[amluto]

> But not once - not from word of mouth, or directly from them, or someone, ever, anywhere - have I heard a common sense way these guys make money due to intelligence, instead of due to a scam or due to luck.

Financial markets have a fascinating property: any well-known strategy that can be implemented at reasonable cost [0] stops working. This is because people implement it and the profit goes away. If Jane Street has a common sense strategy or three that makes money, they’re not telling you about it.

(I’m taking about actual market profits here. It is well known that you can make lots of money by charging fees on a lackluster fund as long as you can find investors.)

[0] The cost issue is real, and the relevant parameter is some combination of profit (revenue - opex), capex and risk. For example, one can make money (revenue) by being the fastest market on the block. But the revenue there is approximately bounded and competition has driven the cost up to insane levels, so it is not straightforward to do this profitably.

[itsdrewmiller]

The original comment addresses that concern:

>Why in the absence of any positive evidence, like "oh here is our genius but nonetheless expired" trading strategy, which anyone could have furnished in the last two decades, they agree, oh it must be real?

I agree that there should be some obviously awesome things these funds did that they can share now given they are no longer able to exploit them. I have no idea if they have done so and I and GP are just not aware of it.

[espadrine]

That is part of it. The Sequoia piece[0] describes what kicked off Alameda Research: after a tumultuous hard fork, there used to be a discrepancy between the price of Bitcoin in JPY at a Japanese exchange, and that in a US exchange. So he opened a Japanese account, bought a bitcoin in the US for a low price, and sold it in Japan for a high price.

To be clear, it is described by SBF. I haven’t verified historical prices to confirm it. The journalist that wrote this article probably hasn’t either.

[0]: https://web.archive.org/web/20221110141739/https://www.sequo...

[peyton]

He claims to have been wiring $25m a day from a BoA branch to banks in rural Japan. Total horseshit.

[tych0]

And at least in SBF/Alameda's case, they did, and you can google it. IIUC it was basic arbitrage, the hard part was figuring out how to interface with Japan's banks.

Maybe the guy is a bad dude, I don't have a horse in that race. But lots of trading strategies that have worked in the past are well known.

[jeffreyrogers]

There are known expired strategies that generated large profits for long periods of time. In some cases the people involved in developing the strategies have directly published things explaining what they did.

[121789]

Do you have any examples? Would be interested to read sone

[elijaht]

Article mentions one (bitcoin arbitrage)

[taliesinb]

I'd be fascinated to read these published things if anyone can point to them!

[jeffreyrogers]

The books and articles by Ed Thorpe are a good place to start.

[somuchfordonor]

I see a lot of variations on these arbitrage and secrecy themes.

Arbitrage that sticks around for years: those are scams dude. They involve collusion, not intelligence. I understand it might not be illegal collusion, but if either side of the transaction being scammed found out, they would find someone else to work with.

Trust me, I know. I've worked in ad tech.

[solveit]

I mean, yeah. For arbitrage to stick around for years it requires that the person who first found it be years ahead of the curve, and that's really hard to do just by being smarter than the competition. The vast, vast majority of these will be collusion, or regulatory capture, or literal fraud, or whatever where the competition knows full well what you're doing, but can't/won't jump in for completely unrelated reasons.

But finding lots of different things to arbitrage and consistently being two weeks ahead of the competition is something you can do with a dedicated team of smart, experienced people, and this is the business model that Jane Street and others claim to be running.

[DebtDeflation]

The obvious suspicion, for any company that is both a market maker and doing prop trading, is that they're engaging in some sort of front running. They're probably doing it in a highly obfuscated non-trivial way otherwise they'd get caught quickly, but nevertheless are using their visibility into trillions of dollars worth of order flow to shape their own trading strategy.

[bwi4]

I just assume everyone but retail has order flow data now.

[adamsmith143]

>Trust me, I know. I've worked in ad tech.

Trust me I know about the inner workings of the Financial world because I did an internship at a Digital Marketing agency and totally didn't get coldly rejected by Jane Street when I applied for their Head of Trading position that I totally deserve because I'm like way smarter than those Harvard Math 55 morons.

Lol this is S tier cope or A tier trolling.