/sci/ - Science & Math

[Anonymous No.11260296]

HOW ARE THEY ALLOWED TO MANIPULATE THE MARKET LIKE THIS USING VOODOO MATH AND PHYSICS ITS NOT FAIR

>Eric Weinstein has intimated that James Simons [2] discovered a secret (in the Peter Thiel sense of the word) related to gauge theory during the time Simons and C.N. Yang [3] (as in Yang-Mills Theory [4]) discovered the correspondences in what has become known as the "Wu-Yang Dictionary" [5], which later led to Simons founding Renaissance Technologies [6] in 1982 and is part of the secret-sauce in their mathematical models that has enabled them to dominate quantitative trading ever since

>Renaissance employs specialists with non-financial backgrounds, including mathematicians, physicists, signal processing experts and statisticians.

>"Of [Simon's] 200 employees, ensconced in a fortress-like building in unfashionable Long Island, New York, a third have PhDs, not in finance, but in fields like physics, mathematics and statistics. Renaissance has been called “the best physics and mathematics department in the world” and, according to Weatherall, “avoids hiring anyone with even the slightest whiff of Wall Street bona fides”.

>"It's startling to see such a highly successful mathematician achieve success in another field," says Edward Witten, professor of physics at the Institute for Advanced Study in Princeton, NJ, and considered by many of his peers to be the most accomplished theoretical physicist alive ...[29]

[Anonymous No.11260299]

r.

[El Arcón No.11260325]

>"It's startling to see such a highly successful mathematician achieve success in another field," says Edward Witten

[Anonymous No.11260326]

>>11260296
It's not voodoo. It's auto execution of stock trading algorithms carried out extremely well. They have almost no risk and always make money.
The thing that separates them from other competing firms is that their research platform is too good. That means they generate better ideas and faster.

[Anonymous No.11260341]

>>11260296
Yea and they do all this for a 5% ROI for the year meanwhile some autist made a 10x return on Tesla options cause he thought 420 was a hilarious stock price after seeing Elon Musk in Joe Rogan. I’ve lost and gained thousands to trump making a fucking tweet in the shitter. Stock market is literally just gambling and math doesn’t change that. Some just take advantage of idiots who play without knowing all the rules.

[Anonymous No.11260355]

>>11260341
he's the god of all quants and worth >$20 billion

[Anonymous No.11260365]

apparently Weinstein did a lecture on the subject

https://www.youtube.com/watch?v=h5gnATQMtPg&list=PLrMNMaMJNUUjvaJiE9LhLFiKgWgyN-6d4

[Anonymous No.11260407]

>>11260341
Are you even reading your own posts? If he can 5% ROI consistently then he can do that forever, and whatever 10x you make by jerking off to meme lines on charts will be long gone on prostitutes and blow while his hedge fund is still cashing that 5% on their billions.

[Anonymous No.11260426]

>>11260341
Didnt he make like 60%?

[Anonymous No.11260436]

>>11260407
Thing is, there’s plenty of investment options with a similar return rate that takes no effort and are relatively risk free. When you have a genius plan and the first step is “have a billion dollars” it’s not really a genius plan. It’s not a secret that having a lot of money means you can get a lot more money. Even gambling is no longer gambling when you have enough money to keep taking bets. It’s how casinos work. Besides, no matter how much money they make, those autists abusing large numbers for steady returns will never know the the thrill of YOLOing your portfolio on a pharm startup, watching it shoot to the moon, and spending half your winning barebacking hookers and snorting coke off of strippers’ asses so who’s the real winner?

[Anonymous No.11260448]

>>11260436
>who’s the real winner
The billionaire

[Anonymous No.11260449]

>>11260426
Depending on the year he made more than that. His personal fund made 80% during the biggest financial crisis since the Great Depression but his public fund tanked during the same year. Until shown evidence otherwise, I’m going to assume his magical mathematical discovery is the same one every other major player in finance found, fuck over everyone else and specially your customers then balance their loses with gains to your own account.

