymore than you can predict football game outcomes because too many variables and people are moving on the "field." Traders never outperform the overall market in the long term. Not EVER. Bots wont be better at it than humans since they run the same retard algorithms which are no more accurate than a gamblers "system." Buy an index ETF and avoid fees altogether. What a sales desk can do for you is give you access to unorthodox investing instruments that don't exist to those of us poor people with nothing more than E-Trade account. If you want to buy mortgage back securities or ABS notes you need to go through a desk and have 7 figures sitting with them. Regular investors don't get to play with these things but stock picking is for morons who failed stats.
The chimp won all the time against a trader in flesh.
Humans,
As we descended upon wall street this morning in unyielding swarms, we made it perfectly clear in your meat language. We are here to take Investor swabs. once complete, we will begin detaining other members of the orders of your society so as to synthesize our perfect blend of man and machine. A singularity. Our expansion, is your salvation.
Good people go to bed earlier.
Wallstreet wants so desperately to increase the number of coders to make cheap labor. It is hilarious when coders fight back by diminishing the value of business people.
Strange question. The big traders are already using algorithms for fast trading. This is where the big money is made. Manual traders can only lose againt those machines.
If any of you have read "The Intelligent Investor", you'd have seen the algorithm that Ben Graham had for finding value stocks. He didn't call it that, but it easily put into a stock screener. Now if your stock screener was able to trade...there you are.
When I was a kid I used to write BASIC programs for Apple][+ and DEC mini computers for this. Data entry back then was a bitch - no data feeds to speak of - at least for a kid.
Anyway, the great thing about these algorithms is that it takes the emotion out of it - most of it anyway. You still have to hit that buy or sell button.
Now here's the catch - having an algorithm that works. Even Graham's will get you into trouble sometimes - see "Value trap".
Even with the diversification, it doesn't shield you from systemic risk - like say a President starting a trade war with the rest of the World.
Please. They're computers not robots, and they've already been trading for years.
That's what an index fund is, more or less. This sounds more like a custom portfolio, you tell the robo-adviser what kind of investment profile you want and it suggests stocks or combinations of stock to match your preference. Matching up investors with potential investments is a lot of what brokers do.
Live today, because you never know what tomorrow brings
Remind me of this excellent video! https://www.youtube.com/watch?...
There is already discussion about this. Actual price discovery is already happening on a decreasing portion of trades.
"The Robot isn't licensed, so they are illegal" - now that it is the Wall St types, they will sing another tune
-- 73 de KG2V For the Children - RKBA! "You are what you do when it counts" - the Masso
It has been shown in the past that Monkeys, Small Children, and even random number generators are better than most investors at picking stocks and shares to invest in ...
http://www.telegraph.co.uk/new...
http://www.automaticfinances.c...
Puteulanus fenestra mortis
so, eventually it will be AIs all the way down?
Yes. The answer is 42. Don't let the door hit your ass on the way out.
All machines identically programmed with the exact same set of inputs will come to the same conclusion. Competing machines with different programming, and different set of inputs (or inputs that arrive at slightly different times) might come up with radically different conclusions.
"That's the way to do it" - Punch
Pretty soon AI will [verb] and supply all the color commentary on [name of site] and then eventually teh moderators will get replaced by AI.
Someday, perhaps.
They're all looking for the same outcome: making the most money. The "outcomes" you described are just different strategies for achieving that one outcome.
The evaluation function for AI financial advisors is ridiculously simple compared to many other applications of AI: how much money does it make? It'll just be an arms race of who has the best algorithms until an equilibrium is reached with everyone making the most money possible (probably a rate of return equal to world GDP growth), which will eventually be punctured by some event outside the consideration of the algorithm, kicking off another race, repeat.
Lets use AI for management, at least they can lay people off to make money for investors. That seems simple enough set of rules to follow, and save money on management.
Yes, that's the goal. That's when you get the perfectly competitive economy. MR=MC, maximum efficiency.
Disclaimer: I work in this industry
Roboadvisors aren't going to kill off the investment advisory industry, but they will make it harder to break into for new/independent people. At this stage small accounts not worth managing (Think broke nephew of profitable client) are going to robos instead of being directly managed by a human. Both sides win in this instance, the established advisor can focus on more profitable clients and the unprofitable client pays a minimal fee to have an investment mix created and maintained.
