OMG :eek: Dude, Bruce Lee was the real thing. His One Inch Punch was legendary among the martial artists of his day. Granted, the movies were stupid, as were all the other Hong Kong kungfu movies of that time, but there was nothing fake about Bruce Lee's real-life martial art skills.
Some use highly complex mathematical models to try and find their edge while others just buy on support and sell at resistance. My choice is the latter.
coating everything with numbers....why do quant hedgies always blow up if its so complex? although i'd be interested in quantitative derivatives trading (whatever this is)....just for educational purpose.
Weren't the original hedge funds a variation of pairs trading? Now it's finding a slight edge and leveraging it 10x until it blows up.
correct. pairs trading started off in wall street. btw nassim emphasizes in his book that he t rades rare events in derivatives....what does it mean ? changes in prices due to incorrect price modeling due to some extraordinary event ? how would be able to exploit such black swan events?
Financial advisors are morons. And if they are not, they are not allowed to think & act outside of the company philosophy. The fact is that you are a bagholder. If you have a serious sum of money, then: A) educate yourself because a fool and his money are soon parted. Actually, they are lucky enough to get together in the first place. B) understand your risk profile and investigate the products & markets you are interested in investing C) if you decide you do want some professional money management, go for unique, word of mouth and esoteric routes rather than a big firm like UBS. In other words, don't be part of the herd. Your financial advisor is nothing more than a salesman that has control over you because you fall for his/her pitch. It's basically a confidence scam, since you already state that you feel like you NEED his/her help. Yet, as shown in this thread, your financial advisor doesn't really know much and is BSing you. And you still feel like you NEED his/her help. This is while advertisements for financial advisors are plentiful and firms will hire ANYONE to do the job and SELL SELL SELL. Like I said, it's a confidence scam. P.S. Please don't tell me this joker had your money put into a CDO. That's a red flag bigtime.
There are two types of people in this world: 1) The ones that search for ad hoc models that simply work. We call these people engineers. 99% of modelers that come to ET with "models" are engineer types. When these stop working, it's back to the (optimization) drawing board. I venture to say that 85% of hedge funds also fall in this category. 2) The ones that search for the underlying principles that govern the reality of the given domain and form models from those principles. We call these people (econo) physicists. These models have far far longer shelf life. People in category one may find simple models that work for some time. They utilize massive searches and back testing using sophisticated statistics to mine for patterns. It is a sophisticated form of curve fitting, with statistical properties at inception to try to alleviate that sin. What are examples of models of type 2 in the hard sciences? Newtons tree laws of motion summarizes everything about motion and forces (before Special Relativity.) Another example is the four letter language in which the genetic code is written. Another is Schroedinger's equation in quantum theory that describes the structure of every atom and molecule. Not a single one one of these 2) models were discovered by engineers. What is more, every single one of these theories were not made by adding ad hoc appendages to existing ideas at the time of their discovery. It is interesting to note that, in financial markets, almost all theories of type two are in derivatives. Every model that I try to develop is of the second kind. That is why I have no hair left. This doesn't answer your question, but it answers a deeper one, imo. nitro
First off, quant hedgies do not "always" blow up. Far from the truth in fact. You only hear about the blow-ups because they are newsworthy. There are many very successful quant funds that you will likely never hear about. Second, you don't even know what quantitative trading is - you stated that yourself... yet you seem eager to dismiss it though. Do some homework before you talk. Nassim will lose money 364 days out of the year (obviously an exagerration). On the non-losing day(s) he makes a killing that pays for all though losses and then some. He does this by betting on the highly improbable event. A way of exploiting such events is by buying premium at "cheap" prices. The markets are a numbers game. Period. Correct analysis of the numbers and their subsequent pyschological impact is by nature a quantitative study. Every trader uses some degree of quantitative analysis - identifying support is a quantitative excercise as is identifying a correlation. And no, most hedge fund strategies are not that complex, they just have good traders trading them. Mike
What? That engineers apply knowledge while physicists "search" for it? One has to know what one is looking for... Newton developed calculus - perhaps the most uselful tool ever created by man - with the help of dozens of other individuals in order to explain a specific phenomna. He knew he was looking for a tool to help him explain motion. Correct tool + hypothesis = Newtionian physics. Your classification doesn't address anything practical or realisitc for that matter. It illustrates your narrow view regarding the way science is conducted - which, on many occasions comes down to being in the right place at the right time and has nothing to do with being an engineer versus being a physicist.
LOL talking to a financial planner about hedge funds? Are you serious! Financial planners don't know anything about trading or anything about the markets.. they charge you a fee and put you in annuities and then sell you insurance.. this is so ridiculous thta its funny. Well this is 10 minutes of my life I won't ever be getting back!!!!!!!! P.S. GAME THEORY SOUNDS EXOTIC BUT REALLY ISN'T! lET ME TELL YOU A LITTLE SECRET.. PROBABILITY.. BOAT LOADS OF CASH AND HUNDREDS OF WEALTHY CONTACTS ARE MORE PRICELESS THAN visa!