Robo-Advisor
Categories: Investing
A black box. A smart robot. A computer that purports to advise you as to how to best manage your money, better than an analogous human...for a fraction of the cost.
Sound too good to be true? Hmm...well, given that human advice-givers are usually awful, and that money managers destroy more value than they add, this little trickster might actually be good. The future. The way things go. The "fire your advisor and hire this robot thingie"...thing.
You have probably heard of SoFi. They're a robo-advisor. It's all they do. Unclear how they make money, but it's awfully nice to have a computer do all the client-dealing for almost no marginal cost versus those high-maintenance people in expensive clothing.
In theory, a robo advisor "knows" more about the market than a human, is unbiased, and simply does what's best for clients as driven by statistical data. The tough question: is the data good, bad, or ugly? Or all three? Yeah. We don't know yet. The jury is still out on this one. Google the term and you'll be hounded relentlessly with ads from the many vendors out there all fighting for your business.
Related or Semi-related Video
Finance: What is program trading?14 Views
Finance a la shmoop what is program trading? okay well watch two episodes of
Big Bang Theory if you first watch one episode of Keeping Up with the [Man and woman watching TV]
Kardashians deal alright no different kind of program trading, program trades
in a Wall Street sense are run by a computer program, hence the catchy name
and it's also called the black box like a program kicks out that if the S&P 500
is down 0.3 percent in an hour and the US dollar has risen relative to the
pound and goog is outperforming the tech index and the moon is in the seventh
house and Jupiter is aligned with Mars then short a million shares of GE like
that would be something that the box would tell you or something like that
and there are a ton of weird mathy things behind the rationale for each of [Math formulas appear]
these trades some of it makes sense to normal people but most of it needs three
PhDs in math and physics and other stuff to translate rationally
well the dangerous thing here about program trades is that usually there is
no human involved when they execute a trade that is it's just computers
talking to other computers but thankfully computers never have glitches [Computer chip blowing off steam]
right they never have mistakes and things generally always run smoothly
when computers are involved right well this is a really smart way to manage
your retirement money just give it all to a black box and assume the guys who
wrote the algorithm knew what they were doing or maybe not [Hacker using a PC]