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It doesn't matter if you can do it once. You have to do it consistently over years, which is not possible. I know about Renaissance Technologies, but I suspec

It doesn't matter if you can do it once. You have to do it consistently over years, which is not possible. I know about Renaissance Technologies, but I suspect they have insider information or some other angle and it's not all about their algorithms.

eximius 9y ago
That is a rather large accusation. Can you restate that as something constructive or helpful to the conversation?
- justadeveloper2 9y ago
  Do you understand investing at all? People have been attempting to "beat the market" for decades and nobody has been successful. There is always the "reversion to the mean" issue in every case. People with algorithms think they are beating the market then something changes and their algorithm no longer works. Except for Renaissance--they have consistently been beating the market, or so it appears. Does that help?
  - alextheparrot 9y ago
    He simply asked you to backup your claim, which you don't seem to be able to otherwise you would have. Throwing around a "yeah they can do it, but they must be cheating" isn't exactly constructive.
    - justadeveloper2 9y ago
      Do you know the story of LTCM? If not, do not lecture me on this subject. I'm sure in time I'll be proved correct. I'm sure you've heard of Bernie Madoff and how he "beat the market" for so long, yes? I don't have to "back up my claim" the math does it for me already! You're asking me to prove a negative--instead, show me one example of a firm that has beaten the market without resorting to funny business and I'm all ears.
    - srean 9y ago
      I have no dog in the fight, but generally it is the extraordinary claims that need backing up. Consistently beating the market would indeed be an extraordinary claim, because we havent seen that a lot (if at all).
  - justadeveloper2 9y ago
    AlexTheParrot--then home come they are the only one?
    - alextheparrot 9y ago
      I'm unsure what to make of this.
  - dajohnson89 9y ago
    No, it doesn't help all. You have yet to provide any evidence for your accusation of insider trading (or "something else"). You can't really accuse RT of wrongdoing, just because you don't understand their methodology. Also -- if I were a quant that managed to beat the market consistently, I would shut up and go straight to RT, for two reasons. To avoid toxic dubious comments like yours, and because RT can pay me better than your standard hedge fund.
    - scottlegrand2 9y ago
      Except that Renaissance trading doesn't really want to hire quants. They wish to hire scientists and mold them in the Renaissance way, which is something you'd know if you were a quant. http://www.reuters.com/article/simons-hedge-idUSN2135575220070522 http://www.reuters.com/article/simons-hedge-idUSN21355752200...
      - justadeveloper2 9y ago
        It's a good article, but it's all that you will find about them, no real details on how they are beating the markets over and over again. It's simply not possible to be that successful for so long. The article states that some experiments succeed and some fail and that their strategies peter out over time and they have to develop new ones. Okay, but never booking a loss?
        scottlegrand2 9y ago
        Speaking as a former quant myself (1 year), I believe that there are transient patterns in the market. The challenge is that those patterns appear and then they disappear mostly forever because they are frequently created by someone else's mistakes like Nassim Taleb buying way out of the money put options that never really created any significant profit. Free Alpha, get your free Alpha, right there. To tap into those patterns while they are profitable, you need a lot of smart people, and a great deal of infrastructure for experimentation and delivery of strategies that can tap into those patterns before they disappear. While you're right that it is possible that they cheat, it's also possible that they have a sufficiently sophisticated infrastructure to actually make this work. It's kind of like how Nintendo only ships 1 out of 3 video games they develop. All IMO of course.
  - eximius 9y ago
    I work at a hedge fund. I may not write the trading models, but I'd like to think I'm not totally ignorant.
    - justadeveloper2 9y ago
      So does your hedge fund beat the market every year like clockwork or do you have losses sometimes?
- sidlls 9y ago
  I didn't interpret it as an accusation. I interpreted it as he wrote: a suspicion that something other than RT's algorithms is a non trivial contributor to their success. He gave an example of insider trading, but it could be something else ranging from the equally sinister lying about outcomes (e.g. by creative accounting of what counts as a return) to the less sinister better access or timing to information anybody else has that makes the algorithms more effective and far less relevant, and many other things. His other point about the rarity of regularly beating the market certainly supports some amount of skepticism of RT, in my view. It's extraordinary, and it's an extraordinary claim that suddenly the particular talent at computational trading at RT is better than the legion of super genius other quants and techies who have been doing this for years. Disclaimer: I haven't a dog in the fight with respect to supporting or taking RT down. As I see it, being a small time player, my trading strategies are necessarily constrained to the point where RT's methods, legit or not, aren't applicable. So whether they win or lose doesn't make a difference to me.
  - omgwtfbyobbq 9y ago
    They, and other hedge funds, apparently classify their earnings in a way the IRS objects to. http://www.reuters.com/article/usa-irs-hedgefunds-idUSL3N0ZP3D320150709 http://www.reuters.com/article/usa-irs-hedgefunds-idUSL3N0ZP...