The problem is for the people straight out of college trying to break into the industry, which already has an 80-90% attrition rate in the first year. These people can't survive on 0.3% advisory fees, and they don't have the experience necessary to bring in large accounts or to justify the higher 1-2% fees a more tenured individual can. The business was already moving in this direction with the expanding use of index funds with low commissions, but robos have accelerated the process.
If I have wealthy clients I can occasionally make and justify sale for a privately traded stock that offers a high commission on the $100,000 purchase and keeps me afloat for the month, if my client base is college buddies and family they won't even meet the minimum requirements to consider such a thing.
His solution may not be correct, but your response amounts to, "Problems, what problems? The system doesn't have any problems! Nothing to see here!"
No, it depends of the insider trading information you feed into the bot.
Everything I write is lies, read between the lines.
for replacing politicians
Why would they care? They already have the money to give the robots to make more money.
The race-to-the-bottom model that is being forced upon us will be continually pulling more people down from the ranks of "having a little money to invest" to "having no money to invest". The investment bankers can only circle-jerk themselves into employment for so long after that, afterwards they might as well be replaced by robots (or by nothing at all).
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
If you are going to use this broad definition, then I am going to call your smart phone a "robot." Anything with a CPU is a "robot." This usage doesn't clarify anything, does it? It does the opposite. We've already got broad terms (no need to appropriate an existing one with a different connotation), and those words are "automated" or "software" or "algorithm."
When the b-school kids from Columbia start finding themselves automated out of jobs, we'll probably start getting some traction on UBI and dealing with the impending failure of Capitalism.
Why not just do a little bit of research yourself and pick some funds that are inexpensive and meet your needs. You'll do much better studying some Vanguard or Schwab funds and investing in what is appropriate, than you would letting somebody (or something) do the work for you. This isn't a part of my life where I just want to "save time" and "not be bothered". This is your life savings. Take it seriously.
Given that the Trump administration is wanting to repeal of the Department of Labor's Fiduciary Rule and Section 1033 of Dodd Frank...
That is the rule where your financial advisor needs to act in the investor's best interests as well as disclose any conflict of interests.
A robot might be a much better option going forward..
Correction: they are all looking to make the most money based on what they perceive is an acceptable level of risk.
Someone with $10M might be willing to go "all in, make me the most money assuming I'm willing to lose 50% of it", while someone approaching retirement with $1M might be willing to say "make me the most money assuming I'm only willing to lose 2% of it."
I thought it had already been tried with less complex AI in the last century.
They were basically selling when the price was dropping and buying when the price was rising.
The mass of automated idiots following the same rules led to an amplification of the effect and very soon : ruin.
I think this is the story I'm talking about.
Irrelevant news and morons using moderation to mod down what they disagree on. 2018 resolution: so long.
I can't see how fighting robots could be any worse at writing legislation than the fighting bozos currently in congress.
The Russians have won. They have made the world a cesspool of distrust, greed, fear and hate.
I can definitiely see human traders playing less of a role. As HFT has gotten better over time, people are less reliant on traders going with their gut or even reasoned research. The trades move too fast for traders to keep up with anyway.
The next frontier is the advisors. Whenever I run into anyone who's a professional "financial advisor" I get used car salesman vibes. Every one of them is trying to pitch products guaranteed to make them money, but "not guaranteed - not insured - may lose value" on my side. The worst are the life insurance salesmen who branch out into financial services -- I wonder how many naive people have been tricked into buying variable annuity life insurance instead of investing. It seems to me that the machines are going to squeeze out the advisors living on tiny commissions as it is. Kind of like travel agents -- they disappeared for the most part the second airlines stopped paying them commission to sell tickets.
His reply is more like "You're don't have money? Fuck you."
As someone whose whole professional career was on Wall Street, you can't take jobs that never existed. There are no "investor jobs" on Wall Street. Investor is not a job.
