Who needs bankers when you have robots?

November 29, 2016 | Rocco Savage

This article by NY Mag’s David Wallace-Wells highlights a few instances where institutional investors are moving in to automation tools and the general fear among financial advisors and managers of diminishing traditional employment opportunities.

On September 4, a new activist investor announced himself to the world of big-swinging-dick finance. In a short email sent to 200 industry heavyweights, he urged Och-Ziff, one of the world’s largest publicly owned hedge funds, to embrace robo-trading. The author of the note was Michael Young; he is 24, a Chipotle cook who has moonlighted as a self-taught investor since reading Ron Chernow’s The House of Morgan at 19. His stake in Och-Ziff, a $39.2 billion fund, is $1,018. He wrote his declaration from a personal Gmail account; he did not use bcc.

“Dear Partners,” Young began. “We have taken a position in Och-Ziff Capital Management.” Then he got to the point.

I. Focus Och-Ziff’s attention on increasing tangible book value.
II. Help Och-Ziff develop an automated trading strategy to decrease human emotion and improve investing performance. This will also increase profit margins by requiring fewer traders to execute trades.
III. While continuing to focus their attention on tangible book value and investing performance. We will advocate for the sale of Och-Ziff Capital Management to a buyer who can manage the business better.

When notorious activist Bill Ackman took his position against Herbalife in 2012, it was with a 342-slide PowerPoint; I have just reproduced Michael Young’s Och-Ziff presentation in full. But that second objective was genuinely eye-catching (one recipient forwarded it to a Business Insider reporter, asking, more or less, “Who the fuck is this guy?”). For decades, certain amateur investors, suspicious of stock-market gamesmanship they might’ve felt looped out of, have proselytized “fundamentals” investing (it’s one way Warren Buffett got sainted as the cuddly Oracle of Omaha). But robo-trading (also called algorithmic or automated investment) is a relatively new crusade — and, for financial managers, a new fear. Which, of course: It’s hard not to worry if your future professional status depends on out–John Henry–ing some Deep Blue fino-bot. One telltale sign they’re genuinely freaked is the word they use to deride the threat. Robot is what we call technology we’re scared of these days, from robot warfare to robot cars to robot doctors. When we like the technology, we call it software.

Read the entire article at: Who Needs Bankers When You Have Robots?

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