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It’s No Fun Competing Against Quants. Why Not Compete With Them?

by Andrew White  |  April 11, 2017  |  Comments Off on It’s No Fun Competing Against Quants. Why Not Compete With Them?

Source for this blog: WSJ Inside a Quant ‘Alpha Factory’, April 6th 2017

  • Wall-mart car park traffic is up a notch.  A weak signal.
  • Credit card receipts show a slight uptick in transactions related to Wal-mart.  Subsequent analysts shows that higher margin products are being purchased.  Another weak signal.
  • Social and other media news streams report a slowing down of minimum wage growth at Wal-mart but continuing growth at Target.  Two more weak signals.

But if collected near real-time, and cross referenced and connected at the same time, we might conclude an opportunity exists by buying some Wal-Mart stock and, if we are in a bullish mood, even shorting Target a little.

Quants use a whole lot of data (and increasingly IoT data) and algorithms to look for just these kinds of patterns.  In fact the examples above are the obvious ones.  There are new streams, cross streams and analysis of all this and more, more coming online every day.  It’s a veritable soup of data out there.

So how can mere day traders compete?  We can’t.  Forget all that stuff about ‘fundamentals’ and browsing rough the 10Q or annual report.  Maybe those help with long-term investment ideas but the world that moves trillions of dollars a day is the world of quants.

Of course detractors suggests that pattern discovery is a fools game.  The world and data sets will be full of false positives.  And this maybe true.  Which is why quants are actually humans.  They might be a little too geeky, but human they are.  Maybe to avoid being overly-geeky they should marry mere humans (like you and me) and then we would have the perfect balance: the best of man and machine.

 
Andrew White

Gartner, Inc.

 

Sent from my iPhone.  Excuse the typos.

 

 

Category: big-data  internet-of-things  quant-quantitative-analyst  

Andrew White
Research VP
8 years at Gartner
22 years IT industry

Andrew White is a research vice president and agenda manager for MDM and Analytics at Gartner. His main research focus is master data management (MDM) and the drill-down topic of creating the "single view of the product" using MDM of product data. He was co-chair… Read Full Bio




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