Bloomberg likens the process to a mountain surrounded by rising flood waters: The base is easily traded markets, such as stocks. Higher up are bonds and derivatives, then niche investments such as aircraft leasing, movie rights, and drug royalties, followed by human-heavy dealmaking such as mergers and buyouts. Alpha from esoteric assets are at the peak and most immune to automation (for now!!!)
A wave of coders writing self-teaching algorithms has descended on the financial world, and it doesn’t look good for most of the money managers who’ve long been envied for their multimillion-dollar bonuses. On a cold spring day, Ganti, clad in a gray hoodie, takes quick sips of Earl Grey tea at a bakery in Manhattan’s Tribeca neighborhood and explains that many of his peers don’t yet realize their careers won’t last. “Algorithms are coming for your job—they only ask for electricity,” says Ganti, jabbing his finger on a lime-green laminated table. “Algorithms are already reading, processing, and trading the news even before the photons have hit your retina.” Yet few money managers are alarmed by the threat. “They’re anesthetized,” Ganti says.