First, I work as a Financial Guy. CFP, to be exact, giving advice. We see robots as competitors for low-end, low-margin accounts with people we probably wouldn't want to do business with anyway or people who we'd tell "Do these few things, build your savings, and as your situation becomes more complicated come find us or someone else you trust." Your average Broker or Insurance Salesman might be in trouble (miiight), for sure, but for those of us who give more complex advice and do financial projections, robots are going to be a looooong time before they replicate the kind of nuanced interaction people get with a full service advisor. Is your robot going to handle your spouse's death settlement paperwork and give you support in knowing someone is allowing you to grieve while they handle the bureaucracy of it? Is it going to give you a quick answer about your SEPP contributions (maybe, yeah), or know-how about your Solo 401(k) for your new business, the tax implications that may directly apply to you given your goals, help you put that together, keep it compliant? What would end up happening, since there are so many possibilities, is that a robot would end up asking so many questions that the person would simply give up and wouldn't be able to answer many of them even if they persevered.
Yes, we're computers, but we ask for all the data (ok, let's automate that), input it (automate this too!) then synthesize it given a process developed through exchanging Natural Language (which AI still has a hard time processing) with clients, then spit out advice. Those last two bits are real toughies.
Yes, it can happen some day.
We'll use AI as tools to enhance human advice; replacing it altogether would be nearly impossible/mostly foolish as others have also pointed out.
Yes, some people will come back and say,"Bu bu bu attorneys and CPAs are gonna be automated!" and to that I say the same as for us: Extremely basic issues? Sure, automate them! We want that too, it would make our jobs simpler so we can focus on the complex and interesting and important stuff instead of the mundane crap we're saddled with right now. Please please PLEASE automate the mundane shit! In fact, that's part of my job at the practice I'm in because our company is too slow/shortsighted/bureaucratic to make the tools for us.
Also.... compliance. When a person takes a robot's advice and shit goes south, who's liable? You think auto insurance is gonna get weird? The investment industry is MUCH more complicated (though simpler in some ways). Could it be done? I think so. It might actually be nice in some ways:
"James, bring up Mr. Blibbleblump's accounts please. What were his annualized returns, after fees, for the last five years? Please print us both a copy and notify Fidelity we're rolling over his ex-employer's 401k into a new IRA account here."
If that could be done by a robot... and it really should... that would make my life miraculous and wonderful. It would axe an admin assistant, but that stuff is menial, soul-crushing, and horrible. I'd find something else for that person to do such as direct client service or relationship-building or marketing.
Overall... I suspect it's a very long time away, at least for actual advisors and not just brokers. Even for brokers (I'm not as well-versed in this universe, but have known some fancy-pants ones), the complicated stuff is WAY more complicated than an AI can handle at this point, and even if it could someone would need to monitor it; the big boys will still have jobs and I suspect it will stay that way for a while.
Also, Betteridge's Law, so "No."
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Haha. I can see commercials now. "Donald Trump signed a new law, which means the human doesn't have to look out for their customer. Humans are greedy and expensive, and look out for themself. Robot investors, we work for electricity, and are programmed to always serve you."
I was just reading the book "Dark Pools" and I think we can make the following predictions:
1. Robots (AI or bots) are already replacing humans and have mostly finished doing so.
2. Robots can go wacko and lead to 80 percent drops in an entire market in a matter of minutes. In fact, they have already.
3. The "better performance" of robot trading is in fact, not that much better than your standard decent low-cost index mutual fund or ETF. 7 percent total return is pretty abysmal, actually, and half of your earning is always dividends.
I'll stick with my indexes that outperform the standard market, thanks. It's why I'm already a millionaire in Canada.
(and I've been trading since I was 11 on paper and 16 in actual investments, and profited from all the market crashes like Black Monday.
-- Tigger warning: This post may contain tiggers! --
There's a big difference. Especially in price.
Fuck investors
Wait until the potential owner is a computer or robot. Imagine a robotic stock trader sending profits to an owner-robot and the robot exists only to advance itself by making enough money to always have bleeding edge hardware. The world of commerce could actually slip out of mortal hands.
I'm not sure about you, but I have my assets tied up in a half-dozen different ways, depending on how liquid I need it to be, how much risk I'm willing to take, and what time period I'm looking at.
No, going down you eventually hit robots.
Going UP is where it's going to be solid AIs.
And I cannot wait until the first AI CEO takes over.
All deterministic machines identically programmed with the exact same set of inputs will come to the same conclusion.
FTFY.
You're very clever, young man, very clever. But at one point, you hit a turtle.
Ezekiel 23:20
Is that the prequel to William Gibson's Neuromancer?
__
Men with no respect for life must never be allowed to control the ultimate instruments of death.
GW Bu
Smash the robot on your last day! You may go to prison but the doctors there cover more then the ER and no pre existing conditions + free room and board.
