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Renaissance Technologies

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Re: Renaissance Technologies

#181

Post by pmart123 »

patentatt wrote: post #125
smabie wrote: post #116

Earlier quoted context omitted.

I guess all the math and science PhDs they hire are actually undercover spies that finished their dissertations in order to provide a good cover?

Do you think there aren’t other highly educated smart people working anywhere else in the financial industry? They’re success can’t be explained by just hiring smart people.

You could say the same thing about Google and Facebook versus Twitter or Snapchat. Whatever strategies they did find and implement likely worked or were massively improved upon using the historic data the firm had on how to position quotes, what trades weren't liquidity constrained, what were the server response delays between exchanges, etc.

Think about the quality between Google Maps and Apple Maps when Apple maps was first launched. Apple even hired a bunch of ex-Google Maps employees to improve their product, so it likely was using similar algorithms, but with worse data. Apple though had the luxury of gathering every iPhone user's location data though to build up their dataset. In Rentech's case, a competing hedge fund would not only have to build out the team and infrastructure, they would only likely lose a lot of money at first to gather enough data to have a similar edge. There were a lot of HFT firms like Jump, Citadel's unit, Getco that generated very impressive risk-adjusted returns for a while, but I don't believe it was close to Rentech in terms of capital capacity and number of years.

Re: Renaissance Technologies

#182

Post by hogFeast »

tomp wrote: post #158
hogFeast wrote: post #95

Earlier quoted context omitted.

I would read the recent book. Competition really started in the mid-1990s (and quant funds existed way before that point), and Renaissance actually picked up steam far later than everyone else (and had trouble raising capital because everyone thought the space was already tapped out). Btw, the point to investing isn't an absolute level of knowledge but relative knowledge. If you keep moving ahead because you are smar…

Companies like AHL and Winton have completely different goals and ways of making money... they got into the “quant” (a.k.a. trend following) industry very early and still reap the benefits, they have big AUMs, scalable strategies, etc, but (AFAIK) their actual performance isn’t that amazing (compared to RenTech, Two Sigma, Citadel, ...). I only interviewed at AHL so I cannot speak of the quality/intelligence of peopl…

Winton is fundamentally dissimilar to AHL. Winton have a reputation for skill and outperformance. AHL have a reputation for blundering incompetence (that is why the 'H' in AHL left to start Winton, and became a billionaire doing so).

The only goal is to make money. I understand your point in that AHL are dissimilar to RenTech but I didn't say any way was correct. The right way is whatever makes money. You have firms that look like AHL and do better.

I would look at who they actually hire. From what I know, there is almost no-one in their quant team who didn't go into Oxbridge (at least for PG). That is not a low bar.

Btw, I have seen this elsewhere. I know of non-quant firms that only hire from Oxbridge, and they get the same result as firms that don't have a specific analyst program (i.e. everyone rotates through admin/sales/marketing).

The point isn't that this doesn't work. RenTech have a high bar, it works. The point is that you have to really understand why you are doing it. Hiring "smart" people without thought only results in a higher wage bill.

And if we are going to get into it: one big issue with AHL has been the management (that is why David Harding left). They have got better but I don't think they are totally out the woods (I have heard they are trying to do momo in illiquid and esoteric markets...which won't work).

Saying it is the clients is one of the worst excuses in investment management. That is actually true one time in a hundred (BlueCrest is one). It is like the crap football teams complaining about good teams having all the money. Good fund managers have good clients because they don't fuck up all the time. The issue is AHL, for whatever reason, kept trying to do the same thing for decades, and expected to print money.

Re: Renaissance Technologies

#183

Post by jandrese »

zelly wrote: post #140
smabie wrote: post #18

A great book about RenTec and Jim Simons came out recently: The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution. Everyone in the industry worships Simons and RenTec as practically god-like. What they've managed to do shouldn't really be possible and is out of this world. According to Wikipedia over a 20 year period between 1994 and 2014, RenTec realized an 71.9% annualized return in their inte…

The "it's a scam" angle is they're insider trading.

Not necessarily, they could be money laundering instead.

Re: Renaissance Technologies

#184

Post by jandrese »

crazypyro wrote: post #139
analogkid wrote: post #98

The tone of many comments here is disappointing. I'm really surprised at the number of people suggesting illegal activity. Why is it so hard to accept that someone did the math?

It's simply surprising that they continuously find an edge in an ever increasingly competitive market. It's not a fair comparison to say they just "did the math" when there are thousands of other, highly qualified, highly intelligent people trying to "do the math" at the same time, all the time, yet RenTech has managed to always come out ahead and not just barely, but massively ahead. I don't believe RenTech is doing…

Like seven standard deviations better than their competitors. Maybe they're just that good, but normally when something is that far out of the norm it invites suspicion.

