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Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

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Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#31

Post by madars »

Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Why would it be wasted? I like apples and I like being able to buy them any day of year, even out of season. The only reason I can do so is because there is an entire industry of people who manage the inventory, distribution, try to predict supply and demand, and take on a risk doing that. The principal reason why I can buy and sell equities at very small spreads any day of the year is similar: traders are competing to take the other side of the bet.

I also encourage everyone to read CFTC response to the Vatican's (!) Congregation for the Doctrine of the Faith https://www.cftc.gov/PressRoom/SpeechesTestimony/giancarlore... It talks about about the social utility of derivatives and refutes the narrative that they are basically tools of "speculation." Traders take on risks others can't bear, creating massive economic value that ripples through the entire system.

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#32

Post by Mistletoe »

twoodfin wrote: post #20
jwr wrote: post #19

Earlier quoted context omitted.

The problem is that smart people are the ones being employed, not the ones getting rich.

I am pretty sure anyone who sticks around Jane Street for a while is getting “rich” by any popularly accepted measure.

Sam Bankman-Fried and Caroline Ellison did for a while…

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#33

Post by objektif »

Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Would you rather people spend their time on centering divs? Or come up more ways to make people click on ads. I see this type of view often on HN from big tech employees. Get off your high horses people.

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#34

Post by achierius »

madars wrote: post #31
Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Why would it be wasted? I like apples and I like being able to buy them any day of year, even out of season. The only reason I can do so is because there is an entire industry of people who manage the inventory, distribution, try to predict supply and demand, and take on a risk doing that. The principal reason why I can buy and sell equities at very small spreads any day of the year is similar: traders are competing…

Everyone understands that there's a pricing utility to markets and market speculation. But consider that, like in all things, the free market has its 'biases': wouldn't you expect that something like trading, which directly produces profit with very little overhead and maximal ability to hedge against rush, would draw an inordinate amount of capital -- in the same way that things like infrastructure, sans government intervention, naturally repel it?

We have far, far too much of our economy sunk into a sector that fundamentally produces nothing of value, one that only shuffles value around and chooses to whom it will be allocated (coincidentally, often the people doing the allocating!).

Compare our economy and its woes to China. Do they spend nearly as much of their human capital figuring out how to get an extra bp on some statistical arb? Thethe origins of DeepSeek are illustrative in this regard.

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#35

Post by dietr1ch »

madars wrote: post #31
Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Why would it be wasted? I like apples and I like being able to buy them any day of year, even out of season. The only reason I can do so is because there is an entire industry of people who manage the inventory, distribution, try to predict supply and demand, and take on a risk doing that. The principal reason why I can buy and sell equities at very small spreads any day of the year is similar: traders are competing…

> I like apples and I like being able to buy them any day of year, even out of season. The only reason I can do so is because there is an entire industry of people who manage the inventory, distribution, try to predict supply and demand, and take on a risk doing that.

This has been the case for well over 200 years and is not done by the same kind of people that modern finance/fintech employs.

Imagine the world 150 years ago and imagine were you'd allocate the smart people that's the highest paid these days. They'd be doing science and developing technology instead of doing finance. Why is finance that much more important now? (is it just because it makes rich people richer?)

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#36

Post by achierius »

__cxa_throw wrote: post #29
Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Theres large portions of the tech industry that are pretty useless to society too while paying incredibly high salaries random examples include: - facebook/google ads teams - various SaaSLOP companies Lots of smart engineers that work on making buttons pretty and A/B testing crap rather than pushing the boundaries of science.

This is also bad. Huge amounts of our human capital are invested in fundamentally anti social enterprises. This sort of market failure seems to be endemic to our system as it stands today, and the only answers I've seen are "well, but that other bunch are even less useful!"

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#37

Post by abenga »

objektif wrote: post #33
Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Would you rather people spend their time on centering divs? Or come up more ways to make people click on ads. I see this type of view often on HN from big tech employees. Get off your high horses people.

Are those the only other options to being a quant? That's a false dichotomy if I ever saw one.

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#38

Post by [deleted] »

bblcla wrote: post #16
Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

Tyler Cowen did an 'ask me anything' at Jane Street when I interned in 2016. One of the interns asked him exactly this: "What do you think of the fact that we all work here instead of, I don't know, curing cancer?" He replied with, roughly, "Those of you who work here probably couldn't do anything else other than perhaps math research. Arguably, working here is the economically efficient use of your time." I think ab…

[deleted]

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#39

Post by godelski »

twoodfin wrote: post #13
Workaccount2 wrote: post #4

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

If it didn’t provide value, nobody would pay for it. The alternative to highly technical, agile quantitative trading is fat middle men, wide spreads, and capital sitting in 8%* stupider places than it would otherwise. That’s a pretty big deal even if the observable effects are extremely diffuse. * Made up number, but if we woke up on Monday with nothing but the tech we used to trade in 1984 it would probably hit much…

Lots of things provide no value that people pay for.

The inverse is true too: lots of things provide value that no one pays for.

I find it shocking that anyone that programs would think this way considering how widespread and common open source tooling is. I don't know how you can get through your day without using OSS or even free websites like stack overflow.

Re: Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

#40

Post by godelski »

twoodfin wrote: post #20
jwr wrote: post #19

Earlier quoted context omitted.

The problem is that smart people are the ones being employed, not the ones getting rich.

I am pretty sure anyone who sticks around Jane Street for a while is getting “rich” by any popularly accepted measure.

I'm pretty sure the parent is implying that there is quite a disproportionate distribution.
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