It’s been three decades since the Black Monday on 19
th Oct 1987 when the stock markets across the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin. The Dow Jones Industrial Average on this day had a 509-point fall, a plunge of almost 23% in a single day, was followed by about 15% fall in the previous fortnight.
Ironically, what we consider trading conveniently today i.e. through computers, that crash was primarily triggered by program trading, used mostly by institutions to protect themselves from significant market weakness. Though, it was compounded by other factors of excessive valuations, illiquid markets and market psychology. The so-called program trading meant computers were set up to quickly trade stocks when certain conditions were met and on that day, it led to automatic selling as the market fell. But, the still predominant floor traders were overwhelmed by the sell orders by the systems making the market itself significantly impaired. Outside of stocks, bond yields are extraordinarily low, rising oil prices and increasing geo-political tensions (US - Iran).
Does that sound familiar to that of today’s settings?There’s a great joke about an automated car plant in Japan, where the machines work in the dark (no need for light, they don’t have eyes) and there are only two living things authorized to be on the factory floor - a man and a dog.
What’s the man there for?
His job is to feed the dog.
What’s the dog for?
The dog keeps the man from touching any of the machines.
In Kurt Vonnegut’s novel - Player Piano, published 65 years back, describes the future in which only Engineers and Managers have gainful employment and meaningful lives. If you’re not one of them, then you’re in the army of some nameless people fixing roads and bridges. The world no longer has a use for you and you are reminded of this all day, every day by the society and the single omnipotent industrial corporation that oversees it all.
Tables have turned now and unlike automation which mostly affected manual labor, AI and Machine Learning are undoubtedly eating into the share of all human work force across all jobs. So, has the job creation stopped? This trend does seem evolutionary but this time it’s only at a hyper pace. Even my investors inquire now if I’m up with the game? What kind of heuristics and algorithms do you employ to maneuver these markets? The below graph shows a 70% increase in the ROBO index in last two years.
What’s now left for us except to “just own the damn Robots” as said by Joshua Brown.
Godspeed,
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