The Digital Skeptic: Job-Killer Robots Target Analysts Next

NEW YORK ( TheStreet) -- Philip Parker has this to say to the swanky, Wall Street analyst set: You've probably seen your day.

"The process for automating much of what they do is now fully understood," Parker told me during what has to be one of the strangest, most eye-opening phone calls I've had in months.

See, Parker is a professor at

Insead, an international business research and educational organization with offices in New York City, Abu Dhabi and Singapore and other groovy, far-flung spots. Part of his research, he told me, is taking a deep, hard look at the role language plays in helping -- or hurting -- economies around the world.

"When you go into Barnes & Noble ( BKS) and look for self-help books in English, you see three aisles. But in French, there are almost none," he said.

That's not because the French are any less self-obsessed than Americans, or even because you are in a U.S. bookstore. Rather, it's because fewer people speak French -- which makes it tougher for businesses to fill niche categories like francophone self-help.

"No publisher can make money selling such small topics," Parker said.

So a decade or so ago, Parker began researching and diagramming the thinking behind language, with an eye toward using computers to automate the creation of print, audio and video content and altering those depressing economics.

And so far, so good.

He's developed several marvelous automatic content tools, including an on-demand weather information translation system used in dozens of languages in Africa and India, as well as a self-writing poetry engine called

Toto Poetry. Back in 2007, he was even awarded a patent for the process of creating, producing and marketing audio, video and print material without all the pesky people.

And what does this machine-learning brain bug have to say about what passes for financial report writing and scholarship here on Wall Street?

"Most of what economists do is very formulaic by nature," he said. "We're getting to the point where we can diagram, program and automate much of it."

That's right, friends, the age of the RoboAnalyst is at hand.

RoboAnalyst says "Buy!"
For Parker, it's not a question of if human investors will rely less on human analysis, it's how much they already do. Mimicking the mind of analysts to extend their reach, while not exactly trivial, is not exactly rocket science either.

"The big trick is to realize that what we call a report is not a report, but a series of diagrammable subgenres like chapters, sections, paragraphs or whatever," he said. "And once you get to that last subgenre, you've written a formula."

It's a process Parker says is well within the reach of larger enterprises and investing firms and, more and more, even the rank-and-file investor.

Without question, the most interesting of the firms behind such processes is Durham, N.C.-based

Automated Insights. The firm has created its own proprietary content creation algo that produces written analysis and trend forecasting based solely on the numbers financial markets create organically.

"We produce content with nothing but data as the input," Robbie Allen, founder of the firm, told me via email.

Allen explained that his technology looks for relative change in financial data and assigns a qualitative value to that change, which is captured and rendered in English. Cormac McCarthy it is not, but we've all read worse. And business is growing. The company already provides similar content to Yahoo! ( YHOO) Sports based on sports box scores.

"We are talking to a couple of companies about personalized portfolio recaps," Allen said.

But the growing reach of automated analysis is not limited to science fiction-like operations such as Automated Insights.


Trefis creates what it calls a "meaningful financial community" based on the components of the price of a stock -- but with a fascinating, automated, intelligent analysis twist. The firm, with less than 50 people, uses technology developed by MIT grads to extend the analytical reach of its team of human analysts. It offers a variable target price for a stock based on complex scenario analysis of the value components of that stock. And it does it for more than 200 popular equities. And in real time.

"Our forecasts and the corresponding rationale are transparent to all," says the company website. "And each forecast assumption that has an impact on the Trefis price is modifiable by users."

Go take a look and tell me what humans can do that. It's pretty darn impressive.

Just another collapsing market
What's getting plain old sad is how there's nothing particularly unique about the decline and fall of the financial analyst empire. As in music, publishing and other sectors in financial services, it turned out that creating written reports and doing the valuations are handled just fine by machines.

So just like any other blogger, lawyer or banker, the once invulnerable Wall Street analyst will have to get right with life in this Dark Age 2.0. Working harder to stretch ever-thinner resources to meet the rising demand of output, and all the while living with the odd wonder of wondering what algorithm finally takes at his or her job altogether.

As Parker puts it, "Analysis is simply too simple a problem."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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