James Simons' hedge fund, Renaissance, brings him over $3.2B/year in salary and bonuses. Does his computer program know how to cheat at the tic-tac-toe that is the stock market?
While I believe the 80 PhDs are extremely good at creating successful computer models and trading strategies, I don't need a PhD or a sopisticated computer to figure out what are likely to be the main underlying secrets to their success. The biggest and most lucrative inefficiences to exploit are technical in nature (rather than fundamental). The computer models are probably especially good at detecting when too many people have shorted a stock or when to arbitrage profits out the greedy short term bets options traders like to make. Prices can be manipulated for short term gains or they can simply be driven up almost endlessly for positions the company already holds.
Source: Economic Rebalancing
No comments:
Post a Comment