So what are you guys going to do now that you have all of these
non-complaining slaves?
What are you going to do with your lives?
What will be the meaning of your existence if it is not to put simple bread
and meat on table and a house over your heads?
What are your cultures? answers?
What happened in history when you had human slaves?
Will the humans be delegated to war and glory as in the past?
Tournaments on horses with body armor?
Chess?
Game Theory?
War with Korea?
Boredom can be a terrible thing.
What will you do?
REH
From: [email protected]
[mailto:[email protected]] On Behalf Of Arthur Cordell
Sent: Thursday, December 23, 2010 9:55 AM
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION';
[email protected]
Subject: [Futurework] Computers That Trade on the News
An interesting development. Robots take over the factory floor. Computers
take over the trading desk.
---------------------------------
December 22, 2010 NY Times
Computers That Trade on the News
By GRAHAM BOWLEY
<http://topics.nytimes.com/top/reference/timestopics/people/b/graham_bowley/
index.html?inline=nyt-per>
The number-crunchers on Wall Street are starting to crunch something else:
the news.
Math-loving traders are using powerful computers to speed-read news reports,
editorials, company Web sites, blog posts and even Twitter
<http://topics.nytimes.com/top/news/business/companies/twitter/index.html?in
line=nyt-org> messages ? and then letting the machines decide what it all
means for the markets.
The development goes far beyond standard digital fare like most-read and
e-mailed lists. In some cases, the computers are actually parsing writers?
words, sentence structure, even the odd emoticon. A wink and a smile ? ;) ?
for instance, just might mean things are looking up for the markets. Then,
often without human intervention, the programs are interpreting that news
and trading on it.
Given the volatility in the markets and concern that computerized trading
exaggerates the ups and downs, the notion that Wall Street is engineering
news-bots might sound like an investor?s nightmare.
But the development, years in the making, is part of the technological
revolution that is reshaping Wall Street. In a business where information is
the most valuable commodity, traders with the smartest, fastest computers
can outfox and outmaneuver rivals.
?It is an arms race,? said Roger Ehrenberg, managing partner at IA Ventures,
an investment firm specializing in young companies, speaking of some of the
new technologies that help traders identify events first and interpret them.
Many of the robo-readers look beyond the numbers and try to analyze market
sentiment, that intuitive feeling investors have about the markets. Like the
latest economic figures, news and social media buzz ? ?unstructured data,?
as it is known ? can shift the mood from exuberance to despondency.
Tech-savvy traders have been scraping data out of new reports, press
releases and corporate Web sites for years. But new, linguistics-based
software goes well beyond that. News agencies like Bloomberg, Dow Jones
<http://topics.nytimes.com/top/news/business/companies/dow_jones_and_company
_inc/index.html?inline=nyt-org> and Thomson Reuters
<http://topics.nytimes.com/top/news/business/companies/thomson-reuters-corpo
ration/index.html?inline=nyt-org> have adopted the idea, offering services
that supposedly help their Wall Street customers sift through news
automatically.
Some of these programs hardly seem like rocket science. Working with
academics at Columbia University
<http://topics.nytimes.com/top/reference/timestopics/organizations/c/columbi
a_university/index.html?inline=nyt-org> and the University of Notre Dame
<http://topics.nytimes.com/top/reference/timestopics/organizations/u/univers
ity_of_notre_dame/index.html?inline=nyt-org> , Dow Jones compiled a
dictionary of about 3,700 words that can signal changes in sentiment.
Feel-good words include obvious ones like ?ingenuity,? ?strength? and
?winner.? Feel-bad ones include ?litigious,? ?colludes? and ?risk.?
The software typically identifies the subject of a story and then examines
the actual words. The programs are written to recognize the meaning of words
and phrases in context, like distinguishing between ?terribly,? ?good? and
?terribly good.?
Vince Fioramonti, a portfolio manager at Alpha Equity Management, a $185
million equities fund in Hartford, uses Thomson Reuters software to measure
sentiment over weeks, rather than minutes or hours, and pumps that
information directly into his fund?s trading systems.
?It is an aggregate effect,? Mr. Fioramonti said. ?These things give you the
ability to assimilate more information.?
Bloomberg monitors news articles and Twitter feeds and alerts its customers
if a lot of people are suddenly sending Twitter messages about, say, I.B.M.
<http://topics.nytimes.com/top/news/business/companies/international_busines
s_machines/index.html?inline=nyt-org>
Lexalytics, a text analysis company in Amherst, Mass., that works with
Thomson Reuters, says it has developed algorithms that make sense out of
Twitter messages. That includes emoticons like the happy-face :) and the
not-so-happy :\.
Skeptics abound, but proponents insist such software will eventually catch
on with traders.
?This is where the news breaks,? said Jeff Catlin, the chief executive of
Lexalytics. ?You have a leg up if you are a trader.?
The computer-savvy traders known as quants are paying attention. According
to Aite Group, a financial services consulting company, about 35 percent of
quantitative trading firms are exploring whether to use unstructured data
feeds. Two years ago, about 2 percent of those firms used them.
Quants often use these programs to manage their risks by, say, automatically
shutting down trading when bad news hits.
But industry experts say the programs are also moving the markets. Last May,
as Greece?s financial crisis deepened, Wall Street computers seized on a
news story with the word ?abyss? in the headline and initiated sell orders,
according to industry experts.
But some warn of a growing digital divide in the markets. Well-heeled
traders who can afford sophisticated technology have an edge over everyone
else, these people say.
Paul Tetlock, an associate professor at Columbia University who did research
that was used to create the news algorithms, worries that technology has
skewed the playing field. Regulators, he said, should keep a close eye on
these high-speed traders.
?People are trading news at very high frequency,? he said. ?People worry
about that.?
But the experts are already talking about the next thing ? programs to
automatically digest broadcast and closed-caption television.
Adam Honoré, the research director at Aite Group, said the innovations did
not end there. He said some traders were using software that monitored
public statements by corporate executives and administered the computer
equivalent of a lie-detector test.
?It is the next wave of trading,? Mr. Honoré said of unstructured data. ?It
goes hand in hand with more and more of everyday life being digitized.?
