Traders Overwhelmed by Iran News Are Turning to AI for Help

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“It definitely has brought in more efficiency,” Wu said. “A lot of the historical analysis right now has become a lot less time-consuming because before it would be me searching to the end of Google.”

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For Gustavo Pessoa, artificial intelligence tools provide instant access to information that previously might have been hard to get, at a time when calculating the impact of the virtual closure of the Strait of Hormuz is becoming more essential to investing.

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“We use it for everything — from understanding the types of ships to analyzing the elasticity of oil demand to prices and even estimating how many barrels will be needed to stabilize flows,” said Pessoa, who’s a founding partner at Sao Paulo–based hedge fund Legacy Capital Gestora de Recursos Ltda.

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AI is not perfect, nor is it a replacement for human experience and decision-making. The technology has made mistakes in everything from gaming development to news content representation. A Bank of England policymaker warned that AI adoption in trading may amplify market shocks and herd-like behavior.

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Arkevium’s Visseau said the answers needs to be constantly tested for accuracy.

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“It’s an iterative process — I’ll challenge the output, refine assumptions, introduce new data points,” he said. 

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Junior Analysts

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Knowledge is vital to being able to make the most out of AI, said Michael Brown, senior research strategist at Pepperstone Group in London, adding that the technology isn’t a ‘silver bullet.’  

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“Participants still need a deep understanding of the situation themselves in order to make that final trading call and being able to gauge if the AI models are throwing out spurious information, which we all know can sometimes be the case,” Brown said.

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Yet the growing effectiveness of the tools means positions like entry-level research analysts could be at risk. 

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Cortesi said she could do without junior analysts, describing AI as her “best” research assistant.

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“I can ask AI: use a Warren Buffett approach to give me the key points of this company, and the AI will do it right away,” she said. “But if you ask a junior, the junior may not know what Warren Buffett approach is. So these types of more complex requests, definitely AI does much better. Also AI does it so much faster.”

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How long AI remains in this ancillary role is uncertain. Before the Iran war started, investor paranoia over which industries would be ravaged by the displacing efficiency of artificial intelligence spurred selloffs in the shares of software companies to food delivery services. Global banks could eliminate as many as 200,000 positions in the next three to five years as AI encroaches on tasks currently carried out by people, according to a Bloomberg Intelligence report last year. 

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John Foo, founder of Valverde Investment Partners in Singapore, said the technology is far from replicating the human thought process — for now.

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“AI is an additional resource that complements the human research effort,” he said. “I say complement and not replace as there is still an element of good judgment and experience that goes into decision making that AI at this stage — maybe the next 2-3 years — still cannot fathom. After that it will be anyone’s guess.”

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—With assistance from Abhishek Vishnoi.

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(Updates to add projected job losses in third-last paragraph.)

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