The stock market is run by AI.

Kyle Rock

January 27, 2017

Aidyia is an artificial intelligence hedge fund. It was made by Ben Goertzel, and his team, who have created a system that trades accurately and for a long time. Or as Ben puts it, “If we all die it would keep trading.” Its based on a system of voting for the best possible choice of stock. Your probably thinking to yourself. Well, how did much money did it make? It generated a “2 percent return” in one day. That is not a lot but when you put millions of dollars, its a nice jab. Then 2% becomes very attractive. Other systems have been able to do as strong as 8.50% (see graph below) return. Such as the “AZFinText system” which analyze finical news and decides when a stock will move 1 to 2 percent in a short period of time. Allowing the system to make bets on a given stock.

These systems, as compelling as they sound, are dangerous when you consider the long term. “84%” of all stocks are traded by AI or algorithms. Let that sink in when you consider that in 2010 it was “50%”.

It is safe to say that because AI is doing nearly all our trading and because it is starting to make the decision process for which stocks to trade. It will likely choose the most efficient companies . It will be the ones that have invested heavily in AI systems. So this becomes a self-feeding mechanism. The AI will trade to the best company. The best companies will be the ones with the most AI. They may even be entirely AI.

Regardless of your take on it one thing is for sure. We have put algorithms and AI at the helm of stock trading. The short term is profits for companies. The long term is a potential stock market absent human interaction.

Economics is the ultimate driving force for AI in business. If one sets down and logically thinks about our basic money supply system. One can quickly realize that a robotic system handling our financial sector will be the norm of the future. So it appears the fate of our currency system may be in the cold palm hands of AI.

https://www.wired.com/2016/01/the-rise-of-the-artificially-intelligent-hedge-fund/

https://www.technologyreview.com/s/419341/ai-that-picks-stocks-better-than-the-pros/

http://www.zerohedge.com/contributed/2012-17-26/84-all-stock-trades-are-high-frequency-computers-%E2%80%A6-only-16-are-done-human-tra