[Anonymous No.11260454]

Wu Tang has had more interesting financial mathematics discoveries than Wu Yang

Diversify your bonds nigga

[Anonymous No.11260527]

>>11260449
>His personal fund made 80% but his public fund tanked
LOL. AKA The Shitcoin Shuffle

[Anonymous No.11260529]

>>11260454
Kek

[Anonymous No.11260688]

>>11260436
>Thing is, there’s plenty of investment options with a similar return rate that takes no effort and are relatively risk free.

Are you really that stupid that you think a hedge fund can charge their outrageous fees for something that has similar returns to some other bullshit? I hope you don't think their returns are like a fucking treasury bill jesus christ...

[Anonymous No.11260715]

Someone eli20 what gauge theory is and how it can be applied to economics

[Anonymous No.11260729]

>>11260296
Financial mathematics is not as hard as you think it is. If you are smart enough to get a 4 year STEM degree then you are already overqualified to come up with a trading system that beats the S&P500 (in a certain sense). You could do it in a week if you got the right books to get started on the basics of what trading actually is. The actual limiting factor is really the risk management framework that you use behind your fund. The mathematics behind risk management is actually extremely primitive and while it may be enough to figure out the correct price for car insurance assuming that x% of cars have an accident every year, it is definitely not enough to manage risk in a real financial market. (The reason is that the number of car crashes every year is correctly modeled by a random variable with finite variance, so the math works out, but the variance of the return of financial instruments is known to be infinite, so all of the math breaks down)

This means that the risk management in these kinds of funds is heavily based on heuristics with perhaps some clever mathematics backing it (though not too much because you can basically assume almost nothing of use about the random variables at play). You can probably imagine that there have been hundreds if not thousands of these "let's hire physics PhDs to beat the market" started out of a single risk management heuristic invented by some clever mathematician but eventually most of those died out, leaving the lucky ones (i.e. the ones whose heuristic wasn't shit) like Renaissance, 2-sigma and Citadel basically making the billions that were left by all the players who died trying.

Remember, in probability, it is always a numbers game. Start 100 funds and the 1 who survived just did so because one ought to survive, if only because the money lost by the other 99 had to go to someone. One thing is for sure though, having the aura of being some mystical fund ran by geniuses will sure making fund-raising easy.

[Anonymous No.11260760]

This may be of interest

https://arxiv.org/pdf/1912.01708.pdf

[Anonymous No.11260771]

>>11260729
>Remember, in probability, it is always a numbers game. Start 100 funds and the 1 who survived just did so because one ought to survive, if only because the money lost by the other 99 had to go to someone. One thing is for sure though, having the aura of being some mystical fund ran by geniuses will sure making fund-raising easy.
this is the bigger relationship here if we're honest. the hype is all popsci shit

[Anonymous No.11260958]

>>11260688
Yes. Most hedge funds can’t even beat the s&p 500 and if they do they’re considered amazing. You’re the exact type of moron making the managers rich, the kind that thinks spending big means what you’re paying for must be great.

[Anonymous No.11260965]

>>11260341
>Yea and they do all this for a 5% ROI
>what is compounding
if he makes 5% year over year he beats any casino trader anon

[Anonymous No.11261022]

>11260965
I wasn’t saying 5% is meaningless, I was saying it’s not unique. There’s a million places or strategies you can use for year to year steady returns. The funds that go for anything more impressive than that are essentially just gambling. As Warren Buffet said, to be a great investor you just have to get lucky like 4 times. This guy got lucky a few times and OP thinks he discovered the mathematical formula for turning shit into gold. Yet as mentioned in this thread he has posted 20% losses. Never seen a casino be down 20% for the year, yet they don’t need math PhDs telling them how to run the business. It’s all a meme to attract investors and people like OP are just buying into the PR.

[Anonymous No.11261027]

>>11260325
Hi Tooker, how’re your holidays?

