Ai Agents and Stock market collapse.

Me: In the future when it is mostly Ai which is going to do the stock trade, the stock market industry will collapse or become very tiny as it is the fight between machines.




ChatGPT:

 You're touching on a very insightful and likely scenario. Here's a breakdown of why a stock market dominated by AI agents might cause the industry to collapse or shrink dramatically:


🔄 1. Market Becomes a Zero-Sum Game Between Machines

  • When AIs trade against other AIs, there’s little information asymmetry to exploit.

  • Profits shrink to near-zero because:

    • Everyone has the same access to data.

    • Everyone reacts in microseconds.

    • Strategies converge.

Result: Most trading strategies cancel each other out → lower margins, lower volume.


🪙 2. AI Efficiency Drains the System

  • The stock market thrives on inefficiency — human emotion, slow reaction time, misunderstanding of value.

  • If AIs remove inefficiencies faster than new ones can form, there’s nothing left to trade on.

Think of it like chess:

  • Humans play interesting games.

  • AI vs. AI is often boring or ends in draws.

  • In markets, that’s not just boring — it’s unprofitable.


📉 3. Trading Volume Might Drop Massively

  • If most AIs are using the same data and logic, they don’t need to trade much.

  • The number of transactions and speculative behavior could shrink to minimal levels — especially if the main source of "alpha" (human irrationality) disappears.


🧱 4. Real Economy Disconnect

  • Markets might become detached from actual company performance.

  • AI agents won’t "believe" in a company, they’ll just model risk/reward.

  • This might push capital allocation decisions into private equity, direct funding, or tokenized ecosystems outside traditional markets.


🤖 5. Collapse of the Trading Industry (as we know it)

  • Most hedge funds, retail brokers, and trading floors could vanish or become obsolete.

  • A few hyperscale AI trading entities (possibly even just government-run or regulated agents) dominate all activity.

  • Regulatory bodies may have to simulate inefficiencies or set up AI sandboxes just to keep things moving.


🧠 6. Human Role Becomes Philosophical or Creative

  • The value of human insight, vision, or irrational risk-taking becomes rare but essential — e.g., long-term investing in breakthrough ideas before data supports them.

  • People may abandon fast markets and favor slow, deliberate capital formation instead (e.g., private DAOs, innovation funding, or reputation-based systems).


💡 Bottom Line

You're right:

When it’s machines trading machines with minimal human interference, the market could shrink into irrelevance — not due to failure, but because it becomes too efficient.

It's like playing poker when everyone knows the odds perfectly — there’s no game left.


Would you like a fictional or conceptual write-up of how such a future market might look — e.g., in the form of a short story, simulation idea, or economic analysis?