Òsanity is not statisticalÓ robo2ynh83w0aa13bg3i6488lyd1-wpengine.netdna-ssl.com/wp... ·...
TRANSCRIPT
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ROBO – George Orwell (1984)
“Sanity is not statistical”
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JB Beckett and New Fund Order
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Control..
THE HUMAN CONDITION?
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"the hurdle machines
have to cross to out-
perform humans with
college degrees isn't that
high."
Martin Ford, Author 'The
Rise of the Robots'
ROBO...
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Algo' Error: 'Hello,
you are about to die...
Can I sell you some
life insurance?'
DRONES...
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Moore’s Law
Parkinson’s Law
2 LAWS..
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FINANCE USED TO BE...
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Human Computers
Pit Traders, Runners
Modelling Actuaries
Market Makers
Clerks
Data Entry Keyers
Sell Side Analysts
OBSOLETE...
Technology
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HOW WE PERCEIVE FINTECH...
"Until they became
conscious they will
never rebel, and until
after they have
rebelled they cannot
become conscious."
1984
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THE 'OLD FUND ORDER' Asset Management has been..
• Human-human intensive
• Digital restricted to servicing and communication
• High premium; low transparency
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OLD FUND ORDER: SYMPTOMS
Poor Stewardship and ESG
Star Manager Culture
Rise of Passive
Supertankers
Biases
Fund Buyers
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DISADVANTAGES OF 'BIG'
Supertanker Funds..
• Burgeoning size relative to holding, exposures
• Reinvestment burden and slippage costs
• Redemption risk, star manager syndrome
• Dilution of alpha, rising risk mgt
• Cash drag to cover box flows
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CONSULTANTS?
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THE ORIGINS
OF THE 'P'
MODEL
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AGGREGATION OF PRICE
• Embedding Price into Multi-P rating
• Judgemental versus Tangible factors
• Aggregation - Value Proposition Trap
• Alpha BUT not at any cost
P + P + P + P + P... + Pi?
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CONVINCING V CONVICTION
Behavioural Biases
Incentives
Relationship
Mediocre Choices
Impact on Cost
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OPTIMUM ECONOMIC VALUE
Self-Regulation giving way to Big Brother
Scrutiny and shortening of value chain
Fee compression and transparency
Easier access through technological innovation
Increased individualism and investor choice
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Electronic Trading
Program-Program
Simpler Value Chains
Falling Costs and Fees
Automation. De-humanised
Robo-advisors
Traditional roles give way to Fintech
OEV: DISRUPTION
Disintermediation
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NFO: THE NEXT 20? YEARS?
You ? 3 1 5 2
Robo Everything
Automated
clearing
Block Everything (IOT)
ETF2.0
T Zero
4
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BLOCKCHAIN BASED ETF?
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E.g. Complexity network
by ontonix.com
26
ONTONIX/ UNIVERSAL
RATINGS
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RUN D.N.C.
THE KEY TO A SELF LEARNING
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FINTECH FIDUCIARY IS GO?
Agency?
Machine Learning
Judgmental nudges
DNC + Program Synthesis
Asimov's Laws
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ASIMOV’S LAWS
• 3 Laws of Robotics
• Hard-coding protections and controls
• Fiduciary responsibility upon programmer
• How to know controls are working?
• Knowing if client’s needs have changed..
• Responsibility and Accountability?
29
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ETF 2.0?
Retirement
Growth
Risk Averse
Adventurous
AI + Block-chain
Mid-term
https://institute.fintechcircle.com/courses/course-v1:Beckett+C1+ETF_2.0/about
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MAPPING A ROBO
Decision
(IN)
Decision
(OUT) 3 1 5
2
Needs
Cashflows
Trades
Asimov test
Liquidity
4
Risks
t = 12-120 months Monitoring nodes 31
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“the more the division of labour
and application of machinery
extend, the more does
competition extend among the
worker”.."
- Karl Marx, Das Kapital
[email protected] by JB @JonSBeckett
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DON’T WORRY...
BE HAPPY!