[exelius]

Hedge funds operate across a whole bunch of arbitrage options -- not all of which are available to Quantopian.

At most hedge funds, "alpha" boils down to information asymmetry (aka "how well-connected is my fund manager?") Pure quant platforms almost never outperform because they're so easy to replicate. Quantopian doesn't have enough "levers" to be able to build a comprehensive arbitrage plan. They might be able to provide low-cost hedging on the greeks, but that's just 1980s finance with computers.

Furthermore, it's not the brilliant coder who just joined who makes you all the money. It's the brilliant coder with 15 years experience under his belt who makes way too much to bother with Quantopian who is writing the winners. It's not unheard of for top quant programmers to pull down 8-figures annually.

Those guys are just not gonna mess with Quantopian -- they're going to eat it (and any platform like it) for lunch. In quant finance, if you're not the smartest guy in the space you're playing in, you're just another sucker.

[kolbe]

> if you're not the smartest guy in the space you're playing in, you're just another sucker.

I know you're trying to cargo cult some machismo from GGGR, but the stats don't support your claim. There're literally hundreds of successful quant finance firms. Which one is 'the best'? I'll be sure to let Ken Griffin or David Shaw or whoever isn't 'the best' know that they're just 'suckers'.

[kevstev]

One big hole in his claim is that a real problem for successful, and really all hedge funds to some extent- is scale. Yeah you might find a microcap out there that looks great but if the ADV on it is 100,000 shares with a <$200M market cap, its going to be really hard to invest a significant amount of money into it if you have even $100M in assets under management (which is considered to be a small fund).

As an individual with orders of magnitude less in funds, there are a lot more opportunities out there picking up the "pennies" that the bigger guys are just too big to get into. I have a strategy that mostly picks up small and microcaps, and have had market beating returns since I have run them the last 4 years. I can't find a reference to it now, but Warren Buffet in an interview talked about some of the ways he could easily invest up to a million dollars and have a margin of safety that should easily allow him to beat the market. The closest thing I could find describing it is this: https://valuebin.wordpress.com/2011/01/27/warren-buffett-on-...

This link, while it doesn't go into the methods, at least directly quotes Buffet on the subject: https://www.sovereignman.com/investing/warren-buffett-its-a-...

[exelius]

They just pick their spaces well; there are plenty of ways to find a niche where you are the smartest guy in your space. But there are a lot of traders / fund managers who lose their asses; most people don't last very long in a professional environment (the ones who do end up making a ton of money)

[kolbe]

For someone who makes very outlandish statements, you never seem to support them in any way. Throwing mild profanity and colloquialisms into your statements (as if being 'cool and casual' will make you sound like an expert?) doesn't suffice.

[praulv]

>>It's not unheard of for top quant programmers to pull down 8-figures annually.

This is complete nonsense. What is your source? In the current environment, max low 7 figures will be heads of quant research or senior directors.

[Bromskloss]

> In quant finance, if you're not the smartest guy in the space you're playing in, you're just another sucker.

That's one attractive advertisement. :-) It makes me want to play that game.

[bjork]

This attitude gives me genuine hope that there's still some unexploited alpha out there.

[gonzoflip]

Wait, you are saying there are quants that make >1,000,000,000 annually?

[exelius]

Haha, you're right. There are fund managers who make that much though :) I meant 8 figures for quants; need more coffee...

[gonzoflip]

Yeah I was going to say i thought quants pretty much topped out in the mid 8 figures. Although to be fair, I can't even fathom making ten figures annually. Having a compensation package that compares to the GDP of a small nation is beyond my comprehension.

[exelius]

Well, the guys making that kind of money (David Tepper comes to mind) are managing their own money with the fund / family of funds as well. I'm sure it's almost all capital gains.