Between January and March 2016, a record $15 billion was pulled out from Hedge Funds, the second highest outflow since 2009, when the economy was going through a downturn. Investors were responding to the inability of some of the superstar fund managers to protect their assets. When we hear stories of AI robots taking control of our lives, the image of panic is ingrained in us, primarily contributed by Hollywood movies, but popular culture fails to measure the nimbleness of high net worth individuals. Their fickleness changes demand in a market and subsequently freezes hiring. Perhaps, super-specialization is not a good idea in domains where innovation is disrupting the daily responsibilities of a well-established hierarchy.
Babak Hodjat, one of founding members of Siri, before Apple acquired the team, shares how the AI Hedge Fund Managers will disrupt the space. Like any other AI agents, the trading agents or digital stock traders uses historical data, market sentiments, and risk factors, before purchasing an instrument in a segment.
After the purchase, instructions are also provided on the risk of the sector, the exposure, and the exit price. Unlike the annoying digital assistants that you saw with Microsoft Office in the 90s, the AI Hedge Fund Managers creates its own assistants, train them with real data sets and those who have proven their worth is replicated. The under performing agents are killed off, eventually creating a system of smart traders. Now imagine competing with thousands of AI traders. No amount of ‘The power of intuition and experience’ will work in the new reality. You will soon be irrelevant.
If you go by the track record of Siri, be comfortable in knowing that the disruption is 5-10 years away, and your super niche specialization as an Analyst for Hedge Funds is safe, but the problem is with the investments in AI. From 2013 to 2015, the investments have tripled from $700 million to $2.4 billion. The speed of learning and the lack of distraction makes AI agents a potent replacement for MBA analysts.
Another trend that would accelerate AI adoption is the productivity per employee numbers in the US that is set to fall by 0.2 percent, in 2016-17, first time after three decades of a year on year growth. Wage stagnation, pressure on companies to maintain profit margins and the rising costs means companies have to look at options other than incentivizing employees with Career Opportunities, Work/Life Balance, or higher autonomy. The pressure from shareholders to maximize return would lead to faster adoption of AI into the workforce.
Unless you are working in Oil & Gas or Mining where human, political, environment and market dynamics along with innovation in technology determine the future of the industry, don’t take an MBA based on the ‘carrot’ that with an MBA, you can climb the middle manager ladder.
There won’t be any ladder in a decade – the time when you would need to fetch the long-term return from an MBA.
The above post is an Excerpt from the Chapter: Big Data, AI & Future for MBAs (F1GMAT's Comprehensive MBA Research Guide)
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