Chris Skinner's blog

Shaping the future of finance

Do we have perfect market knowledge?

Chris Skinner Author Avatar
by

I’ve thought for years that we are moving towards perfect market knowledge, where demand and supply information becomes equal to all buyers and sellers. Now that we have OpenAI and Gemini, are we getting there?

During the 1990s, I spent a lot of time discussing neural networking where we could pair stocks to buy and sell. Thirty years later, we can do far more than this. We moved from paired stocks to algorithmic trading to flash markets to markets that rise and fall without the touch of a mouse. It’s all automated.

We moved from markets that were run by computers to markets that are run by computers. I had this old joke that the world would be run by one man and his dog. The dog was there to stop the man touching the computers … the man was there to feed the dog. Are we there yet? I think we are.

This then leads to an uncomfortable question: if markets are run by systems, is that acceptable?

If we delegate the commerce of the world to algorithms, what is our role? If we no longer run the systems, can the systems run themselves?

Hmmm …

The real issue at the heart of that debate, in a financial context, is that we have reached perfect market knowledge. Those who are buying know just as much as those who are selling and, not just that, but the whole market knows. There’s no leverage. Is this where we are?

Some would say no, some would say yes, but I’m in the space that says it is possible, but not real.

Firstly, we would have to assume that all stocks, products and services were fungible – like-for-like or equitable. They are not.

Secondly, we would have to assume that AI, algorithms and related technologies could predict the movement of the markets. They cannot.

Of course they can make forecasts, but a forecast is not firm. It’s just a forecast. It is not firm, and none of the world is firm. Just look at Ukraine and Israel.

So, the answer is that systems, AI, networks and the world we live in today can invest in markets with imperfect knowledge, just as they always did. The biggest difference now is that it is real-time. There are no laggards.

I guess this is where perfect market knowledge exists.

You can programme everything, automate everything, connect everything … but there is still a space for a human interruption. In other words, we have everything organised on the network with what appears to be perfect knowledge, but someone is always going to interrupt the network.

Perfect markets? Imperfect humans. It’s always been this way.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

Intelligent Money: Our Future Is Where We Do Not Think About Money, As Our Money Thinks For Us

What is the future?

Learn more

Learn more about Chris

About Chris Skinner

The Past, Present And Future Of Banking, Finance And Technology

Fintech expert Chris Skinner: countries need digital transformation to remain competitive

Join me on Linkedin

Follow Me on X!

Hire Chris Skinner for dinners, workshops and more

Learn directly from from one of the most influential people in technology, gain insights from the world's most innovative companies, and build a global network.

Chris’s latest book

Order now

Chris Skinner’s ‘Intelligent Money’ Book Launch Event

Top 50 Global Thought Leaders and Influencers on FinTech 2023

Chris Skinner
Commentator, CEO of The Finanser and best-selling author at The Finanser

Thinkers360 Thought Leader

Contact Me

Global Awards

Lifetime Achievement Award

Global 100 - 2024 Winner

Chris Skinner - Financial Markets Advisor of the Year - The Finanser - UK 2023

Best Financial Markets Advisor of the Year 2023

30 Best Regtech Blogs and Websites 2023

Kids creating the future bank | TEDxAthens

Captain Cake and the Candy Crew

Captain Cake Winner of a Golden Mom’s Choice Award

TWO-TIME WINNER OF A MOM’S CHOICE GOLD AWARD!

Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser