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Numerai, a hedge fund built by a community of anonymous data scientists

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Re: Numerai, a hedge fund built by a community of anonymous data scientists

#41

Post by s_q_b »

Xcelerate wrote: post #36

> Numerai was seed funded by Howard L. Morgan the co-founder of Renaissance Technologies. Very interesting. This gives this idea some legitimacy in my opinion.

Very much agreed.

For those who are not aware, Renaissance Technologies is a massively successful hedge fund that makes investment decisions solely from data, with perhaps the most sophisticated mathematical models in the marketplace.

Their approach was entirely novel when James Simons founded the firm. Simons is incredible mathematician, graduated MIT in his teens, and obtained his doctorate at 23. Before and during Renaissance, he made significant contributions to cryptology, topology, and string theory.

His firm essentially invented quantitative trading. To this day, with close to $30 Billion under management, Renaissance Technologies still makes investment decisions purely algorithmically.

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#42

Post by gtrubetskoy »

karmacondon wrote: post #30
gtrubetskoy wrote: post #22

I'm skeptical. There are skyscrapers in NYC's, Londons, Singapores and Hong Kong's of this world filled with people who are smart and have enormous computer resources and funds and are paid handsomely to work on solving this problem with all manners of ML and AI at their disposal, the "crowd" has no advantage over them. The "closed system" is much larger than the "crowd" in this case.

I don't think this is true at all. 10,000 people are just going to have more ideas and better individual ideas than 100 experts. The impact of that much creativity and perspective can be exponential, and it's hard to duplicate. When I'm designing a system, I hate to have to try to out think everyone on the internet. If you have a known set of opponents you can predict what they might do. When you're up against anybod…

My point is that in the world of quants, it's more like there is 10,000 paid experts who are not about to share anything and 100 amateurs.

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#43

Post by vostok »

s_q_b wrote: post #41
Xcelerate wrote: post #36

> Numerai was seed funded by Howard L. Morgan the co-founder of Renaissance Technologies. Very interesting. This gives this idea some legitimacy in my opinion.

Very much agreed. For those who are not aware, Renaissance Technologies is a massively successful hedge fund that makes investment decisions solely from data, with perhaps the most sophisticated mathematical models in the marketplace. Their approach was entirely novel when James Simons founded the firm. Simons is incredible mathematician, graduated MIT in his teens, and obtained his doctorate at 23. Before and during…

To provide a counterexample, P/NP was doing quantitative trading before RenTech. I will say that I wouldn't comment on implementation details in this industry unless I've worked at the company in question.

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#44

Post by sseveran »

bcherny wrote: post #35
iopuy wrote: post #31

Earlier quoted context omitted.

I absolutely disagree. I'll take the word of 100 experts over 10,000 amateurs.

The two aren't exclusive. What's to stop the experts from doing this as a side project?

They stand to lose a lot for relatively little gain. Hedge fund non-competes are very, very carefully enforced. Making money trading on the side would get you sued.

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#45

Post by sseveran »

iopuy wrote: post #31
karmacondon wrote: post #30

Earlier quoted context omitted.

I don't think this is true at all. 10,000 people are just going to have more ideas and better individual ideas than 100 experts. The impact of that much creativity and perspective can be exponential, and it's hard to duplicate. When I'm designing a system, I hate to have to try to out think everyone on the internet. If you have a known set of opponents you can predict what they might do. When you're up against anybod…

I absolutely disagree. I'll take the word of 100 experts over 10,000 amateurs.

The interesting factor here is strategy sizing. The 100 experts need to manage portfolios of a certain size. The amateurs don't. There are people who can carve out a living of a strategy that has sustainable alpha but would not be attractive to hedge funds due to the capacity of the strategy.

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#46

Post by agorabinary »

modeless wrote: post #37

So in exchange for giving a hedge fund a stock tip that earns 20% in a month, the guy gets $10k? That sounds like a ripoff to me! If you have the skills to do that repeatedly you can make a whole lot more than $10k doing the trades yourself.

Well if you have $50k capital then 20% gains = $10k is about fair. Luckily for numerai they have $1mil capital so the rewards are a bit higher...

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#47

Post by s_q_b »

vostok wrote: post #43
s_q_b wrote: post #41

Earlier quoted context omitted.

Very much agreed. For those who are not aware, Renaissance Technologies is a massively successful hedge fund that makes investment decisions solely from data, with perhaps the most sophisticated mathematical models in the marketplace. Their approach was entirely novel when James Simons founded the firm. Simons is incredible mathematician, graduated MIT in his teens, and obtained his doctorate at 23. Before and during…

To provide a counterexample, P/NP was doing quantitative trading before RenTech. I will say that I wouldn't comment on implementation details in this industry unless I've worked at the company in question.

That's fair. It was not my intention to provide a comprehensive review of the firm's approach, but rather a quick summary that glosses over a great many details.

To address your second point, I wouldn't comment on implementation details in a company for whom I had worked.

P/NP is Princeton Newport Partners. I have a passing familiarity with that story ;)

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#49

Post by Ameo »

sseveran wrote: post #45
iopuy wrote: post #31

Earlier quoted context omitted.

I absolutely disagree. I'll take the word of 100 experts over 10,000 amateurs.

The interesting factor here is strategy sizing. The 100 experts need to manage portfolios of a certain size. The amateurs don't. There are people who can carve out a living of a strategy that has sustainable alpha but would not be attractive to hedge funds due to the capacity of the strategy.

This is absolutely true. Many, many strategies that are viable at small portfolio sizes fall off very quickly when millions, tens of millions of dollars start to be used for them.

Although the world's financial markets are massive, the little inefficiencies that can be exploited for profit often aren't.

Re: Numerai, a hedge fund built by a community of anonymous data scientists

#50

Post by ves »

ikeboy wrote: post #12
theli0nheart wrote: post #8

Earlier quoted context omitted.

Doesn't the encrypted chart still need to display price history or volume? If so it seems like it'd be a trivial task to match it up with its real-world counterpart.

See https://en.wikipedia.org/wiki/Homomorphic_encryption , which they claim to use.

There's no way in hell they're doing ML on cipher text. It's like orders upon orders of magnitudes too slow.
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