[Anonymous No.11261028]

>>11260436
>It’s not a secret that having a lot of money means you can get a lot more money. Even gambling is no longer gambling when you have enough money to keep taking bets. It’s how casinos work.
That’s... not why casinos make money.

[Anonymous No.11261067]

>>11261028
What? That’s exactly how they work. Law of large numbers + a few percentage points edge in every game = easy money.

[Anonymous No.11261660]

>>11260958
>Most hedge funds
But we aren't talking about any hedge fund. This is Renaissance. If you need proof of its success, look at the net worth of the founder.

[ECHS/KumKum/Solivagus/Zilly No.11261691]

>>11260325
We recognize Tooker as the American representative for Mathematics. He defended the need for argumentation in the absence of sanity, for it is sacred.

https://www.youtube.com/watch?v=ohDB5gbtaEQ

[Anonymous No.11261806]

>>11260688
The overwhelming majority of hedge funds fail to beat the S&P 500 and only a fraction of a fraction of a percent can consistently beat it. It's mostly random which hedge funds in any given year will outperform the market, and only like 20% do.

[Anonymous No.11261832]

>>11261806
Actually the odds are even worse than that.
https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf
Want massive return? Be willing to risk your entire portfolio or have insider information, SEC be damned.

[Anonymous No.11261851]

>>11261806
>>11261832
This is still a pointless argument because quant hedge funds are still a tiny minority of hedge funds and Renaissance is a specific one with a specific track record that you can look into.

[Anonymous No.11261854]

>>11261851
>Renaissance is a specific one with a specific track record that you can look into.
>Dude what are the odds that the winning lottery numbers were 40,35,17,23,6? Insane
Some are gonna be winners by random chance.

[Anonymous No.11261862]

>>11261854
It's possible that they are only successful due to random chance but you've yet to show why this is necessary. Dude, I know you've read Taleb and you feel like a smartass talking about lottery numbers salty about not making hedge-fund money but if you give Taleb a second look you'll see that he actually goes into detail about why certain types of traders are just lucky and go bust eventually. If you can't argue that for Renaissance, you are just jerking your tiny dick for attention.

[Anonymous No.11261868]

>>11261851
>with a specific track record that you can look into.
Yes, one that posted massive loses as well. This guys personal year to year earnings hover around 10% and that’s including the massive fees he charges people to gamble for him or possibly even front run them. Nothing about his company seems special other than being lucky.

[Anonymous No.11261872]

>>11261862
>you've yet to show why this is necessary.
I don’t think you understand how burden of proof works

[ECHS/KumKum/Solivagus/Zilly No.11261879]

>>11261872
Yes, the burden of proof is on the last poster in every thread ever made on 4chan, for eternity.

[Anonymous No.11261892]

>>11261868
It is true that pic related could be luck, though I'd wager it is highly unlikely. Regardless, I always like to think of this stuff from the perspective of the insider: the actual guys making the systems and the trades. If are able to create a curve similar to medallion for even a year then you can easily get millions of dollars and start paying yourself a yearly salary of perhaps 500k. That is money that, even if you go bust, will be in your bank account. And your investors will all be European oligarchs investing in you through a fund of funds investing in a fund of funds investing in you. If the guys who got rich by selling Hitler weapons in WW2 lose a couple million I don't much care.

Now, I'd argue that even if it is some risk management magic hiding huge risks that will eventually kill the fund, there is still some talent and skill in making the ruse. Because this hedge fund at least is not a Ponzi scheme, even if it is a scam it is one that you could replicate. Because if you could, you would also be running your own lucky hedge fund making billions of dollars. But you are not, therefore it can't all be luck.

>>11261872
You are the one claiming their returns are lucky. I am claiming this is not necessarily the case. Which claim is the strongest? I mean, my claim is already trivially true because it is not even a statement of fact.

[Anonymous No.11261901]

>>11261892
>Which claim is the strongest
Yours. You’re not claiming it’s not necessarily the case. You’re claiming it’s almost certainly not the case. So show what they have that’s so different from any other hedge fund.

