The Quants

Once inward a while, a mass well-nigh trading written for the full general world contains merely about useful nuggets fifty-fifty for professionals.  Kelly's formula, Universal Portfolios, in addition to the maximization of compounded increase rate. The Quants, yesteryear WSJ reporter Scott Patterson, is another. (Hat tip to my partner Steve for telling me well-nigh it.)

What is the most of import take-away inward The Quants? No, it is non that you lot should acquire to acquire a main poker histrion or chess histrion earlier hoping to buy the farm far big, though you lot would intend that given Patterson's exhaustive coverage of poker games played yesteryear the altitude quants. Among my ain professional person acquaintances, trader-poker-players are soundless a minority.

The most of import take-away is what ex-employees said well-nigh Renaissance Technologies: "there is no undercover formula for the fund's success, no magic code discovered decades agone yesteryear geniuses .... Rather, Madallion [Fund]'s squad of xc or in addition to then Ph.D.'s are constantly working to ameliorate the fund's systems, ..."

In other words, though you lot may non conduct maintain 90 Ph.D.'s  at your disposal, you lot tin soundless hap continuously improving/refining your strategies, improving the technology scientific discipline of your trading environment, in addition to increasing the multifariousness of your strategies. And though you lot may soundless non archive 60-70% annualized returns every year, you lot volition nonetheless savor stable returns yr afterwards year.

By the way, it is expert to meet my ex-colleagues Lalit Bahl, Vincent in addition to Stephen Della Pietra mentioned inward the book, all of whom left IBM to bring together Renaissance many years ago, in addition to who are extraordinarily overnice in addition to friendly guys, quite inward contrast to the norm on Wall Street.