Re: Renaissance Technologies

#185

Post by hogFeast »

codingslave wrote: post #173
hogFeast wrote: post #95

Earlier quoted context omitted.

I would read the recent book. Competition really started in the mid-1990s (and quant funds existed way before that point), and Renaissance actually picked up steam far later than everyone else (and had trouble raising capital because everyone thought the space was already tapped out). Btw, the point to investing isn't an absolute level of knowledge but relative knowledge. If you keep moving ahead because you are smar…

I would argue its because academic success is more related to having a great memory than having novel intelligence

I am sure I have no idea why this it is the case. But I would characterise the "novel intelligence" as a combination of creativity and common sense.

RenTech aren't hiring smart people. They are hiring people with technical ability and with a proven track record for solving very open-ended problems.

AHL is mainly hiring grads, definitely very smart people with strong postgrad quals but with no real track record. This can work if your model is technology-based like a Citadel or Jump. But you will get creamed in the world of RenTech.

All I can say for sure is that I have definitely seen this in non-quant investing. Firms that hire people from worse academic institutions, focus heavily on training, and have a culture that encourages teamwork do way better than firms that hire the "genius" types.

Re: Renaissance Technologies

#186

Post by ipsa »

paganel wrote: post #148
unchocked wrote: post #16

A 66% annualized return over 30 years - from a completely opaque investment strategy. Extraordinary result for sure, how did he do it? Run by Robert Mercer, the money man who associated with prominent money launderers. Based on my priors, Occams Razor says Rentech is a laundromat, not a hedge fund.

Strange that I had to scroll to the bottom of the page to see Mercer's name mentioned. I think is high time we stop idolizing companies that enable scum people like Mercer to make tons of money and to negatively influence the lives of millions.

Strange that I think that a sarcastic reply that goes a bit further in moral punishment would be indistinguishable from a real reply these days. Mercer was practically forced to resign due to the backlash that his democratic political views generated against RenTech, but you deem the company as beyond redemption. You speak as if commenters here are idolizing, while being black-and-white religious and faux-cult-collective yourself, prescribing what others, we, should or should not worship. Take that to the street corner. If you gather a large enough audience, I will tell you that you are the one negatively influencing the lives of others. By my and your definition, companies and institutions would then be forced to disable you, your business, and your platform. But first let's go after Mercer.

Re: Renaissance Technologies

#187

Post by [deleted] »

rramdin wrote: post #106
gibybo wrote: post #53

Earlier quoted context omitted.

There would be no disbursements from one fund to the other. Fund A would purchase an asset slowly over time. When it has finished purchasing the asset, fund B would purchase that asset quickly at a scale large enough to increase the market price of it. As the price rose, fund A would sell its position. The net effect is that fund A sees increased returns and fund B sees decreased returns.

This is throwing any efficient-market hypothesis out the window. Msybe this would work for a year, but why would anyone invest in fund B if it is a consistent loser. If you can figure out a way to slowly buy an asset and then quickly buy more of it and make both strategies profitable at all, then you're onto something huge. Almost as huge as Ren Tech

[deleted]

Re: Renaissance Technologies

#188

Post by govg »

patentatt wrote: post #125
smabie wrote: post #116

Earlier quoted context omitted.

I guess all the math and science PhDs they hire are actually undercover spies that finished their dissertations in order to provide a good cover?

Do you think there aren’t other highly educated smart people working anywhere else in the financial industry? They’re success can’t be explained by just hiring smart people.

There's almost no firm with a bar to entry as high as Rentec when it comes to hiring, and almost certainly none with the amount of people who have cleared such a bar. Some smaller firms still hire similar quality, but RenTec has been around for so long and always has attracted the best candidates. It's not as simple as saying "they hire smart candidates" it's that they've hired the outright best in the market when possible.

Re: Renaissance Technologies

#189

Post by fizwhiz »

tasuki wrote: post #168
brightbeige wrote: post #36

I’m not a bot but I am always posting relevant and recent (2017) New Yorker articles that are worth reading: https://www.newyorker.com/magazine/2017/12/18/jim-simons-the... And this interesting theme: > Foundations are not taxed, so much of the money that supports them is money that otherwise would have gone to the government. Scientific mega-donors answer to no one but themselves. Private institutes tend to have boa…

I'm not a bot either, and why would you start your post by saying you're not a bot?

reddit transplants would be guess.

Re: Renaissance Technologies

#190

Post by objektif »

deepnotderp wrote: post #79
throw_this_one wrote: post #77

Earlier quoted context omitted.

Very cool. Do you have any info/resources on how the signal extraction works?

Signal processing, information geometry and information theory mostly. You can read the papers rentech authors publish before they leave

Do you have any examples?
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