The New Investor

A sea change is happening in finance. Machines appear to be on the rise and humans on the decline. Human endeavors have become unmanned endeavors. Human thought and human deliberation have been replaced by computerized analysis and mathematical models. Technological advances have made finance faster, larger, more global, more interconnected, and less human. Modern finance is becoming an industry in which the main players are no longer entirely human. Instead, the key players are now cyborgs: part machine, part human. Modern finance is transforming into “cyborg finance.”

I explore this sea change in “The New Investor,” an article recently published by the UCLA Law Review.  The article offers an early, descriptive and normative examination of this transformation and its wide-ranging effects on law, society, and finance.  The article begins by placing the rise of artificial intelligence and computerization in finance within a larger social context.  Next, it explores the evolution and birth of a new investor paradigm in law precipitated by that rise. The article then identifies and addresses regulatory dangers, challenges, and consequences tied to the increasing reliance on artificial intelligence and computers.

Specifically, it warns of emerging financial threats in cyberspace, examines new systemic risks linked to speed and connectivity, studies law’s capacity to govern this evolving financial landscape, and explores the growing resource asymmetries in finance.

Finally, drawing on themes from the legal discourse about rules and standards, the article closes with a defense of humans in an uncertain financial world in which machines continue to rise, and it asserts that smarter humans working with smart machines possess the key to better returns and better futures.

The full article is available for download here.

Leave a Comment