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Understanding Jane Street

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Re: Understanding Jane Street

#211

Post by kasey_junk »

spoonjim wrote: post #87
benreesman wrote: post #79

Earlier quoted context omitted.

Not to mention that tightening spreads, deepening books, and equalizing prices across regulatory/financial/geographical regimes is a pretty serious social good in its own right. I understand that (as the article mentions) these folks clean up when the wheels have already come off anyways, but day-in-day-out, the spread on AAPL is one tick ($0.01) nowadays, rather than the 1/8ths that you'd get quoted by some loud guy…

If you're going to hold AAPL longer than a quarter, then the tick vs. 1/8 doesn't matter, and if you're not, your trade doesn't need to happen to support the core goal of financial markets which is to finance companies.

You are really going to need a citation to back up that the core goal of financial markets is to finance companies.

That is, in my view, at best an ancillary goal (notice that most money in the markets doesn’t participate in buying shares from the company itself).

That may be what you want the markets to be about but every other participant has other desires from the markets and the great thing is they can all get what they want from them.

Re: Understanding Jane Street

#212

Post by JackFr »

benreesman wrote: post #60

I find this stuff fascinating, and this article is way above average for online posts about proprietary/algorithmic/quantitative/low-latency trading (very leaky Venn diagram there). I have a few nitpicks but overall it's informative and it's an interesting format: viewing an industry through the lens of a particular firm, especially one as fascinating as Jane. Anything that develops literacy in modern finance amongst…

Michael Lewis is a great writer, but the closer you are to the subject the more his shortcomings are exposed. I felt the same way about The Big Short and to some extent Liar’s Poker. He has an annoying tendency to assume that if he doesn’t understand something, either it’s completely inscrutable to everyone or simply BS.

(And to pile on, The Blind Side was the touching story of how Lewis’s prep school classmate, an Ole Miss booster, gamed the system to provide improper benefits to a high school recruit.)

Re: Understanding Jane Street

#213

Post by elcritch »

bitcharmer wrote: post #199
fiprofessor wrote: post #188

Earlier quoted context omitted.

> 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. Maybe this is so at other finance firms, but my experience with developers who go to Jane Street is quite different. Because Jane Street heavily advertises OCaml as part of its recruiting strategy, I know many people who ended up there ju…

Having worked in HFT for well over a decade now, I'd say OCaml is more of a deterrent than helps in getting access to larger pool of talent.

A larger talent pool isn't always better.

Re: Understanding Jane Street

#214

Post by JackFr »

> it's hard to argue with success: Jane Street earned $6.3bn in the first half of 2020, up more than 10x from the year before ($, FT).

It’s actually quite easy to argue with that. It’s 1 (or 2 at best) data points. 6.3bn is meaningless without knowing the capital put to work to achieve that. And finally if your 10x YoY it’s just as likely you had a bad year before as a good one this year.

Re: Understanding Jane Street

#215

Post by [deleted] »

JackFr wrote: post #214

> it's hard to argue with success: Jane Street earned $6.3bn in the first half of 2020, up more than 10x from the year before ($, FT). It’s actually quite easy to argue with that. It’s 1 (or 2 at best) data points. 6.3bn is meaningless without knowing the capital put to work to achieve that. And finally if your 10x YoY it’s just as likely you had a bad year before as a good one this year.

[deleted]

Re: Understanding Jane Street

#216

Post by mabbo »

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…

> People who are driven and smart don't suddenly earn their first $5m go off and buy an annuity

I guess I must not be driven, because I would. Or at least something close enough to that. $5m just earning interest at 5%ish is way more income than I need to live the lifestyle I want.

I'd buy a few acres in the middle of no where, build a nice house, grow a big garden, raise my daughter as a nice family man and never work again.

Obligatory "Office Space" scene on "what would you do with a million dollars": https://youtu.be/4lmW2tZP2kU

Re: Understanding Jane Street

#217

Post by keithalewis »

lordnacho wrote: post #120
melony wrote: post #68

Earlier quoted context omitted.

Since this is Hacker News, let's not beat about the bush. Here's a channel that actually go through derivatives pricing without hiding the math: https://youtube.com/c/QuantPy/videos

Whenever the topic comes up, I throw out a reference to Hull's Futures, Options and other derivatives, Wilmott's Quantitative Finance, and possibly also Taleb's Dynamic Hedging. That's more than enough on the instrument math side, most of what you'll see is pretty mundane stuff, unless you end up on an exotics structuring desk. I'd also note that JS and other MMs mostly don't do anything requiring you to know the int…

My writeup: https://keithalewis.github.io/math/um.html for modeling and https://keithalewis.github.io/math/uf.html on now to more accurately reflect the real world. I have taught Derivative Securities at NYU, Columbia, Cornell, and Rutgers over the past 14 years, but my day job is turning math into software that produces numbers people running a business will pay for. The textbooks are missing some important things.

Re: Understanding Jane Street

#218

Post by carnitine »

adave wrote: post #152

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…

Market makers and retail traders have aligned incentives. Stop scaremongering.

Re: Understanding Jane Street

#219

Post by Ekaros »

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 there is also a big question of what sort of spending habits these people have acquired. Their peers are making lot of money. And I doubt everyone is extremely frugal. Margin Call I think gave pretty good example how some in other firms might be spending their income.

Stepping down and just starting to live on annuity might not fit to what they have come to expect.

Re: Understanding Jane Street

#220

Post by kenned3 »

Inconel wrote: post #49
CoolGuySteve wrote: post #15

Earlier quoted context omitted.

There are a bunch of these firms. And when you pass the gauntlet, you realize that the people are smart but no smarter than at other firms. At some point, the strict hiring filter just produces noise. If anything, having that many achievers results in bored people doing things that are suboptimal for the performance of the firm as a whole. Whole divisions of wasted talent spawn and self perpetuate. It's the hiring pr…

Don’t mean to hijack this thread but seeing as you have a background in the industry I was hoping you could answer a couple questions I had: 1. What do these firms typically look for in support staff? I’m asking about non trading/quant roles like recruiting/ops/facilities management? 2. What’s the potential upside, not specifically financial, but more along career growth and opportunities for different roles within t…

I've spent time at a very large and well known hedge fund and I also have family at JS.

Regardless of what the individual you responded to thinks.. Firms like this have very difficult interview processes. They are looking for something "Special" and this excludes the vast majority of applications.

I took a taxi to my interview, and the taxi driver himself told me he drives many people to the location for interviews, and drives a lot of unhappy people back (failed the interview).

It should tell you something when even a local taxi driver knows how difficult it is to get into these places.

I will try to answer your questions as well:

1) I did support work when i was at "hedge fund" - They want people who can think outside the box and be a culture fit. their culture is well known, and you either fit in or you don't. There is no "faking it".

They generally hire fresh grades from ivy league schools. This way they can indoctrinate the culture. This is not always the case, but probably 70% of their employees were done this way.

2) Many of my former coworkers are now CEO's, COO's etc. Besides the money the culture encourages you to push past your limits and grow. One guy was a developer, he's now the CIO for an international makeup company..

At the firm I worked at, it did not matter what your role was. If you wanted to change groups, you would be given a fair chance to take the tests. if you passed, you were in the new role. The tests were INTENSE... but many "techs" moved to business roles over the years.

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