3 ms·

While I understand there are moral and ethical complications with the vast sums of wealth and influence attached to RenTec, the tone in these comments is disapp

by cjken 7y ago

While I understand there are moral and ethical complications with the vast sums of wealth and influence attached to RenTec, the tone in these comments is disappointing... There is no fraud at RenTec, and there is nothing magical about what they do. It's simply an amazing technical and scientific organization, operating with almost unthinkable efficiency and scale. I haven't read the book, but I'm pretty sure this isn't in it: I've been told by reliable sources that if you pick any one strategy (however you are able to separate/define that) from the Medallion portfolio and it will not be individually remarkable--probably less than a 1.0 Sharpe (net of trading costs, gross of fees). There are countless hedge funds with equally performant models and sub-strategies. What makes RenTec different is their ability to generate orthogonal strategies at a remarkable scale. They generate more ideas with less philosophical and empirical overlap than anyone else, by a wide margin. The software and theory required to do this for a fund as large as Medallion is absolutely as rare and valuable as their returns have proven. Wrote more about it here: https://www.bridgealternatives.com/medallion-isnt-magic-probably/ https://www.bridgealternatives.com/medallion-isnt-magic-prob...

erikig 7y ago
Thanks for sharing this, I'm diving into the 3 videos that you highlighted: Part 1: Mathematics - https://www.youtube.com/watch?v=HVqxs0YBp4g https://www.youtube.com/watch?v=HVqxs0YBp4g Part 2: Finance - https://www.youtube.com/watch?v=srbQzrtfEvY https://www.youtube.com/watch?v=srbQzrtfEvY Part 3: Philanthropy - https://www.youtube.com/watch?v=w8o-qC8E5ic https://www.youtube.com/watch?v=w8o-qC8E5ic
logjammin 7y ago
This is really interesting, and what I'm about to say makes me feel more bleeding-heart than I feel I am most days, but there's something deeply melancholy about the fact that this collection of the best intelligence our species has to offer, working together to achieve something utterly unheard of - so unheard of that many other smart people think there's something criminal going on - is exerting its collective effort to - when you put it in plain English - hack a casino. We're hurtling at an accelerating rate to ecological ruin, with millions (hundreds of millions?) of deaths a plausible outcome in the next 100 years, not to mention a fall in the standard of living for basically everyone, and our best and brightest are doing the Manhattan Project of cash. As a stupid person, I can't do much other than shrug - hell, I can't even say I wouldn't do the same as these brain-genius PhDs if I had their capabilities. But it still kinda sucks, is all.
- solveit 7y ago
  The problem is that our society is terrible at rewarding positive externalities. Even worse than we are at punishing negative externalities. I do object to your phrasing. Quantitative finance isn't hacking a casino. It does generate actual value. The problem is that finance is one of the few fields where you can expect to be rewarded in proportion to the value you generate because the amount of value you generate is easy to measure. Cue all the smart, realistic people rushing into finance instead of having a larger impact for peanuts doing fundamental science or something.
  - logjammin 7y ago
    Thanks for this. What you say about proportion of compensation makes a sort of sense, but I don't have the chops or the knowledge of the field to evaluate it. The 'easy to measure' thing is definitely insightful and useful to me as I think about it. Money does have that clarity to it. The "hacking a casino" thing I'll defend, though: to the extent that getting better at gambling games and finance both can involve prediction, probabilities, data collection, and the like, I don't see how the analogy fails on anything but its crudeness, which I'll happily grant (while also saying I was going for a chuckle with it). I didn't mean to imply that getting good at either is something to be embarrassed about, only that it feels a little ... maybe "small", next to other concerns. I think that superlatively intelligent people do have god-given opportunities the rest of us don't have, and that while they're free to do as they please, the rest of us sometimes hope they'll use them wisely (and, selfishly in this case, to our benefit in some small way). I'll also say that I meant "hack" in the older, more optimistic 1970's way, like "figure out what makes it tick and do cool things with it" instead of the more sinister modern sense. I don't attribute any malice or ill intent to Simons/RenTec, at least not without evidence. I guess I could reinterpret/update my comment in light of what you've said to now say that "whatever value these men and women are creating inside this secretive firm, there's a strong case to be made that it's not the most urgent or needed kind these days". I'm curious and sincerely so, though, when I ask: what actual value does quantitative finance create?
    - strangedynamics 7y ago

by cjken 7y ago

erikig 7y ago

Thanks for sharing this, I'm diving into the 3 videos that you highlighted: Part 1: Mathematics - https://www.youtube.com/watch?v=HVqxs0YBp4g https://www.youtube.com/watch?v=HVqxs0YBp4g Part 2: Finance - https://www.youtube.com/watch?v=srbQzrtfEvY https://www.youtube.com/watch?v=srbQzrtfEvY Part 3: Philanthropy - https://www.youtube.com/watch?v=w8o-qC8E5ic https://www.youtube.com/watch?v=w8o-qC8E5ic

logjammin 7y ago

This is really interesting, and what I'm about to say makes me feel more bleeding-heart than I feel I am most days, but there's something deeply melancholy about the fact that this collection of the best intelligence our species has to offer, working together to achieve something utterly unheard of - so unheard of that many other smart people think there's something criminal going on - is exerting its collective effort to - when you put it in plain English - hack a casino. We're hurtling at an accelerating rate to ecological ruin, with millions (hundreds of millions?) of deaths a plausible outcome in the next 100 years, not to mention a fall in the standard of living for basically everyone, and our best and brightest are doing the Manhattan Project of cash. As a stupid person, I can't do much other than shrug - hell, I can't even say I wouldn't do the same as these brain-genius PhDs if I had their capabilities. But it still kinda sucks, is all.

solveit 7y ago
The problem is that our society is terrible at rewarding positive externalities. Even worse than we are at punishing negative externalities. I do object to your phrasing. Quantitative finance isn't hacking a casino. It does generate actual value. The problem is that finance is one of the few fields where you can expect to be rewarded in proportion to the value you generate because the amount of value you generate is easy to measure. Cue all the smart, realistic people rushing into finance instead of having a larger impact for peanuts doing fundamental science or something.
- logjammin 7y ago
  Thanks for this. What you say about proportion of compensation makes a sort of sense, but I don't have the chops or the knowledge of the field to evaluate it. The 'easy to measure' thing is definitely insightful and useful to me as I think about it. Money does have that clarity to it. The "hacking a casino" thing I'll defend, though: to the extent that getting better at gambling games and finance both can involve prediction, probabilities, data collection, and the like, I don't see how the analogy fails on anything but its crudeness, which I'll happily grant (while also saying I was going for a chuckle with it). I didn't mean to imply that getting good at either is something to be embarrassed about, only that it feels a little ... maybe "small", next to other concerns. I think that superlatively intelligent people do have god-given opportunities the rest of us don't have, and that while they're free to do as they please, the rest of us sometimes hope they'll use them wisely (and, selfishly in this case, to our benefit in some small way). I'll also say that I meant "hack" in the older, more optimistic 1970's way, like "figure out what makes it tick and do cool things with it" instead of the more sinister modern sense. I don't attribute any malice or ill intent to Simons/RenTec, at least not without evidence. I guess I could reinterpret/update my comment in light of what you've said to now say that "whatever value these men and women are creating inside this secretive firm, there's a strong case to be made that it's not the most urgent or needed kind these days". I'm curious and sincerely so, though, when I ask: what actual value does quantitative finance create?
  - strangedynamics 7y ago