We’re told that artificial intelligence is so amazing that even the best and brightest among us can’t hold a candle to it, and with each passing day, it’s increasingly difficult to deny that claim. AI-generated images beat what people display on canvas, and AI-generated songs top billboards. AI turns spectators into surgeons and laymen into lawyers, but we’re also told that AI just isn’t intelligent enough to copy the quants. Artificial intelligence isn’t fake enough to pick stocks? Your author is more than a bit skeptical.
AI and Wall Street—for now—have a symbiotic relationship. AI needs access to equity markets and Wall Street needs AI in order to better its financial position. Anthropic and OpenAI have recently filed for an initial public offering of their stock, requiring Wall Street’s facilitation, but what will happen once the companies go public? Will Wall Street replace much of its analysts with the AI we’re told is inferior to human investors? “AI will doom all industries but finance” is a convenient narrative, but investment bankers aren’t stupid. Post-IPO, we’ll see if finance’s exception is excluded from the narrative.
This appears to be Wall Street’s last chance to milk AI for what it’s worth, knowing full well that AI is coming for their hides, and notice that retail investors aren’t part of the equation. Nvidia seems to imply as much: “The RTX Spark is a ‘new superchip for the era of personal AI agents – offering a new class of computer that moves from tool to teammate.’” Might these “personal AI agents” become personal investment managers? This would be bad news for stock-pickers but great news for humanity, on par with free energy ruining energy companies but elevating humanity.
Consider that Virtu Financial “recorded only a single day of trading losses in the 1,238 trading days that comprise the period between Jan. 1, 2009 and Dec. 31, 2013…” Note the end date. As that remarkably successful run occurred when artificial intelligence was just a topic and not a tool, one wonders what’s possible today—not only for Virtu but for anyone with access to artificial intelligence. Are we to seriously believe that with AI, Virtu has not improved upon its stellar record? Citadel Securities and Jane Street Capital have not found a way for AI to improve their high-frequency trades?
Imagine if everyone could effortlessly do tomorrow what Virtu achieved 12+ years ago. While at one’s place of business (or on the couch), “personal investment managers” would slave away, directing the better part of one’s savings to its best use and providing what could be called a basic income. To a much greater degree, that’s what AI companies expect will happen to themselves, as evidenced by their hundreds of billions in capex (which will later translate into trillions in return). But as evidenced by the outrage over the proliferation of data centers, frustrations aren’t ameliorated with, say, freely provided French Toast recipes.
If the general public could take part in the potential for enormous profits, people might readily accept data centers in their backyard rather than protest their construction. Elon Musk claims with utmost certainty that AI will annihilate virtually all jobs and, therefore, the government will have to alleviate said job destruction. But forecasting is difficult, even for Musk. Just like anyone else, Musk doesn’t know what the future holds, but even if his claim of mass unemployment materializes, why on earth would he want the government—the destroyer of all things natural and just—to be what saves us?
Rather than rely on the entity that parasitizes the very same people it claims to serve, Musk is contributing to the worldwide effort that will ultimately make a government-provided income laughably unnecessary. No need to steal from some Americans to give to others. In the glorious future that lies ahead, the difference between retail investor and institutional investor will be rendered meaningless. To varying degrees, all will benefit, and the most amusing irony is that it will be one of Musk’s companies—not the government—that will likely provide a basic income.
AI will massacre the menial but exalt the exceptional, meaning what’s clearly AI-manufactured will lose value alongside the jobs that once created it; however, because AI will make what’s rare even more scarce, it’s reasonable to conclude that everyone’s unique talents will have a greater chance of commercialization. The government is the epitome of menial, so there’s no reason to believe that it could provide what only its antithesis can. And during this great technological transition—during which everyone will learn what truly differentiates themselves from everyone else—an AI-generated income will help during the culling of what’s average.