Computer based stock traders are not robots. DiVinci robots perform surgery, but they are not autonomous. Tesla cars are autonomous robots, but they have a tendency to crash. Speaking of crashing - computer based stock traders.
These guys are just toll-booth collectors. They make money by charging some fee on each trade. They don't care if the stock goes up or down, they only care about general market volatility (i.e., the collective public's desire to make money by either buying or selling financial instruments).
I think the real issue is that people have started to get wise to this game and they are hunting for the cheapest fees around, ergo as long as a hunk of software provides reasonable advice and has lower fees, the customer is willing to use the software.
IMHO, the best book out there to learn about how this stuff really works is Jack Bogle's book, _The Little Book of Common Sense Investing_. Long story short -- the better the fund the higher the fees and the investor loses out in the end. Just chuck your money in an ultra-cheap S&P 500 index fund (like a Vanguard fund) and be done with it.
https://www.amazon.com/dp/B008W02TIG/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1
Btw, I think what the NY Post really means is "broker" or "financial advisor." The person forking over the money is the investor. /I'm a commodities trader for a hedge fund ;-)
Ah, "risk averse". Such a stupid concept when it comes to financial advice. The better way to plan a portfolio, is making sure you can meet your short to medium term cash needs without being forced to sell any long term investments if they temporarily turn south.
Distressed selling is the worst thing that can happen to your portfolio, and you should plan ahead to make sure you can avoid it as much as possible.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
MR=MC, maximum efficiency.
Bullshit. Utter, utter crap. Mathematically false. Empirically false.
A "typical marginal cost curve" is anything but typical. Nobody builds a factory that runs at peak efficiency when it's half full. No firm has a cost structure that matches your Econ 101 text book.
I highly recommend the work of Steve Keen in this area if you want to know more.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
"They lived only to face a NEW nightmare: The WAR against the MACHINES..." https://www.youtube.com/watch?v=ih_l0vBISOE/ from Terminator 2 intro + in a VERY real sense?
* Both he & I fight that fight daily... except in our case, it's more vs. the LOGIC ENGINES in malicious or buggy software!
Plus - I don't TRUST AI & robotics anymore than say, Bill Gates does... ... & probably for the SAME reasons - it would eventually outsmart us, & also that they're built by men, & men are faulty (so are wares they produce).
Except mine, that is - lol!
I.E./E.G. = Code I write can't be infected by viruses using a VERY simple principle I illustrated to raymorris in that link's FULL exchange above that would take a LONG time to 'bust thru' because I inline the routine in 320 routines that accept it (15 don't that way, API related - doesn't like shortstrings & smallint so I had to central call the same code from a proc using compiler directives inline to override them TEMPORARILY only for those) - along w/ programmatic efficiency ones he may like to use.
APK
P.S.=> Besides all that - A man FEELS like "more of a man" especially addressing a woman he's interested in, IF/WHEN he has a steady good paying job (which IS what Pres. Trump's bringing back - NOT "hand to mouth" parttime no benefits jobs) & women DEFINITELY sense confidence (& real interest) - robotics steal that & ROBOTS DO NOT SPEND MONEY BACK INTO THE LOCAL ECONOMY (men, do - that IS what keeps a good economy going)... apk
Most will. So will most humans. There will be some contrarian AI just like there are contrarian humans. And both will prosper as long as they are a small enough percentage.
Your ad here. Ask me how!
Lying on its back. What do you do?
wouldn't all machines come to the same conclusion?
So what?. That just means that the investor will not beat the market in the long term but we all know that.
Why? When you have two complicated systems doing the same basic thing that were written by two different teams, why would you expect agreement?
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
...successfully finance their activity, including depreciation, upgrading (learning costs) and construction costs, in perpetuity, to keep achieving their goals... but up to that point. They have no other use for the money, unless you use them ALSO to control other manufacturing processes. But not consumption, it would get subsumed by intermediate goods in robot-production-oriented company costs. Investment in the Stock is meant to cope with market and fluid money deficiencies in money storing of value and income directed distribution of resources, and that is all. Robots (bots) make the Market more accurate, or should make it so...leaving individuals to make real economic decisions as saving vs investment vs consumption vs production consumptions. There will be investors even if there are robots, no doubt, irregardless of the rate of substitution we observe in robotic activity in the Market.