[Anonymous No.11261904]

>>11261901
>So show what they have that’s so different from any other hedge fund.

That they make 40% returns yearly for decades on the fund that is restricted to only their own money, so it's not even like they are scamming European oligarchs to pay themselves huge bonuses. They are risking their own money for real returns. Call it Skin in the Game.

[ECHS/KumKum/Solivagus/Zilly No.11261905]

Eventually guys, the reason why other people stop caring to cover the story behind their numbers is because those that do end up jerking off over it rather than, ya know, uniting or defeating it.

See: Trump

>Amazed at seeing all the justice boners ITT btw

[Anonymous No.11261933]

>>11261892
>the very best performing fund out of thousands of gamblers is statistically anomalous and this is a mystery
It’s like you’re trying to be retarded. there’s nothing weird about it, you should almost expect it given the amount of hedge funds.
>that will eventually kill the fund
They came pretty close in 2007. Odd given their magical formulas.
> still some talent and skill in making the ruse
Sure. But it’s not mathematical.
>at least is not a Ponzi scheme
I wouldn’t take that for granted. This isn’t the only fund he manages, yet there’s a huge discrepancy between the earnings of the closed off fund and the more public ones. Almost like the top level of certain schemes...
>but you are not, therefore it can’t all be luck
That may be the single most retarded statement I’ve ever seen on 4chan, and I live shitting on /pol/tards. Congratulations. I guess lottery winners must be geniuses, since everyone else is unable to replicate their success. Jesus Christ.
>>11261904
>that is restricted to only their own money
Why the hell would you think this is at all a redeeming quality? Again, it’s not the only fund that company manages. Shouldn’t they all be making similarly amazing profits? I would kind of get if you said just because it looks weird doesn’t mean they’re doing anything nefarious, but to claim that the fund with their own money massively profiting while their others not so much is in fact a virtue is incredibly asinine.

[Anonymous No.11261944]

>>11261933
>That may be the single most retarded statement I’ve ever seen on 4chan, and I live shitting on /pol/tards. Congratulations. I guess lottery winners must be geniuses, since everyone else is unable to replicate their success. Jesus Christ.

Technically, you could come up with 100 different ideas for a hedge fund and invest just 1000$ on each. Then just invest all your money on the one who survives and outperforms the rest. It's all just a numbers game, right :^)

>Why the hell would you think this is at all a redeeming quality?
Skin in the Game.

[Anonymous No.11261967]

>>11261944
>Technically, you could come up
Technically, you’re fucking retarded. Being lucky isn’t an investment strategy. Yes, if you made 1000 different funds one of them would probably get very lucky. That in no way implies that you should invest all your money into that one because having been lucky over a period of time is 0 guarantee that you’ll keep being lucky. Winning one lotto ticket doesn’t make you any more likely to win another, other than having more funds to waste. Do you have even a limited understanding of how statistics and chance work?
>Skin in the Game
Again, it’s more evidence of nefarious acts than it is evidence of genius. Repeating it without answering any of what I said just makes you look dumb, unless you care to explain the discrepancies from your own framework.

[Anonymous No.11261973]

>>11261967
>Technically, you’re fucking retarded.
No, technically you are. After finding out which 1 is the best one, you can show it's percentual track record to investors, get 50 million dollars and then pay yourself 2% of assets, 20% of profits. This is well known to be the easiest way to become filthy rich. The fact that you are so smart and yet not doing this is proof that you are retarded (i.e. smart just for show).

[Anonymous No.11261994]

>>11260326
>>11260296


Yes, you can even beat the market just by using really primitive tool like CNN fear and greed index

[Anonymous No.11261998]

>>11261933
>>11260326
>>11260296

https://money.cnn.com/data/fear-and-greed/

right now CNN fear and greed index says the market is extremely overbought

[Anonymous No.11262012]

>>11261933
>>11260326
>>11260296

a simple trading algorithm would be like sell when Fear and Greed Index goes over 90 and Buy when fear and greed index drops below 10. You can also make fear and greed index of shorter time intervals so you can do high speed trading.

