Reflexivity.
Why do traders in investment banks feel their jobs are immune from AI, etc?
221–230 of 232 posts
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#222Earlier quoted context omitted.
Me neither. How much of the genuine human nuance is present in today's financial services or any commission driven industry - next to nothing. Every agent/broker is motivated by the highest commission he/she can make, nothing more.
I can reasonably say that you make this comment because you know nothing about the business logic of trading desks. A trader is not necessarily a sales or a broker, though. Nor is he a quant, or a dev. People rarely imagine how many different jobs are involved in the trading job, and how rich the business logic is. At my shop, traders are the piece that connects all of the jobs in the value chain. I believe, currentl…
I'd say I know something about the business logic of trading desks. Some of my friends worked at GS. I'm not implying traders are brokers. I do agree that the trading business logic is very rich and that AI will be nowhere close to replacing a trader in the next 15-20 years at least.
I do foresee a future in which a trader can accomplish a lot more than he/she can today using AI. So in the future as the per trader efficiency increases, the number of traders required will most probably decline, unless there is a dramatic increase in trading volume that cannot be matched by the then state of the art AI.
This is essentially what's happening today with X.ai, Facebook messenger and the like. Sure the logic involved in booking air tickets for a group of 5 over 10 conversations isn't as complicated as the rich business logic of a trade, but 5 years back Facebook messenger would've seemed almost impossible, just like the trading business logic seems impossible to do with AI today.
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#223Earlier quoted context omitted.
Me neither. How much of the genuine human nuance is present in today's financial services or any commission driven industry - next to nothing. Every agent/broker is motivated by the highest commission he/she can make, nothing more.
Even if this was true (which it isn't: in most areas of finance blindly following this strategy is a rapid route to getting sued for breach of fiduciary duty) there's a lot of human nuance involved in actually selling the service to a client who won't take "well the model isn't tractable but here's last year's results and an article on ML" as an answer
So what is a more reasonable answer that the client will accept ? Ultimately, it's a pattern of words and data. Just playing the Devil's advocate here. Any ML system that can be trained on such patterns should be able to learn the nuance, per client. No ?
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#224Earlier quoted context omitted.
Machine learning is "learning from data." It is not the assumption that there are no dynamics, and that the future will simply be a repetition of the past. To the extent that the future is predictable, learning from data is the best that can be done. The reality is that speech recognition, language translation, face recognition, object classification and detection, semantic segmentation, speech and image synthesis ha…
The trouble with stock market systems is that any successful one is defeated by its own success - as its logic gets factored into everyone else's strategy. This self-defeating problem is not present in the other AI applications you mentioned.
Any strategy a human can think of, they can also code as a program. The difficulty is in expressing one's strategy clearly.
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#225Because 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. They aren't? Because I see this happening all the time. Automated checkout lines, E-Trade and online brokerages, etc. Low-value transactions are handled more and more by electronic "salespeople". All it takes to reach high-value transactions as well is for the clientele to decide they trust machines more than humans, which is not all that unlikely…
TIL cashiers are considered salespeople.
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#226Earlier quoted context omitted.
Machine learning is "learning from data." It is not the assumption that there are no dynamics, and that the future will simply be a repetition of the past. To the extent that the future is predictable, learning from data is the best that can be done. The reality is that speech recognition, language translation, face recognition, object classification and detection, semantic segmentation, speech and image synthesis ha…
The trouble with stock market systems is that any successful one is defeated by its own success - as its logic gets factored into everyone else's strategy. This self-defeating problem is not present in the other AI applications you mentioned.
Again, I'm not trying to provide an exhaustive survey of AI or ML applications. Merely point out that the fallacy of using past failures of AI and ML to conclude that they will continue to fail at tasks against which they have thus far made limited headway.
Bear in mind that in the 90's only a handful of supercomputers had teraflops of computing power, where now you can get an 11 TFLOPS Titan X Ultimate for $1200. Compute power continues to grow exponentially, yet it has only recently reached a level where certain kinds of approaches are truly practical. As Heinlein said, "When it's time to go railroading, people go railroading."
