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Matt Levine

Research Analysts and Poker Robots

Also human robo-advisers, Trump and regulation, some Barthelme, some Buffett.


Investment bank research is a grim business, because it's hardly a business at all. A business is, like, you make a thing, and you convince me to buy it, and I give you money for it. Research, classically, is: You make a thing (a research report), and you give it to me for free, and I trade some stocks with your bank and you maybe get credit for some of the commissions. That model has fallen apart in recent years -- in the U.S., providing corporate access has become as big a part of the job as actually producing research, while in Europe, new "unbundling" rules require investors to pay for research directly -- but it was always pretty unstable. If you work in the financial industry, it is good to sit as close as possible to the revenue. Research analysts' work is supposed to be motivated by the search for truth, not revenue. There is some loose connection between truth and revenue, but there's lots of slippage.