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

Plenty of downsides to balance out the high pay and the excitement of working with big transactions. The hours and level of stress take a heavy, heavy toll on many people.

There's a duality of thought going on here (with apologies to the false dichotomy). One says that all intelligence is ultimately materialistic/mechanical and that all we must do is retrace these steps with electronics and we can achieve whatever we want including high-value traders. The other seems to leave room for... let's call it the "irrational" side of things.

My only point here is that just about all values themselves are irrational. The same problem in trying to get a computer to recognize that the Mona Lisa (or poched eggs or Mozart or whatever) have value, is the same one that makes it hard to teach them to figure out if Tesla is still a good long-term investment etc.

I don't agree with the question, especially if we are talking about de facto traders. There is a high level of worry because commission margins and returns per unit of risk are the lowest ever. I would say there is a high level of calculated ignorance in the industry.

Truth is, most trader jobs have been gone in the last 15 years. First it was the automation of order collection (phone orders being replaced by automatic order routing processes), then automation of the execution process (from human order management to algorithmic trading), then automation of the investment management process (from discretionary processes to quantitative management), and the last frontier will be the automation of the relationship with the client.

Problems are different for different trader types.

Execution traders execute orders on behalf of clients. Today a lot of clients execute directly using web terminals and APIs. And if you still execute on behalf of others you spend a lot of time fighting against the machines (one solution is to trade out of market, but this too is being automated). Very very hard to come up with new execution algos.

For delta hedging traders the role has been reduced to monitoring, unless you have allowance to take risk (which most banks don't since the 2008 crisis).

For alpha traders, whose job is to extract money from market, the risk is not in being replaced by the machines, but one of overcrowding, i.e. everyone following the same strategies is reducing returns and increasing risk (skew) across the board.

Sales traders whose activity is to sell first, and trade last, still need to manage relationships with customers. But this has been changing gradually, with clients prefering digital interfaces, passive investment programs, and now the rise of automated investment management programs.

I started working in the industry circa 1999. The head of trading I was working with told me once machines will never be able to invest like a human. He's still there doing a lot of money, but certain that it will end someday. His strategy: "let's see if I can make it one more year"...

> In casinos the games are designed so that in the long run the house always wins.

That's exactly what I meant by odds; they always win because the odds of the games are in their favor.

> The stock market isn't a game

It's a game in the same sense that life itself is a game.

> it isn't designed

The mechanisms that fit all the pieces together are very much designed by humans. True the behavior of the market isn't designed; it's an emergent property of the complex system we call "the markets."

> it continuously evolves

Yes, but change is also the constant. What underlies that change is supply and demand.

Of course you're free to disagree. But if you'd like to learn more about the not-100%-accurate analogy I described in abbreviated form, the source is here: http://www.goodreads.com/book/show/253516.Trading_in_the_Zon...

Edit: Good reading on "life as a game": http://www.goodreads.com/book/show/189989.Finite_and_Infinit...

>To overcome that with software, we need to dramatically reduce the cost of developing software, enabling ordinary employees to develop their own software.

I think this is the key to running an effective organisation.

It requires that most people know how to program, or at least know enough to understand what is possible to program.

I also don't see this coming, partly because the education systems are not really up to par, but also because it's really hard to develop complex systems.

I'd argue that the languages are not really the issue here even if the trends seems to go towards even crappier languages (like js, php) to really mess up the heads of beginners.

But even with a hypothetical "perfect language" the main problems is the huge amount of time and effort it takes to learn any programming language at all, plus the even more enormous amount of time it takes to write something useful even for a really experienced developer.

But sure. It's perhaps time for a new cycle of tearing down the "mainframes" (in someone else's basement this time) and reinvent personal computing for the 2nd or 3rd time...