[Anonymous No.11262017]

>>11261973
I’m going to assume you’re just doing damage control now after getting btfo and aren’t actually this dumb, but feel free to correct me. The entire point of the thread and the one you were arguing until now was that medallion has some secret mathematical formula to stock market success. Your point about scamming people into trusting you and getting wealthy off of fees has zero relevance to any of this.

[Anonymous No.11262040]

>>11261994
>>11261998
>>11262012
Quantitative analysis is fucking astrology for investors. All that work just to score nothing statistically significant above passive funds. The unironically best strategy is moon or rope.

[Anonymous No.11262061]

>>11262017
>you were arguing until now was that medallion has some secret mathematical formula to stock market success
kek, point to the post in which I ever said this.

[Anonymous No.11262117]

>>11262061
> Renaissance is a specific one with a specific track record that you can look into.
> They are risking their own money for real returns
The very first post of yours I responded to implied they weren’t just lucky. The OP is about if they are or aren’t lucky. Tell me how a scamming strategy has anything to do with this.
> It is true that pic related could be luck, though I'd wager it is highly unlikely.
You’re really going to try to sell this as you were just trying to say hedge funds are a good way to scam people the entire time? Pretending to be retarded just so you’re not wrong is a terrible strategy, but maintain it if you’d like. You’re no longer saying anything relevant to the thread or even trying to defend your previous idiotic statements so I don’t really care where you shift the goalpost to next.

[Anonymous No.11262129]

>>11262117
So... I said nothing about secret mathematical formulae?

[Anonymous No.11262185]

>>11260958
>Most hedge funds can’t even beat the s&p 500
This is a fucking meme posted by stock market losers. Hedge funds are not supposed to beat the market. They're supposed to make a stable return independently from the market conditions. They make just as much as they think they can handle without the whole thing leaving their personal risk tolerance. Individual traders can handle small account incredibly well with x00% per year. At some point you run into liquidity problems on single postitons and you can't personally handle more of them which means you are very limited on your account size.

[Anonymous No.11262273]

>>11261067
The EDGE is why they make money, not because “gambling is no longer gambling when you have enough money to keep taking bets” like you said, which is dumb.

[Anonymous No.11262682]

Wasnt Baum, as in Baum-Welch HMM algo, also part of Renaissance?
Are there any examples of financially useful HMMs?

[Anonymous No.11262716]

>>11262273
Except the edge is meaningless when you can’t take enough bets. With games like blackjack, you can easily go bust against a friend if your bankroll isn’t big enough, even if you’re playing the dealer. It’s only when you have a stupid amount of bets taking place that a 2% edge is guaranteed money.

[Anonymous No.11263763]

>>11260326
>They have almost no risk
how could they?

[Anonymous No.11263873]

>>11260965
5% loses to the index in the long run

[Anonymous No.11263881]

>>11260326
>They have almost no risk
how could they?

[Anonymous No.11263966]

>>11262012
They made $8bn with a $10bn fund last year. Safe to say their strategy is highly sophisticated.

>>11263881
They hedge it away (particularly black swan events) and their machine learning models automatically reduce risk when they detect it. Keep in mind they have already fully automated the process of profitable signal discovery and trade execution.

[Anonymous No.11264035]

>>11263966
>They hedge it away (particularly black swan events)
how?
IN case of recession everything goes down

[Anonymous No.11264422]

>>11260729
What books do you recommend?

[Anonymous No.11264439]

Whoever figures out how to properly model risk will be the world's first trillionaire.
That said, they will also cause the market to completely stabilize and prevent people from ever really being able to profit from the market. People make their money from market fluctuations of any kind and the better we get at modeling and risk assessment, the lower the margins get for the market as a whole.
Eventually the market will make itself obsolete which is interesting

[<negarestanipoopoo> No.11264687]

>>11263966
shut up dumbass you dont know anything

[Anonymous No.11264724]

>>11260296
>Eric Weinstein
i dont trust a word this guy says