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Financial Statement Analysis with Large Language Models

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Re: Financial Statement Analysis with Large Language Models

#91

Post by chollida1 »

posting_mess wrote: post #73
qeternity wrote: post #68

Earlier quoted context omitted.

It’s impressive how incorrect so much of this information is. High frequency trading is about going fast. There is a huge mid and low freq quant industry. Also most quant strategies are absolutely not about being “super right”…that would be the province of concentrated discretionary strategies. Quant is almost always about being slightly more right than wrong but at large scale. What algos are you referring to derive…

Quantitative trading is simply the act of trading on data, fast or slowly, but I'll grant you for the more sophisticated audience there is a nuance between "HFT" and "Quant" trading. To be "super right" you just have to make money over a timeline, you set, according to your own models. If I choose a 5 year timeline for a portfolio, I just have to show my portfolio outperforming "your preferred index here" over that t…

> the way to calculate the price of an Option/Derivative hasn't changed in my understanding for 20/30 years

That’s not true. It is true that the black scholes model was found in the 70s but since then you have

- stochastic vol models

- jump diffusion

-local vol or Dupire models

- levy process

- binomial pricing models

all came well After the initial model was derived.

Also a lot of work in how to calculate vols or prices far faster has happened.

The industry has definitely changed a lot in the past 20 years.

Re: Financial Statement Analysis with Large Language Models

#92

Post by hattmall »

qeternity wrote: post #68
posting_mess wrote: post #60

Earlier quoted context omitted.

No hedge fund registered before the last 2 weeks will use Llama3 for their "prod work" beyond "experiments". Quant trading is about "going fast" or "being super right", so either you'd need to be sitting on some huge llama.cpp/transformer improvement (possible but unlikely) or its more likely just some boring math applied faster than others. Even if they are using a "LLM", they wont tell you or even hint at it - "eff…

It’s impressive how incorrect so much of this information is. High frequency trading is about going fast. There is a huge mid and low freq quant industry. Also most quant strategies are absolutely not about being “super right”…that would be the province of concentrated discretionary strategies. Quant is almost always about being slightly more right than wrong but at large scale. What algos are you referring to derive…

Algo trading is certainly about speed too though, but it's not HFT which is literally only a out speed and scalping spreads. It's about the speed of recognizing trends and reacting too them before everyone else realizes the same trend and thus altering the trend.

It's a lot like quantum mechanics or whatever it is that makes the observation of a photon changes. Except with the caveat that the first to recognize the trend can direct it's change (for profit).

Re: Financial Statement Analysis with Large Language Models

#93

Post by [deleted] »

posting_mess wrote: post #73
qeternity wrote: post #68

Earlier quoted context omitted.

It’s impressive how incorrect so much of this information is. High frequency trading is about going fast. There is a huge mid and low freq quant industry. Also most quant strategies are absolutely not about being “super right”…that would be the province of concentrated discretionary strategies. Quant is almost always about being slightly more right than wrong but at large scale. What algos are you referring to derive…

Quantitative trading is simply the act of trading on data, fast or slowly, but I'll grant you for the more sophisticated audience there is a nuance between "HFT" and "Quant" trading. To be "super right" you just have to make money over a timeline, you set, according to your own models. If I choose a 5 year timeline for a portfolio, I just have to show my portfolio outperforming "your preferred index here" over that t…

[deleted]

Re: Financial Statement Analysis with Large Language Models

#94

Post by posting_mess »

Izkata wrote: post #89
posting_mess wrote: post #60

Earlier quoted context omitted.

No hedge fund registered before the last 2 weeks will use Llama3 for their "prod work" beyond "experiments". Quant trading is about "going fast" or "being super right", so either you'd need to be sitting on some huge llama.cpp/transformer improvement (possible but unlikely) or its more likely just some boring math applied faster than others. Even if they are using a "LLM", they wont tell you or even hint at it - "eff…

> but most "trading" isn't as complex as they'd like you/us to believe I know nothing about this world, but with things like "doctor rediscovers integration" I can't help but wonder if it's not deception but ignorance - that they think it really is where math complexity tops out at.

