Hot answers tagged quant-funds
The Medallion Fund doesn't take outside investors. They returned the original investor money years ago. So: if it's a Ponzi scheme, then they've figured out how to profit by ripping themselves off. That's nice work if you can get it.
There are a some information about Renaissance Technologies available in The Quants from Patterson. Basically, and it's also what I heard in general, they are using intensively algorithmic trading, and from what I understood there are using Information Theory (they worked with Shannon if I remember well). I'd say it'd be harsh to say it's the next Madoff ...
Your example shows a fundamental ignorance of how hedge funds operate: Hedge funds cannot advertise and are limited to 499 investors. Given these restrictions plus the capital requirements to hold positions overnight, it is a virtual guarantee that a fund would not take an investment of $10K. Hedge funds are usually LPs, which means that the GP (the asset ...
"There is no secret sauce!" - Inside the Black Box: The Simple Truth About Quantitative Trading, by Rishi K.Narang In this book, which is well worth reading to get a good conceptual overview of the different components of a quant trading system, the author tells about "one of the most successful" quant funds hiring only the best academic researchers ...
Maybe a better answer: http://quantivity.wordpress.com/2011/05/08/manifold-learning-differential-geometry-machine-learning/#more-5397
I think the key to fund performance is the use of own money, not borrowed. In this case, it is possible to implement strategies that ordinary hedge funds can not use due to risk management.
Given their choice in hiring mainly academics from the fields of NLP and cryptography(at least in their early days), my guess is that they have been using something derived from information theory and/or hidden markov models.
I live very close to their office on Long Island and went to Stony Brook University, where they hire from at times - and the only few couple of people I know that got hired there were pure genius. I really doubt they are a ponzi scheme! I drive by their gates every now and then, definitely secretive but totally legit in my books.
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