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I know a few people who work at RenTech. I would be very surprised if the operation turned out to be fraudulent. It certainly could be, but I very much doubt it

I know a few people who work at RenTech. I would be very surprised if the operation turned out to be fraudulent. It certainly could be, but I very much doubt it. If you have your ear to the ground you can find many proprietary trading firms which have similar or even superior returns. It's much harder to find a fund deploying similar strategies at the same capacity. As a corollary, every single new hire at the firm is expensive in more than the traditional ways. They only have so much room in Medallion, and so they tend to be both extremely secretive and extremely protective when hiring. They've lessened up on that somewhat recently, but it's still there.

quietthrow 8y ago
What are the people that you know like? Are they all multimillionaires now? Are they genius level smart by conventional standards. Did they apply for a job there or where they “plucked” from else where? How do they make such a shitload of money there?
- auntienomen 8y ago
  I can't speak for throwawaymath, but the people I knew who went there generally were academics who had already done great things or from whom great things were expected. I don't have much use for the term genius, unless we're talking about Grothendieck or Witten. But yes, we're talking about people who stood out among the crowds of extraordinarily smart people in top tier academia, and who'd actually managed to _do something_ with their intelligence. I think it's fair to say they were generally recruited via social networks. They knew what RenTec was, they knew someone who worked there (maybe an old grad school colleague or a former student), and when they reached out, RenTec already knew who they were. I don't know of anyone who went there who didn't already have a reputation in academia. So contrary to astazangasta's original claims, they do seem to me to have something of a monopoly on brains. There are other smart people at other firms, but I don't know of any other place that has such a concentration. (Aside from Jeff Dean's office, I suppose. ;)
  - bradleyjg 8y ago
    I'm not one of those people that have a moral objection to making money, or holds to crazy conspiracy theories about hedge funds, or anything like that. But it does seem kind of sad when you lay it out like that.
    - lenticular 8y ago
      We do have rather interesting incentives in our society to induce so many talented people to do essentially zero-sum game trading instead of science or math.
      - mrchicity 8y ago
        Commercial work will always pay better than academia. Roles like trader/quant where your value is measurable & portable will always pay better than being a drone in a big machine like Google. If anything, front office finance roles aren't underpaid: people with similar skill sets are underpaid elsewhere. I don't work in trading anymore, so I'm not talking my book here. Trading is zero-sum at a transactional level, but has knock on benefits beyond profit and loss: -Making it easy for companies to raise capital through IPOs or offerings (without a robust secondary market for securities, people will be less likely to invest) -In commodities: Letting businesses bear the risks they want and insure against the ones that aren't their core business -Liquid markets let real people trade in and out of investments without friction at fair prices -Providing accurate price signals to other businesses and the broader economy So I don't think I was saving the whales, but I don't think it was wasteful, either. Also, as a mildly clever OCD math guy who's semi-good at writing fast C++ code, I don't think I would have been curing cancer anyway. ETA: At least in the case of HFT, if you accept that markets need intermediaries of some sort, it seems more efficient to have a few dozen tech/math guys do the same job thousands of guys in mesh vests were doing years ago, and cheaper.
        bradleyjg 8y ago
        I knew, or at least knew of, some of the vest guys as fathers of people I grew up with. As in any group it’s a mixed bag, but I feel pretty confident that none of them were missing their true calling in pushing forward the boundaries of our understanding of hidden markov models or getting speech recognition to work. We’ve used those kind of resources to free up people to, I don’t know sell whole life insurance policies or something. I’m sure there’s a sense it which it is efficient, like I said I’m not a centrally planned economy guy, but there does seem to be something off about it. I mean there are computational cancer models that need to be written and optimized.
auntienomen 8y ago
I know some folks there too, and I sincerely doubt they're fraudsters. But character references aside, the claim that Medallion is skimming the other funds just doesn't add up: Medallion is at capacity and has been for at least a decade. It's been producing at least $3B / year in profits during that time, and that's redistributed to RenTec employees as cashflow, either as bonus (from their infamous 5/45) or as profits returned to the Medallion investors. So, we're talking about minimum $30B spun out in cash over the past decade. That's basically the total AUM of their other funds.

quietthrow 8y ago

What are the people that you know like? Are they all multimillionaires now? Are they genius level smart by conventional standards. Did they apply for a job there or where they “plucked” from else where? How do they make such a shitload of money there?

auntienomen 8y ago
I can't speak for throwawaymath, but the people I knew who went there generally were academics who had already done great things or from whom great things were expected. I don't have much use for the term genius, unless we're talking about Grothendieck or Witten. But yes, we're talking about people who stood out among the crowds of extraordinarily smart people in top tier academia, and who'd actually managed to _do something_ with their intelligence. I think it's fair to say they were generally recruited via social networks. They knew what RenTec was, they knew someone who worked there (maybe an old grad school colleague or a former student), and when they reached out, RenTec already knew who they were. I don't know of anyone who went there who didn't already have a reputation in academia. So contrary to astazangasta's original claims, they do seem to me to have something of a monopoly on brains. There are other smart people at other firms, but I don't know of any other place that has such a concentration. (Aside from Jeff Dean's office, I suppose. ;)
- bradleyjg 8y ago
  I'm not one of those people that have a moral objection to making money, or holds to crazy conspiracy theories about hedge funds, or anything like that. But it does seem kind of sad when you lay it out like that.
  - lenticular 8y ago
    We do have rather interesting incentives in our society to induce so many talented people to do essentially zero-sum game trading instead of science or math.
    - mrchicity 8y ago
      Commercial work will always pay better than academia. Roles like trader/quant where your value is measurable & portable will always pay better than being a drone in a big machine like Google. If anything, front office finance roles aren't underpaid: people with similar skill sets are underpaid elsewhere. I don't work in trading anymore, so I'm not talking my book here. Trading is zero-sum at a transactional level, but has knock on benefits beyond profit and loss: -Making it easy for companies to raise capital through IPOs or offerings (without a robust secondary market for securities, people will be less likely to invest) -In commodities: Letting businesses bear the risks they want and insure against the ones that aren't their core business -Liquid markets let real people trade in and out of investments without friction at fair prices -Providing accurate price signals to other businesses and the broader economy So I don't think I was saving the whales, but I don't think it was wasteful, either. Also, as a mildly clever OCD math guy who's semi-good at writing fast C++ code, I don't think I would have been curing cancer anyway. ETA: At least in the case of HFT, if you accept that markets need intermediaries of some sort, it seems more efficient to have a few dozen tech/math guys do the same job thousands of guys in mesh vests were doing years ago, and cheaper.
      - bradleyjg 8y ago
        I knew, or at least knew of, some of the vest guys as fathers of people I grew up with. As in any group it’s a mixed bag, but I feel pretty confident that none of them were missing their true calling in pushing forward the boundaries of our understanding of hidden markov models or getting speech recognition to work. We’ve used those kind of resources to free up people to, I don’t know sell whole life insurance policies or something. I’m sure there’s a sense it which it is efficient, like I said I’m not a centrally planned economy guy, but there does seem to be something off about it. I mean there are computational cancer models that need to be written and optimized.

auntienomen 8y ago

I know some folks there too, and I sincerely doubt they're fraudsters. But character references aside, the claim that Medallion is skimming the other funds just doesn't add up: Medallion is at capacity and has been for at least a decade. It's been producing at least $3B / year in profits during that time, and that's redistributed to RenTec employees as cashflow, either as bonus (from their infamous 5/45) or as profits returned to the Medallion investors. So, we're talking about minimum $30B spun out in cash over the past decade. That's basically the total AUM of their other funds.