It's interesting that you should talk about antagonistic systems, since Actor-Critic Models, dueling architectures, Generative Adversarial Networks (GANs) are an extremely hot area of AI/ML research at the moment.
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#227Earlier quoted context omitted.
I can reasonably say that you make this comment because you know nothing about the business logic of trading desks. A trader is not necessarily a sales or a broker, though. Nor is he a quant, or a dev. People rarely imagine how many different jobs are involved in the trading job, and how rich the business logic is. At my shop, traders are the piece that connects all of the jobs in the value chain. I believe, currentl…
I'd say I know something about the business logic of trading desks. Some of my friends worked at GS. I'm not implying traders are brokers. I do agree that the trading business logic is very rich and that AI will be nowhere close to replacing a trader in the next 15-20 years at least. I do foresee a future in which a trader can accomplish a lot more than he/she can today using AI. So in the future as the per trader ef…
I have no doubt new technology will be leveraged to improve productivity, but that's been quite common in the last decades.
On the other hand, the technology advances needed to transform the tools into standalone actors are not merely a matter of scaling current technology. Especially, the creation of training datasets is a problem for which we currently have no solution, that's why we fall back on human trainers (mturk, etc). That's why a solution to a problem with no clear, bounded model and no easy dataset seems out of reach.
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#228Earlier quoted context omitted.
The difference is that chess, go, etc are all essentially rules based. Finance has very few rules that do not break over time. Just look at QE. Arguably the financial market represents the collective intelligence of a huge amount of very clever people. Machines are only just starting to challenge a single human at a rules-based activity. We're very far from beating a brutally darwinian, impressively adaptive, human h…
What are the rules for image / video captioning? For natural sounding speech synthesis? For realistic image generation? For semantic segmentation? For determining perceptual visual similarity between images? Frankly, rules based AI is basically a bust compared to learning from data approaches. The hive was pretty amazing at destabilizing the entire global economy within a brief span following fundamental financial de…
arguably the "crisis" was a perfectly rational response to inputs, namely, people no longer being able to service their debts.
Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#229because traders are used to seeing such predictions fail. Reuters was trading FX electronically since the early 1990s. At the tier one IB I worked for the IT budget was 500m USD a year (across products), and that was in 1997! Huge resources were thrown at automation. However, to this day, large trades in FX (> 10m USD notional) are still almost exclusively performed by humans over a telephone or over the bloomberg me…
Machine learning is "learning from data." It is not the assumption that there are no dynamics, and that the future will simply be a repetition of the past. To the extent that the future is predictable, learning from data is the best that can be done. The reality is that speech recognition, language translation, face recognition, object classification and detection, semantic segmentation, speech and image synthesis ha…
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Re: Why do traders in investment banks feel their jobs are immune from AI, etc?
#230Earlier quoted context omitted.
Even if this was true (which it isn't: in most areas of finance blindly following this strategy is a rapid route to getting sued for breach of fiduciary duty) there's a lot of human nuance involved in actually selling the service to a client who won't take "well the model isn't tractable but here's last year's results and an article on ML" as an answer
So what is a more reasonable answer that the client will accept ? Ultimately, it's a pattern of words and data. Just playing the Devil's advocate here. Any ML system that can be trained on such patterns should be able to learn the nuance, per client. No ?
I'm certainly not convinced any ML system can pass a high-stakes, niche-interests version of the Turing test (and since winning people's trust back after losing their money is an emotionally charged thing, probably something akin to Philip K Dick's Voigt Kampf empathy test too). Even if they could, you haven't got a training set because (i) client conversations aren't usually on the record (ii) none of the previous human conversations that could be used if they had been recorded were remotely related to the whys and wherefores of the investment decisions the algorithm actually took (iii) the investment model generated by the ML process probably isn't tractable enough for even its own human designer to convert into words what it's actual strategy was and will be in the next period.
You don't need "any ML system" to be able to not only process the data, but also explain the strategy behind its data processing at various levels of granularity, answer abstract questions and do a convincing impression of listening and responding to client feedback, you need advanced general intelligence.
As for what the more reasonable answer a client would accept is, I don't think I really have the requisite years of investment banking experience to know that...