Artificial intelligence set to replace all Financial Advisors & Fund managers

Artificial intelligence set to replace all Financial Advisors & Fund managers

Editor: Vlad Rothstein | Tactical Investor

We are always asked the following question? Why do you cover so many topics if you are a financial site? The simple answer is that everything is interconnected. If you focus on finances only then you are looking at the tree and missing the forest and vice versa. Mass Psychology also known as Crowd Psychology dictates that one should focus on the whole picture as opposed to fixating on one part.  Before we get to the story at hand, the following story might tickle your fancy

Before we continue, we would like to state that we are do not view individuals from China in a negative light. In fact, we have many good Chinese friends and associates. The same applies to any religion. For example, Islam has been the centre of many controversies, and yes there are many dangerous radical Muslims that we believe should be punished brutally with no questions asked for the atrocious offences they have committed. War Between the U.S. & China will Destroy World Economy

Investment professionals should start worrying for machines will replace many of them. As it stands most fund managers are nothing but glorified monkeys with darts.  To add insult to injury, monkeys with darts outperform most fund managers. AI is a disruptive technology and it is going to reshape the investment landscape completely in the years to come.  Hundreds of Fund managers are going to find themselves jobless for machines will be able to what they do for a fraction of the cost.  Machines will probably outperform many fund managers but probably not by a wide margin as they are being programmed by humans. The stock market is not based on logic and so, for the most part, they will follow the same path as their human counterparts. However,  as companies won’t have to pay these machines to work, the trend will be to replace humans with machines.

Due to exponential increases in computer power and data storage over the past couple of decades, we have witnessed the rise of artificial intelligence systems that meet and exceed human abilities. At the forefront of recent A.I. technology is an approach termed machine learning. In the financial services world, insurance firms and investment banks have employed ML-based systems to automate areas such as claims processing and contract validation.

The asset management industry will be no exception.

ML has begun to make inroads as asset managers realise that the ability to extract value from big data is going to be a key differentiator and that traditional industry practices will struggle to stay afloat in this mounting flood of real-time data. Analytics using ML can be more robust than traditional financial modelling, as it can tap into the streams of “unstructured” (text-based) data that global digitalization and social media are creating, in addition to the millions of corporate press releases, conference call transcripts and regulatory filings that are produced every year.

With the industry in a state of flux due to the rise in passive investing and the move away from commissions to level fees, many asset managers are investing heavily in technology to reduce operating costs and to comply with regulators’ ever-increasing demands for transparency.

Leading asset managers are realising that this also presents a solid opportunity to invest in advanced data analytics and ML capabilities, as well. With the fixed-income bull market coming to an end, fund managers need to begin to implement new investment strategies, reorganising their operations around next-generation investment systems.

Asset managers are using predictive analytics to generate investment ideas or as an early warning system for assets at risk. At a minimum, A.I.-enhanced data analytics can complement traditional financial analysis by offering unique insights. Full story

These systems will eventually trigger flash crashes that will make the flash crashes of the past look like Child’s play.  The biggest danger is programming computers to think like humans; most humans are wired to react like lemmings, and these systems will only increase market volatility. A day will come when daily moves of 1000 points in the Dow will become the norm unless Fiat is eliminated. However, we see no chance of that occurring in the near future. Fiat is being embraced with gusto; the masses have been conned into thinking they need to make more and more money, without realising that all of this money is created out of thin air. Imagine the beauty of this system; the top players can create money out of thin air or via their connections have access to virtually unlimited credit. The average person has to work harder and harder for less and less.  This link provides enlightening data in terms of how corrupt America is today and how the rich control the US. https://represent.us/action/theproblem-3/

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