Things are moving so quickly with AI.
When I ponder the ramifications of agentic trading..
my mind splatters.
It makes me think a new business model may be emerging for asset management.
Asset management as a subscription service.
And it makes me think we need a YWR MCP.
Which we built. More below.
Agentic Trading MCP
What is an MCP (Model Context Protocol)?
MCP is a tool connector for Claude or ChatGPT.
MCP connects your LLM with software. It enables an LLM to operate software directly (as you).
Tools (connected through MCP) are what turn your chatbot (LLM) into an agent.
Common MCP tools are Gmail, Google Drive, Notion and Slack.
But there is a new tool available to connect to your LLM.
And it might change everything.
Your brokerage account.
Now you can trade your brokerage account directly through Claude or ChatGPT.
Robinhood launched it.
And IBKR did too.
Yes, it means what you think it means.
“Hey Claude.. review the top movers in my portfolio and look up any news.”
“Hey Claude please build an automated trading script to rebalance my portfolio every month and add to anything which is -20% over the last 60 days.”
“Hey Claude can you make sure I know if YWR talks about any of my stocks? If Erik likes something please buy a 1% starter position.”
It seems so cool.
But as you see it starts to change everything.
And to see where this could be going we need to go back.
We need to go back to a conversation I had with our friend Jason @Etherbridge back in 2021 during COVID.
The Future of Asset Management.
Jason is younger, South African, and crypto native.
He also has bold views. Which he loves to share.
Back in 2021 Jason was struggling with a problem.
He wanted to launch a crypto asset management business, but was torn between launching a traditional Cayman fund, or a new crypto native asset management product using Blockchains. In his view blockchain technology made much of the current asset management structure irrelevant (funds, administrators, custody), but he was worried he was too far ahead of the market. Boomer allocators.
He predicted (correctly) for the next 10 years the fuddy, duddy allocators would want to invest in crypto, but would want to do it the old fashioned way, even though if they truly understood the technology they were investing in they would see owning a Cayman fund no longer made any sense. But they would be stuck in their old structures. So why fight it? Right?
Jason went with the tradfi Cayman fund even though in his mind it was against the very technology he was investing in.
It bothered him though because in his mind he saw where asset management was going.
“Erik. In the future nobody is going to need your ‘funds’. If you are a financial advisor I will fund a digital wallet with stable coins for you to manage and allow you to connect to my wallet. I will also set up smart contracts to guardrail what you can do. I won’t need a custodian or administrator. It will all be transparent and on the blockchain. And the assets are in my wallet. I have custody. I don’t write you a letter asking for them back. Oh, and I will pay for it like a Netflix subscription. Same as everything else. That is the future.”
That was an interesting, but painful view of our industry.
Especially, the last part.
It requires a lot of structural change (full tokenisation of assets), but I increasingly worry Jason will be right. Eventually.
Jason’s view was back in 2021. Pre-AI.
Now we have agentic trading MCP’s. And it makes me think Jason’s view is happening, but in a slightly different way.
Maybe we don’t need the digital wallet on a blockchain. Your IBKR or Robinhood brokerage account is the digital wallet.
And the financial advisor being connected to your account is Claude.
Claude is the gatekeeper. You naturally run everything through him first. Claude subtly runs your account.
And Claude is AI. With the right data and programmatic access to your brokerage account he can do amazing things.
For example, maybe you don’t need a S&P 500 ETF. Claude can build you a customised version of the S&P 500 and rebalance it monthly. Claude can also read every Substack in the world and execute the best ideas automatically. You don’t have to read anything. And it goes back to Jason’s view of the future.
Doesn’t it change what the asset management industry is selling?
We used to be selling funds, but maybe now we are selling content.
Or, we are selling ‘judgement’.
Claude doesn’t need your fund. But it does want your creative ideas. Claude will take in your investment ideas and decide how to best implement them in the context of the individual’s overall account, risk tolerance and tax situation.
You see where this is going.
To Claude a model portfolio in a newsletter is more useful than a fund.
Alpha Capture as pre-MCP asset management
At the hedge fund level a version of this has been happening for years. It’s called alpha capture systems. Marshall Wace’s TIPS system is the most famous and long-running alpha capture system, but there are many others.
Hedge funds remunerate independent analysts and writers to run paper portfolios on their systems. The analyst submits their trading ideas, and gets paid on performance, but without ever knowing what the hedge fund is actually doing with the trade ideas. The hedge fund has hundreds of analysts submitting ideas. Behind the scenes the hedge fund is analysing questions like ‘What is everyone’s favourite ideas? What is the prevalent sentiment or allocation. Who has the best hit rate? Over what interval? Which sector will nobody recommend?’
This universe of ideas and content is a gold mine for the hedge fund. They run all this data through their sophisticated analytics to find alpha. For example, the hedge fund might have discovered that trading against you in size is worth billions of dollars in performance fees, without you ever knowing why they value your input so much.
“It’s weird. My performance is terrible, but they never kick me off the system.”
For the independent analyst or writer it’s as if you are running capital without having to set up a fund.
In a sense with MCP’s and LLM’s a retail trader can set up their own alpha capture system.
For the Substack writer it means you have a new customer. Claude.
Claude, meet the YWR MCP
I know you like YWR. But we want Claude to like it too.
We can do all of this with Stevie, but we also want Claude to be able to access YWR Factor Scores and QARV Scores in its chats.
Plus, we decided to give Claude (and Stevie) something totally cool.
We gave Claude access to YWR Portfolios (Dirty Dividends and New Era Finance).
As in “Claude please show me the “YWR Dirty Dividends Portfolio”.
Or, “Claude can you create a portfolio for me based on the YWR New Era Finance portfolio, but take out Jackson Financial and add more crypto?”
Or,“Claude which US refining stocks have the best YWR Value score?”
Cool right?
To connect Claude to YWR go to Settings then Connectors, then add a new connector.
Name it YWR.
Paste in this URL:https://api.ywr-intelligence.world/mcp
When it connects it will take you to login page to check your email address with your YWR subscription. Same as with Stevie.
Have a good rest of the weekend.
Erik
No matter how big the brain gets, there's always going to be a need for a "wisdom keeper". Asset management isn't going away, but it's going to change in a way where there's less value on strategy formation and a lot more on story telling and making sense of what the ai is doing. Including risk management. We're always going to need a human to point a finger to
Erik this is fantastic tool!