BlackRock doubles down on AI and algorithms, starts laying off stock pickers

We have taken another baby step toward a workless tomorrow, in which machines owned by billionaires ephemeralize increasing swathes of human endeavor in service to higher margins, bigger profits, and fewer bellyaching employees.

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Chris Dixon pointed out that

the next big thing always starts out being dismissed as a ‘toy’

and then, a few years later, some established way of doing things is turned ass-over-teakettle by the former toy technology.

This week, the largest investment house in the world has announced plans to basically give up on human stock picking, and let the toys make the decisions:

Landon Thomas Jr, At BlackRock, Machines Are Rising Over Managers to Pick Stocks

On Tuesday, BlackRock laid out an ambitious plan to consolidate a large number of actively managed mutual funds with peers that rely more on algorithms and models to pick stocks.

The initiative is the most explicit action by a major fund management firm in reaction to the exodus of investors from actively managed stock funds to cheaper funds that track every variety of index and investment theme.

Some $30 billion in assets (about 11 percent of active equity funds) will be targeted, with $6 billion rebranded BlackRock Advantage funds. These funds focus on quantitative and other strategies that adopt a more rules-based approach to investing.

“The democratization of information has made it much harder for active management,” Mr. Fink said in an interview. “We have to change the ecosystem — that means relying more on big data, artificial intelligence, factors and models within quant and traditional investment strategies.”

As part of the restructuring, seven of BlackRock’s 53 stock pickers are expected to step down from their funds. Several of the money managers will stay on as advisers. At least 36 employees connected to the funds are leaving the firm.

On 24 March, our Treasury Secretary, Steve Mnuchin told an audience in Washington,

In terms of artificial intelligence taking over the jobs, I think we’re so far away from that that it’s not even on my radar screen. I think it’s 50 or 100 more years.

We have AI denialists running our government (which figures, since they deny all science, basically). A Wall Street guy who doesn’t know the quants are being laid off at BlackRock as the toys take over.

At any rate, leaving our hapless, benighted, futureblind government to the side, we have taken another baby step toward a workless tomorrow, in which machines owned by billionaires ephemeralize increasing swathes of human endeavor in service to higher margins, bigger profits, and fewer bellyaching employees.

Written by

Founder, Work Futures. Editor, GigaOm. My obsession is the ecology of work, and the anthropology of the future.

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