eximius 9y ago

That is a rather large accusation. Can you restate that as something constructive or helpful to the conversation?

justadeveloper2 9y ago
Do you understand investing at all? People have been attempting to "beat the market" for decades and nobody has been successful. There is always the "reversion to the mean" issue in every case. People with algorithms think they are beating the market then something changes and their algorithm no longer works. Except for Renaissance--they have consistently been beating the market, or so it appears. Does that help?
- alextheparrot 9y ago
  He simply asked you to backup your claim, which you don't seem to be able to otherwise you would have. Throwing around a "yeah they can do it, but they must be cheating" isn't exactly constructive.
  - justadeveloper2 9y ago
    Do you know the story of LTCM? If not, do not lecture me on this subject. I'm sure in time I'll be proved correct. I'm sure you've heard of Bernie Madoff and how he "beat the market" for so long, yes? I don't have to "back up my claim" the math does it for me already! You're asking me to prove a negative--instead, show me one example of a firm that has beaten the market without resorting to funny business and I'm all ears.
  - srean 9y ago
    I have no dog in the fight, but generally it is the extraordinary claims that need backing up. Consistently beating the market would indeed be an extraordinary claim, because we havent seen that a lot (if at all).
- justadeveloper2 9y ago
  AlexTheParrot--then home come they are the only one?
  - alextheparrot 9y ago
    I'm unsure what to make of this.
- dajohnson89 9y ago
  No, it doesn't help all. You have yet to provide any evidence for your accusation of insider trading (or "something else"). You can't really accuse RT of wrongdoing, just because you don't understand their methodology. Also -- if I were a quant that managed to beat the market consistently, I would shut up and go straight to RT, for two reasons. To avoid toxic dubious comments like yours, and because RT can pay me better than your standard hedge fund.
  - scottlegrand2 9y ago
    Except that Renaissance trading doesn't really want to hire quants. They wish to hire scientists and mold them in the Renaissance way, which is something you'd know if you were a quant. http://www.reuters.com/article/simons-hedge-idUSN2135575220070522 http://www.reuters.com/article/simons-hedge-idUSN21355752200...
    - justadeveloper2 9y ago
      It's a good article, but it's all that you will find about them, no real details on how they are beating the markets over and over again. It's simply not possible to be that successful for so long. The article states that some experiments succeed and some fail and that their strategies peter out over time and they have to develop new ones. Okay, but never booking a loss?
      - scottlegrand2 9y ago
        Speaking as a former quant myself (1 year), I believe that there are transient patterns in the market. The challenge is that those patterns appear and then they disappear mostly forever because they are frequently created by someone else's mistakes like Nassim Taleb buying way out of the money put options that never really created any significant profit. Free Alpha, get your free Alpha, right there. To tap into those patterns while they are profitable, you need a lot of smart people, and a great deal of infrastructure for experimentation and delivery of strategies that can tap into those patterns before they disappear. While you're right that it is possible that they cheat, it's also possible that they have a sufficiently sophisticated infrastructure to actually make this work. It's kind of like how Nintendo only ships 1 out of 3 video games they develop. All IMO of course.
- eximius 9y ago
  I work at a hedge fund. I may not write the trading models, but I'd like to think I'm not totally ignorant.
  - justadeveloper2 9y ago
    So does your hedge fund beat the market every year like clockwork or do you have losses sometimes?
sidlls 9y ago
I didn't interpret it as an accusation. I interpreted it as he wrote: a suspicion that something other than RT's algorithms is a non trivial contributor to their success. He gave an example of insider trading, but it could be something else ranging from the equally sinister lying about outcomes (e.g. by creative accounting of what counts as a return) to the less sinister better access or timing to information anybody else has that makes the algorithms more effective and far less relevant, and many other things. His other point about the rarity of regularly beating the market certainly supports some amount of skepticism of RT, in my view. It's extraordinary, and it's an extraordinary claim that suddenly the particular talent at computational trading at RT is better than the legion of super genius other quants and techies who have been doing this for years. Disclaimer: I haven't a dog in the fight with respect to supporting or taking RT down. As I see it, being a small time player, my trading strategies are necessarily constrained to the point where RT's methods, legit or not, aren't applicable. So whether they win or lose doesn't make a difference to me.
- omgwtfbyobbq 9y ago
  They, and other hedge funds, apparently classify their earnings in a way the IRS objects to. http://www.reuters.com/article/usa-irs-hedgefunds-idUSL3N0ZP3D320150709 http://www.reuters.com/article/usa-irs-hedgefunds-idUSL3N0ZP...