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RenTech remains a touchy subject, as their only high performing fund is closed to external investors. Their available to the public stuff performs much less tha
by bluepizza 3y ago
RenTech remains a touchy subject, as their only high performing fund is closed to external investors. Their available to the public stuff performs much less than their closed fund.
- bmitc 3y agoMedallion was open to external investors. They closed it because Medallion has an approximate $10 billion cap before it moves the market too much and starts losing money and thus they just keep it to themselves. So they no longer need capital from outside investors. And why make others money when you can make yourself money? Their other funds can't just do what Medallion does, otherwise you are just increasing the cap of Medallion and thus hurting it, which is why they aren't as successful.
- paulpauper 3y agowhich is why they aren't successful. fixed it
- bluepizza 3y agoIt was closed to external investors in 1993, and had gains of 98% in 2008, in the middle of an economic meltdown. How come they figured it out for one single fund, but aren't able to make any alternative strong strategies except the secret and closed one?
- TheAlchemist 3y agoStrategies have limits on how much money they can manage. By limits, I mean - either it's impossible to put in more (could be because there are no more counterparties to trade with above a certain amount) or it would significantly decrease performance.
- bluepizza 3y agoAnd in the 30 years since closure, which has seen China, USA, and Europe boom and multiply in size, somehow the strategy still has limits? My questions are valid, and there might be valid answers. We don't know, because nobody knows how Medallion works. All we know is that nobody else can replicate it, not even RenTech itself. Which makes asking questions very important.
- bmitc 3y ago> All we know is that nobody else can replicate it, not even RenTech itself. Several firms have done similar things.
- bluepizza 3y agoDo you have examples? Googling is not yielding any results for me.
- TheAlchemist 3y agoYes, it would still have limits. There are several trading / arbitrage companies that are bringing roughly the same money over the years - for the past 20 years (I used to work for one). That being said, RenTech is indeed very interesting. For all we know, it could be a money laundering operation or something similar to Madoff's structure. Or they are just very very good, or lucky. Time will tell !
- bmitc 3y ago> had gains of 98% in 2008, in the middle of an economic meltdown Medallion does not act on its own or any human sentiment. It is a black box trading strategy that looks for signals. It's not aurprise that during downturns, the overall market is incredibly inefficient. Medallion makes money off of the market's inefficiencies. I don't know what that has to donwith internal vs external investors though. > How come they figured it out for one single fund, but aren't able to make any alternative strong strategies except the secret and closed one? I dislike responding to a question with a question, but why would that work? Medallion has made several people billionaires and has done so incredibly quickly. Trying to replicate it with the same strategy will just step on its toes. It helps to understand Medallion. It is a massive statistical trading system that places a huge amount of bets across all markets, like all of them, and hopes to win say 51% of the bets. When it reaches a certain size, they cap it by taking off all money above the cap and returning it to investors. You can't add more money to Medallion and keep its performance up. It moves the market too much and degrades its positions.
- bluepizza 3y agoNothing can help understand Medallion, because there is no actual information about it. Everything you just said is conjecture.