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Understanding Jane Street

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Re: Understanding Jane Street

#151

Post by badpun »

ithrow wrote: post #65
julianeon wrote: post #32

Something I don’t understand: Why haven’t their gains been arbitraged away? Conceptually what they do seems simple enough; and presumably you just need capital to do it. Hell, their own former employees could theoretically compete against them - as could many traders who would pay to learn those strategies. So why are they still making so much? I don’t understand why their “advantage” hasn’t been arbitrated away into…

If lone wolf day traders can make good money why can't they?

Lone wolf traders are satisfied in income in hundreds of thousands of dollars per year, while a large company wants millions or billions. There are way, way more opportunities on the market to make just a couple hundred k than to make a billion. In other words, a lot of the opportunities do not scale well.

Re: Understanding Jane Street

#152

Post by adave »

This reads like a very rosy picture of what these firms actually do. Surely they are secretive and tight lipped about all the money being made in low risk trades.

There are known loopholes that market makers get to exploit since they help keep the casino going. No need to make its a noble profession or compare to impact to actual economy or mankind.

These are the worst of the worst when its comes to exploitative and manipulative behavior to make money over retail trades just as a Hedge fund selling CDO's to pension funds.

Re: Understanding Jane Street

#153

Post by benreesman »

SilverBirch wrote: post #137

>the winners get a job from which people routinely retire rich in their 30s, and the losers... don't Honestly, I find this ridiculous. Firstly, Yes, working at Jane Street is a well paying job and you'll do well out of it. No. People aren't routinely retiring in their 30s. I don't understand where this absurd idea comes from. Look at all the rich people in the world, look at how old they are, and ask, are they retire…

I think the author meant "could retire very comfortably in their 30s", and you're correct to point out that's not what it literally says.

But as for "could"? Shit you can do that at Google, Microsoft, Amazon, Meta if you're in that league and start out of undergrad. In my experience (more than a few of my FAANG-era colleagues either came from or went to high-technology finance), people don't actually leave Google to go to Jane for the money (which is similar at the p99), if you're a baller willing to pull the hours you can make many millions a year in either place.

I think people go to high-technology finance because they want to test themselves against a harder class of problem in a more adversarial setting against people who feel the same.

That's anecdotal, but my sample size is more than two or three.

Re: Understanding Jane Street

#154

Post by nly »

paulpauper wrote: post #33
quickthrower2 wrote: post #12

Earlier quoted context omitted.

So you are doubling your money each year? Do you have a forward strategy to keep that up? Looking for people with good track records is a terrible way to choose traders. See: https://m.youtube.com/watch?v=zv-3EfC17Rc Tldw: meets a person, picks 5 horse winners, gets then to invest. How did he pick 5 winners? Emails 1000s of people, using a permutation per person. The person who sees the 5 wins thinks he has a system.…

It depends if you are getting new money or not. For a lump sum investment, depending on market cycles it's possible to structure the trade to optimize returns. If you assume that bear markets are every 6 years , there are certain simple integrals for computing this in which you input a certain starting capital and then a certain risk -free rate and then the capital is split between two assets like cash and stocks. Wh…

One of the funds you list is leveraged 3x. If the market drops 33% you're wiped out, get liquidated, and can never recover.

You've already made the assumption that you can detect the market bottom to select when to drop the $3K, which is ludicrous, and begs the question if you're know where the bottom is why not put the full $10K in then with maximum upward leverage.

Re: Understanding Jane Street

#155

Post by benreesman »

chucksmash wrote: post #114
benreesman wrote: post #78

Earlier quoted context omitted.

Oh yeah, RenTech is just fascinating, and the opacity only lends to the mystique around it. People are talking a lot about how hard it is to get a gig at Jane, and AFAIK it's fucking hard, but one of the best mathematicians who was also a super-hacker I've ever met crushed the Jane interview and got bounced out in the RenTech screen. Of course, the 30%+ annual returns almost every year for 30 years doesn't hurt the m…

Had "The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution" on my shelf for several years as an out-of-the-blue birthday present but I finally got around to reading it earlier this year and I'd absolutely recommend it. The emphasis on published work rang a bell, but thumbing through the book I can't find it off hand.

I enthusiastically second "The Man Who Solved The Market".

Re: Understanding Jane Street

#156

Post by hahnchen »

jwilber wrote: post #40
hahnchen wrote: post #36

Sooooo hard to get hired here. I’m convinced it’s impossible without a referral or something

The interviews are definitely hard, but I can confirm the recruiters will reach out to you directly if they find your profile interesting.

Sounds reasonable. In the past I applied for an internship and got resume rejected for swe, they seem rather elusive…

Re: Understanding Jane Street

#157

Post by FabHK »

jaycroft wrote: post #127
esoterica wrote: post #100

Earlier quoted context omitted.

If the only people who trade AAPL plan on holding it for 10 years then by the time they want to sell it there will be no one to buy it from them, since the probability that someone else will want to make their once-every-10-years trade at the exact same time is zero. In order for long term investors to function they need liquidity to enter and exit positions.

But it doesn't have to happen at the exact same time? Limit orders exist, no?

Further: Suppose you had an auction on shares once an hour, or even once a day, but no continuous trading. Would that make the world any worse off? (except for high frequency shops?)

Re: Understanding Jane Street

#158

Post by amelius »

j7ake wrote: post #77

Regarding the last point in working at Jane Street versus research on fusion/cancer: You could maximise more good by first working at Jane Street in your 20s, retire by 30, and then set up your own smal fusion/cancer research lab where you can do research without being tied to government funding and politics. By 30, many cancer researchers have barely finished their PhDs, so you won’t actually be that far behind scie…

Broken window fallacy.

Nice try to justify your bullshit job, though.

Re: Understanding Jane Street

#159

Post by mkl95 »

SilverBirch wrote: post #137

>the winners get a job from which people routinely retire rich in their 30s, and the losers... don't Honestly, I find this ridiculous. Firstly, Yes, working at Jane Street is a well paying job and you'll do well out of it. No. People aren't routinely retiring in their 30s. I don't understand where this absurd idea comes from. Look at all the rich people in the world, look at how old they are, and ask, are they retire…

> Look at all the rich people in the world, look at how old they are, and ask, are they retired? No! People who are driven and smart don't suddenly earn their first $5m go off and buy an annuity. They're more likely to go off and found their own trading shop at 30 than they are to retire.

This kind of debate needs to be backed up by numbers or it won't be very productive. To get started we should know the percentage of millionaires in their 30s who are still working, and the ones who aren't working but are looking for a job.

Personally I can think of several things I would do with $5m other than buying an annuity. If you have that kind of money you are basically set for life if you make a few right choices.

Re: Understanding Jane Street

#160

Post by noitpmeder »

rgifford wrote: post #97
bitanarch wrote: post #72

Earlier quoted context omitted.

Imagine someone outside of the tech community thinking along this line... "Making high performance CPUs that are also highly power efficient should make a ton of money. Why isn't everyone doing it?" Well, turns out that isn't exactly something that a small group of engineers can whip up in a garage anymore. Same goes for highly efficient market making systems.

CPUs operate due to quantified phenomenon. They're well understood. They've been refined over nearly 100 years. HFTs came into their own over the past decade or so -- during a time of falling interest rates, unprecedented growth, and notable lack of regulation in financial markets. One of these things is not like the other. I'd be entirely unsurprised to see most HFTs turn out like Lehman Brothers, Enron, or AIG. The…

   {x} came into their own over the past decade or so, during a time of falling interest rates, unprecedented growth, and notable lack of regulation in {x's field}.
You can say this about a lot of companies today.
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