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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.
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.
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.
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?...
"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
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
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.
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.
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.
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.
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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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! --
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.
"programmed to always serve you."
Well, unless I program the robot myself, I'm kinda taking your word for it, aren't I?
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.
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.
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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.
In the new definition, the phone could have lots of robots in it. A sufficiently complex app running on the phone hardware, is a robot.
Only I can judge you.
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!
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.