Key insights
- The post discusses the potential impact of AI on market efficiency and retail investor profitability. It questions whether AI-driven trading will eventually dominate, squeezing out retail investors. While automated trading is prevalent, it hasn't eliminated retail profits yet. The post speculates on a future where AI's superior knowledge limits retail gains, with profits concentrated among large institutions exploiting minuscule price movements. This could lead to decreased retail participation and increased market concentration.
How many years do we have before AI makes the market efficient and/or most trading happens through AI agents? Will it ever happen? By that I mean a time when retail investors won't be able to earn much money from trading since AI will know nearly everything there is to know about the markets; and profit from trading may largely be limited to The Big Guys through tiny movements in stocks but by placing huge trades.
How much automated trading is done now and what drives it? Obviously, automated trades haven't made retail stock trading unprofitable thus far. But I'm wondering if there's a time in the foreseeable future when that will be the case. Maybe there won't be, but I'm curious what people think about this.