It is funny to imagine an end state here in which markets are entirely dominated by computers playing games with each other that are so complex and unintuitive that no human can understand them, so that a company will announce surprising good news and the stock will go down and everyone will be like “eh, bots, what can you do.”

Would it be so different from how financial markets work now? Financial markets aggregate human views and preferences in an emergent way, so that it’s not obvious what the views and preferences are just from the price action. “Stocks went up because bad economic data convinced investors that the Fed would pause its rate hikes” is not really that much more intuitive or accurate an explanation than, like, “stocks went up because some computers tricked some other computers into thinking economic data was good.”

Money Stuff: Don’t Insider Trade Drunk on the Squash Court
from Matt Levine ✉️