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Automation of Everything

Arthur Hanson said:
simguru, Even with the best programs, they are only as good as the person directing them. The financial world is the most complex of all for it incorporates more variables than any area or endeavor and is about percentage wins, never absolutes as in science and even to a large extent design. Except for high speed trading, programs can only supplement, not replace human intuition. This I feel will be true for a long time, due to the almost infinite number of variables. Even for the winners, it's a form of gambling, for even the best of the best have losing years. Loss management in a infinitely variable environment will require human input, although it can be supplemented by raw computing power.
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Human brains are pretty finite, as are the markets, but machines have been scaling with Moore's Law for a long time. At some point the machines are just more capable than humans - as with the chess playing. Humans are just bad at parallel processing as well, so anything requiring handling a large number of variables in real time is best left to machines. Problems where there isn't a lot of hidden state or non-linearities can be learned by AIs doing data-mining with minimal intervention - you just let the AIs build a market model then try strategies on the model until you get something you like (although the strategy might be beyond human comprehension).
 
simguru, Many of the top financial people have extensive computer systems and know how to get the most out of them or have the money to hire the top people. Like I said, many of the top people have large staffs of experts, top equipment on top of extensive networks of contacts across areas of expertise, political persuasions and anything else they might need. This way they have better input so they don't suffer from the garbage in, garbage out syndrome. Finance is far broader than engineering for engineering comprises just one of many key segments needed to make decisions with a high enough accuracy to yield positive results. Money talks and XX walks.
 
Arthur Hanson said:
simguru, .... Finance is far broader than engineering for engineering comprises just one of many key segments needed to make decisions with a high enough accuracy to yield positive results. Money talks and XX walks.
Click to expand...

Breadth and depth don't necessarily go together. I had a girlfriend who worked in financial software, and it was quite different from the high-performance programming I do. Quite a lot of people in Silicon Valley are looking at the high-speed trading market and taking a hardware approach over the old software approaches - that's engineers with depth creating machines to handle the breadth, and I wouldn't bet against them. They get funded by VCs because the money does talk - and there is a lot of it; the winners get to take a lot home, and will probably move on to creating AIs to handle more long-term financial problems.
 
Finance requires dealing with very diverse laws, social structures, technological shifts, financial controls, changes in nature, political changes, and a whole list of factors far beyond what is required in engineering. There are far more successful engineers than financial people that have a true grasp on the state of the world. As far as finance, I feel only a few hundred on the planet really have some kind of grasp on the world financial order and another group that just have been the lucky few of millions attempting it and more the result of random luck. The variables involved in truly understanding finance are almost beyond comprehension.
 
Arthur Hanson said:
... The variables involved in truly understanding finance are almost beyond comprehension.
Click to expand...

You're still sounding like the guys that said computers wouldn't win at chess, or at Jeopardy. There's nothing intrinsically hard about the finance stuff other than the large number of moving parts. Also, for the AIs to win in trading they only have to be faster than humans at the same level of intelligence.
 
There was an interesting opinion piece in the SF Examiner last week by a yellow cab driver.
There was a Salesforce conference concert at Pier 70 (somewhere near Portrero Hill I think).
Most attendees obviously tried to use Uber (or similar) so the one main access street became
a parking lot. The Uber drivers relied on their central program and GPS. It turned out the
maps were out of date which the yellow cab drivers figured out plus they new the side
streets. It took hours to get the people out so naturally the tips were good. Any automated
system sufferers from this problem: knowledge is problem specific that no program
can duplicate (see the old UK Lighthill Report for the detailed argument).
 
Arthur, i remember reading about a venture capital company that gave a computer a board seat. Also of others doing investments.
 
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