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Why do traders in investment banks feel their jobs are immune from AI, etc?

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Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#11

Post by coldtea »

yazaddaruvala wrote: post #5

Everybody feels their job is safe from automation. Its the same way planes crash but not mine . Believing "I am special", is just built into us.

That's a non answer.

If some belief applies to everybody, but on a different degree (per individual, or per job sector, etc), then the mere fact that it applies on everybody doesn't say anything to explain this variability.

And if what you say is that it applies to everybody with no variability, then that is obviously wrong. People in specific job sectors are way more worried about automation than people in other sectors, even if their jobs are not yet starting to get automated. E.g. office workers vs surgeons...

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#12

Post by signa11 »

ericjang wrote: post #6

Due diligence on the financials of a company (what investment bankers are supposed to do) is actually really hard to get right with the algorithms we have today. Much of the data and insight compiled by an I-banker today does not exist in an easily parse-able form for automated algorithms, and a substantial amount of the computation relies on common sense knowledge.

> ...actually really hard to get right with the algorithms we have today

assuming, very few companies which would have publically available published financial going over a large (> 50 years) timespan, would it be safer to conjecture that it is actually the _paucity_ of data which impoverishes the algorithms ?

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#13

Post by edblarney »

I don't think bankers are naive, they are seeing it happen.

If your job can be done overseas, it probably will be outsourced.

If your job is algorithmic, you'll be replaced by a computer.

A lot of M&A activity though doesn't fit that category.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#14

Post by coldtea »

argonaut wrote: post #2

Because investment bankers are just salespeople? Nobody is suggesting AI will replace salespeople in the near future. I could see there being fewer grunt analysts in the future, though.

>Nobody is suggesting AI will replace salespeople in the near future.

Huh? For one, investment bankers are "just salespeople" in the same way doctors are just nurses.

Second, everybody and their mother is suggesting AI will replace retail level salespeople in the future. In fact lots of places, from British supermarkerts (where you can bill and pay for your purchases yourself), to Amazon's Go experiment, and numerous other uses of automation in retail.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#15

Post by JumpCrisscross »

ericjang wrote: post #6

Due diligence on the financials of a company (what investment bankers are supposed to do) is actually really hard to get right with the algorithms we have today. Much of the data and insight compiled by an I-banker today does not exist in an easily parse-able form for automated algorithms, and a substantial amount of the computation relies on common sense knowledge.

> Due diligence on the financials of a company (what investment bankers are supposed to do) is actually really hard to get right

Diligence is automatable, in the long run. There is a human element to it, but it is small in most contexts.

Bankers solve trust problems. An AI would need to be trustworthy in a personal way to replace bankers--this only happens with AGI. For a long time, as long as humans control capital, there will be other humans interfacing those humans with each other.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#16

Post by nstj »

aresant wrote: post #9

HN title is significantly different than the question the submission actually asks which is "why do TRADERS in investment banks . . . " and should be updated

In case the full title makes a difference it's "Why do traders in investment banks feel their jobs are immune from AI, automation, and deep learning?"

cc @dang

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#17

Post by huac »

ericjang wrote: post #6

Due diligence on the financials of a company (what investment bankers are supposed to do) is actually really hard to get right with the algorithms we have today. Much of the data and insight compiled by an I-banker today does not exist in an easily parse-able form for automated algorithms, and a substantial amount of the computation relies on common sense knowledge.

More to the point, most investment banking valuations are just guesses and understood to be as such. Estimating discount rates and growth rates in particular are very much gut-driven and aren't expected to be precise, no matter how complex a model the analyst comes up with.

There's only so much you can ask a kid 10 months out of Harvard econ to do, no matter how many pounds of cocaine and borrowed Excel sheets they have.

At the more senior levels, banking is relationship based, and making partner is a function of how much business you can bring in. This means maintaining good relationships with the clients you work with and reaching out to new ones. Show me an algorithm that can send cards on kids' birthdays, drink champagne, and play golf.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#18

Post by gaius »

wobbleblob wrote: post #3

Maybe with their work, labor costs are a relatively small portion of the product price?

Look up the comp ratios of some of the major investment banks. It can easily be 50%. As with all professional services firms, the biggest costs are people and real estate.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#19

Post by huac »

nstj wrote: post #16
aresant wrote: post #9

HN title is significantly different than the question the submission actually asks which is "why do TRADERS in investment banks . . . " and should be updated

In case the full title makes a difference it's "Why do traders in investment banks feel their jobs are immune from AI, automation, and deep learning?" cc @dang

It looks like the question title was changed, in order to aggregate similar questions/answers. Most of the answers answer the question in the current title. I agree that trading and IB is a big distinction, and traders are 1.5 feet out the door already.

Re: Why do traders in investment banks feel their jobs are immune from AI, etc?

#20

Post by grzm »

huac wrote: post #19
nstj wrote: post #16

Earlier quoted context omitted.

In case the full title makes a difference it's "Why do traders in investment banks feel their jobs are immune from AI, automation, and deep learning?" cc @dang

It looks like the question title was changed, in order to aggregate similar questions/answers. Most of the answers answer the question in the current title. I agree that trading and IB is a big distinction, and traders are 1.5 feet out the door already.

There's also a length limit to submission titles. I don't know what it is, but I suspect the original title exceeds it.
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