Having worked for a 700M$ quant investment fund, I'd say, uhem no. It's pretty simple: algo investing doesn't work well or at all. algo trading does. nobody publishes very good algorithms. there are perhaps only 20 very good systems in the world. usually they are statistical arbitrage or HF. these kinds of systems are measured in sharpe ratio and turnover at least once a week. although I've spoken to a 25 year old who managed to make a killing auto-trading an emerging market, but these things don't happen at scale.
also, Bloomberg is in completely different business.
if somebody really wants to work on replacing Bloomberg let me know. this is a huge market, which nobody is working on AFAIK (=~Angellist).
Revenue per user might be high, but it's targeting a smaller market. Bloomberg is useful to anyone who buys or sells stocks in any way. Quantopian seems to be about people who want to find a technical system to beat the market. This is by its nature self-defeating. If everyone is using Quantopian, everyone cannot be beating the market. The article makes this very point on page two.
At the same time, if this is a genuinely useful tool for its intended purpose, there are lots of exit strategy possibilities. It might be worth billions to a single hedge fund.
hackers at the billion $ HF's are the best in the world and there is no tech here that is really of any value to them. not to be too mean, but this is basically a nice webpage with a couple of scripts. If somebody would build a FIX engine and a broker with containers, that would be worth perhaps a billion in aggregate (NYSE:IBKR). But generally you start from scratch, for very good reasons.
I've been lurking on Quantopian for a few months. The algotrading community is secretive. Currently, you code in python which is then saved and run on their servers. I fear Quantopian copying the best trading strategies for their own use. Even if you black box the code, all Quantopian needs is I/O with your program. What's to stop this?
You retain ownership of the content you put in our system; everything you write is yours. Your intellectual property remains private and your own. You can read more about our policies in our terms and in our FAQ (https://www.quantopian.com/faq and https://www.quantopian.com/policies/terms)
Of course, there is no way that we can prove or guarantee that we're not peeking. Like anything else in the cloud, at some point it becomes a matter of trust. That's why we did our About page a bit differently (https://www.quantopian.com/about). We're all startup veterans with reputations in the industry. You can click the links there and find out who we know in LinkedIn, and see what they say about us. We hope that our good reputations make it easier for you to trust us. Of course, that is entirely up to you!
Trust can take care concerns of credit card transaction, banking, or privacy. But when it comes to trade secret, intellectual property, trust is irrelevant. If you're working on trust, you're on the wrong path.
Traders need to keep their algo close to themselves. What you can offer is not testing their algo on your platform, but separating the their critical algo from the commodity data mining then offer the latter. The latter is what most traders don't have and you can add value. The ability of separating the algo, might just be your competitive edge.
I have a fair bit of insight into this world as I work in it and this quote seems abit off.
> Now, 5% of asset managers are algorithmic traders. In a decade, 50% to 70% of asset managers will use trading algorithms.”
It may be true that if you include all mutual and pension funds that only 5% have their own algos, and even that seems very low, its important to note that these funds trade through other brokers like Goldman and Knight capital.
I'd guess that vast majority( > 90%) of trade that they do are done algorithmically whether on a simple VWAP or a more complex "work it" style algos.
Maybe the author meant alpha seeking algos rather than basic order allocation algos?
In that space, there have been many quant tools/online communities, smartquant, openquant etc., let alone weath-lab, traderstation the old school TA tools, yet none has taken off into mainstream.
In the algo trading field, nobody can beat HF. In the alpha seeking field, it takes much more than trading algo, or a single algo. Complete computerization is not impossible but definitely a very hard problem.
In term of creating a Bloomberg competing model, I'll not entirely build it on algo based. There are numerous cheap highly educated labor out there in the world, outsource it, fill in the gap where data mining is still not good at. Only then, Quantopian will become a sound Bloomberg conteder.
also, Bloomberg is in completely different business.
if somebody really wants to work on replacing Bloomberg let me know. this is a huge market, which nobody is working on AFAIK (=~Angellist).