They hire people who know that maths doesn't "top out here", so they can point to them and say "look at that mathematicians/physicists/engineers/PHD's we employ - your $20Bn is safe here". Hedge funds aren't run by idiots, just a different kind of "smart" to an engineer.

The engineers are are incredibly smart people, and so the bots are "incredibly smart" but "finance" is criticised by "true academics" because finance is where brains go to die.

To use popular science "the three body problem" is much harder than "arb trade $10M profitably for a nice life in NYC", you just get paid less for solving the former.

Re: Financial Statement Analysis with Large Language Models

#95

Post by [deleted] »

hattmall wrote: post #92
qeternity wrote: post #68

Earlier quoted context omitted.

It’s impressive how incorrect so much of this information is. High frequency trading is about going fast. There is a huge mid and low freq quant industry. Also most quant strategies are absolutely not about being “super right”…that would be the province of concentrated discretionary strategies. Quant is almost always about being slightly more right than wrong but at large scale. What algos are you referring to derive…

Algo trading is certainly about speed too though, but it's not HFT which is literally only a out speed and scalping spreads. It's about the speed of recognizing trends and reacting too them before everyone else realizes the same trend and thus altering the trend. It's a lot like quantum mechanics or whatever it is that makes the observation of a photon changes. Except with the caveat that the first to recognize the t…

[deleted]

Re: Financial Statement Analysis with Large Language Models

#96

Post by oceanplexian »

abdullahkhalids wrote: post #30
primitivesuave wrote: post #13

The area where I see this making the most transformational change is by enabling average citizens to ask meaningful questions about the finances of their local government. In Cook County, Illinois, there are hundreds of local municipalities and elected authorities, all of which are producing monthly financial statements. There is not enough citizen oversight and rarely any media attention except in the most egregious…

The citizens ask LLMs (or more advanced future AIs) to identify if government finances are being used efficiently, and if there is evidence of corruption. The corrupt government officers then start using the AIs to try to cover up the evidence of their crimes in the financial statements. The AI possibly putting the skills of high-end and expensive human accountants (or better) into the hands of local governments. Who…

> The corrupt government officers then start using the AIs

You're making it way too complicated. The government will simply make AI illegal and claim it's for safety or something. The'll then use a bunch of scary words to demonize it, and their pals in the mainstream media will push it on low-information voters. California already has a bill in the works to do exactly this.

Re: Financial Statement Analysis with Large Language Models

#97

Post by oceanplexian »

doctoboggan wrote: post #38

If this were to become widely used, I can imagine executives writing financial statements, running them through an LLM, and tweaking it until they get the highest predicted future outcome. This would make the measure almost immediately useless.

This is already how it works. Have you listened to an earnings call? Especially companies like Tesla? They are a dog and pony show to sell investors on the stock.

Re: Financial Statement Analysis with Large Language Models

#98

Post by ecjhdnc2025 »

Terr_ wrote: post #70
ecjhdnc2025 wrote: post #48

Earlier quoted context omitted.

Far too much in the way of "maybe in a few years" LLM prediction relies on the unspoken assumption that there will not be any gains in the state of the art in the existing, non-LLM tools. "In a few years" you'd have the benefit of the current, bespoke tools, plus all the work you've put into improving them in the meantime. And the LLM would still be behind, unless you believe that at some point in the future, a radic…

> That is, the bet is that at some point, magic emerges from the machine that renders all domain-specialist tooling irrelevant, and one or two general AI companies I have a slightly more cynical take: Those LLMs are not actually general models , but niche specialists on correlated text-fragments. This means human exuberance is riding on the (questionable) idea that a really good text-correlation specialist can effect…

> Even worse: Some people assume an exceptional text-specialist model will effectively meta-impersonate a generalist model impersonating a different kind of specialist!

Eloquently put :-)

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