QuoteOriginally posted by: torontosimpleguyI don't believe it's possible by using some empirical ideas.You need to develop a theoretical framework. It requires years of analytical studies and practical verifications. It's like to develop nuclear bomb single-handedly. In my opinion it's impossible.You lack imagination.

QuoteOriginally posted by: quantumarI know an affiliate whose friends are working for Rentec, from very little information they gave us for obvious reasons we learned that all they do now is stat arb all over the world, stocks, bonds, currencies....I tend to agree with you, although I once thought they were a bit more advanced. The clue is that they are performing huge numbers of trades. This is characteristic of many statistical algorithms (like linear prediction in high freq trading). The key to success is excellent execution so a direct market connection is required. Without the direct market link, all you'll do is make your broker rich.

QuoteOriginally posted by: NI tend to agree with you, although I once thought they were a bit more advanced. The clue is that they are performing huge numbers of trades. This is characteristic of many statistical algorithms (like linear prediction in high freq trading). The key to success is excellent execution so a direct market connection is required. Without the direct market link, all you'll do is make your broker rich.I believe they have more of their PhDs working on implementing models than actually building them. Especially programming for that kind of around the clock high frequency trading and keeping systems up to date and doing continuous portfolio optimization/risk management is a huge project to finish and keep them running. This is why many people can talk about it or build the systems but can't really apply it at that level. I think they are more advanced than what we pursue on algorithms but not so much on new stat arb strategies. I remember reading backgrounds of some of their PhDs that would only be helpful for writing proprietary algorithms. However if you can come up with hundreds of different algorithms for just pairs trading that alone will provide enough trades and risk management with very low levels of risk. Many good funds are big on strategies like index arb where there is fundamental relationship in addition to a mathematical relationship.

QuoteOriginally posted by: quantumarI know an affiliate whose friends are working for Rentec, from very little information they gave us for obvious reasons we learned that all they do now is stat arb all over the world, stocks, bonds, currencies....That sounds a lot like Goldman Sachs Global Alpha. Except they call it trading "risk factors." It all sounds like pair trading to me, which supposedly hasn't made any money in a long time.

QuoteOriginally posted by: PanniniQuoteOriginally posted by: quantumarI know an affiliate whose friends are working for Rentec, from very little information they gave us for obvious reasons we learned that all they do now is stat arb all over the world, stocks, bonds, currencies....That sounds a lot like Goldman Sachs Global Alpha. Except they call it trading "risk factors." It all sounds like pair trading to me, which supposedly hasn't made any money in a long time.Goldman Sacks relatively speaking is a nickel and dime operation compared to Rentec. Most would argue they aren't advanced enough to wipe Simons' ass - there's no comparison.

QuoteOriginally posted by: torontosimpleguyYou need to develop a theoretical framework. It requires years of analytical studies and practical verifications. It's like to develop nuclear bomb single-handedly. In my opinion it's impossible.Helloooo! Have you heard of Buffett? Soros? Niederhoffer? Unlike these guys, Rentec has no new ideas. They are a grunt shop that make nickel & dime profits running faster computers to pick up nickels faster than other people. The smartest people are going slowly to pick up the $5 and $20 bills.

QuoteOriginally posted by: NQuoteOriginally posted by: PanniniQuoteOriginally posted by: quantumarI know an affiliate whose friends are working for Rentec, from very little information they gave us for obvious reasons we learned that all they do now is stat arb all over the world, stocks, bonds, currencies....That sounds a lot like Goldman Sachs Global Alpha. Except they call it trading "risk factors." It all sounds like pair trading to me, which supposedly hasn't made any money in a long time.Goldman Sacks relatively speaking is a nickel and dime operation compared to Rentec. Most would argue they aren't advanced enough to wipe Simons' ass - there's no comparison.I hear Goldman's have picked up one or two Ivy League PhD's (in math & physics) along the way

PhD doesn't mean anything for making money. That board has lots PhDs. So what?You have to develop sound application models based on original financial ideas and proven on real data.Btw, why nobody had analyzed all Rentec transactions in regards to their profitability? I guess it's legal.

QuoteOriginally posted by: torontosimpleguyPhD doesn't mean anything for making money.Oh yeah, I forgot. Most quants are hired straight outta high school, right?

Number of PhDs increases soundness of the models but doesn't increase company's profitability. There is no strong correlation I firmly believe.PhDs are needed to develop the theory but no commercial company is engaged in that. They just can't afford that kind of activities.

QuoteOriginally posted by: TraderJoeMost quants are hired straight outta high school, right?No, they're hired straight out of the CS programming degree. It's better for rentec to hire CS jocks who are not educated about other stuff. Too much education makes a developer start to demand career advancement and to wonder whether he's being paid enough -- dangerous rebellious stuff like that. Better to get the CS jocks straight from class before they get distracted by independent thoughts.

QuoteOriginally posted by: torontosimpleguyNumber of PhDs increases soundness of the models but doesn't increase company's profitability. There is no strong correlation I firmly believe.PhDs are needed to develop the theory but no commercial company is engaged in that. They just can't afford that kind of activities.Ever heard of R&D??

QuoteOriginally posted by: TraderJoeEver heard of R&D??Lots of R&D in pharm, internet, and business software industries. Its hard to imagine there is any serious R&D on wall street. Rentec wants their profits NOW, so they hire for NOW skills. R&D takes years, decades -- requires long term thinking. Rentec needs 40% return THIS year, not next year. No money NOW, rentec is not interested.

QuoteOriginally posted by: KackToodlesQuoteOriginally posted by: TraderJoeEver heard of R&D??Lots of R&D in pharm, internet, and business software industries. Its hard to imagine there is any serious R&D on wall street. Rentec wants their profits NOW, so they hire for NOW skills. R&D takes years, decades -- requires long term thinking. Rentec needs 40% return THIS year, not next year. No money NOW, rentec is not interested. R&D is now dummy, an investment now in your future. Now go back to business school 101 and stop wasting my time.

KackToodles, you should seriously stop making comments about Rentec because I know that you have no idea what you are talking about. Kacktoodles, your flippant comments about Rentec shows me that you are providing false and misleading statements on this topic. You have absolutely no idea what you are talking about and any future comments that you post on this wilmott site should be treated with a grain of salt and lots of scepticism. Where's that stupid wine glass......