Becoming financially independent as solo quant
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Becoming financially independent as solo quant
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Re: Becoming financially independent as solo quant
#2Relying on constant insane returns isn't financial independence. Considering how many people are working to extract money from equities it's most likely luck.
Insane returns is one way to get to financial independence, because even if the edge exists, it's going to eventually disappear. You can boast about financial independence once you make enough to live the rest of your life from safe passive yield, after inflation, which in the current very low real rates environment requires a lot - maybe $3M as the bare minimum.
Re: Becoming financially independent as solo quant
#3Relying on constant insane returns isn't financial independence. Considering how many people are working to extract money from equities it's most likely luck. Insane returns is one way to get to financial independence, because even if the edge exists, it's going to eventually disappear. You can boast about financial independence once you make enough to live the rest of your life from safe passive yield, after inflati…
How much is reasonable for a family with 2 kids living in a medium expensive city in the US?
Re: Becoming financially independent as solo quant
#4This seems similar to Renaissance Technologies, especially regarding the regression part.
Funny how so many people are skeptical, as if they they want to be convinced that it's not possible. The fact Renaissance Technologies has been so successful for so long shows it can be done. Easy? no, but possible, yes.
Re: Becoming financially independent as solo quant
#5Relying on constant insane returns isn't financial independence. Considering how many people are working to extract money from equities it's most likely luck. Insane returns is one way to get to financial independence, because even if the edge exists, it's going to eventually disappear. You can boast about financial independence once you make enough to live the rest of your life from safe passive yield, after inflati…
Considering how many people are working to extract money from equities it's most likely luck.
renaissance tech. has been doing it for 3 decades and with vasty more capital. maybe it is skill, too.
Re: Becoming financially independent as solo quant
#6This seems similar to Renaissance Technologies, especially regarding the regression part. Funny how so many people are skeptical, as if they they want to be convinced that it's not possible. The fact Renaissance Technologies has been so successful for so long shows it can be done. Easy? no, but possible, yes.
Even the Medallion Fund only averages 20-40% gains a year and they've stacked the deck with every possible advantage of resources and the most brilliant folks they can find. If the risk management on this is geared to the point where it's seeing 300% account volatility in a month, even in a positive direction, it's easier assign higher likelihood to
"this algo is levered far higher than it ought to be and while you've dodged landmines this month, you won't in the long run,"
vs.
"your 'minimum viable stat arb' and competent implementation outperforms the best-of-the-best outlier."
I think skepticism is warranted as most people at this point end up blowing up, but hey, I guess there's some slim possibility that it's the latter?
Re: Becoming financially independent as solo quant
#7The top comment is spot on:
" You have a choice: $103k or your pride. To keep the $103k, you'll have to swallow your pride and admit it was all luck. If you choose your pride, you'll go to $0. The choice is yours. Best "
Re: Becoming financially independent as solo quant
#8This seems similar to Renaissance Technologies, especially regarding the regression part. Funny how so many people are skeptical, as if they they want to be convinced that it's not possible. The fact Renaissance Technologies has been so successful for so long shows it can be done. Easy? no, but possible, yes.
Even the Medallion Fund only averages 20-40% gains a year and they've stacked the deck with every possible advantage of resources and the most brilliant folks they can find. If the risk management on this is geared to the point where it's seeing 300% account volatility in a month, even in a positive direction, it's easier assign higher likelihood to "this algo is levered far higher than it ought to be and while you'v…
>Even the Medallion Fund only averages 20-40% gains a year and they've stacked the deck with every possible advantage of resources and the most brilliant folks they can find.
The Medallion Fund is also larger than a single quant's trading portfolio. This is important because a given trading strategy loses its effectiveness (in percentage terms) when scaled up. A strategy that yields 100% return on a 10k investment is unlikely to return 100% on a $10M investment, for instance.
Re: Becoming financially independent as solo quant
#9Relying on constant insane returns isn't financial independence. Considering how many people are working to extract money from equities it's most likely luck. Insane returns is one way to get to financial independence, because even if the edge exists, it's going to eventually disappear. You can boast about financial independence once you make enough to live the rest of your life from safe passive yield, after inflati…
How much is reasonable for a family with 2 kids living in a medium expensive city in the US?
It's not so much about family size as it is burn rate.
Check out something like FIRE calc: https://firecalc.com/
What you need to do is figure out the burn rate to sustain your family, figure out your safe withdrawal rate (e.g. 3.5%), then you can easily get amount of capital required.
A Mormon friend of mine, with 5 kids, spends less on food for his family than we do (family of 4) --he/his wife are just much better at spending on it. There are also factors like, it's possible to get a 3-4K sqft house for a very reasonable price & low taxes, vs. living in a tiny box in San Fransisco for 2x more.
Re: Becoming financially independent as solo quant
#10This seems similar to Renaissance Technologies, especially regarding the regression part. Funny how so many people are skeptical, as if they they want to be convinced that it's not possible. The fact Renaissance Technologies has been so successful for so long shows it can be done. Easy? no, but possible, yes.
Renaissance is a complete outlier. Most hedge funds - including firms that sell themselves as quants - just lose tons of money.
I've been in this industry for a while and folks making high returns solo either:
1) Got lucky for a very short amount of time, then their strategy stopped working. On avg those folks net lose money trying to make "the thing" work again.
2) Were running a super risky levareged strategy and went bust eventually