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    (Original post by MinorityInterest)
    If you've worked within hedge funds and know all about them, why are you making threads like this: http://www.thestudentroom.co.uk/show....php?t=2220320 ?
    Because I have a friend who I'd like to recommend a book to, but I don't know of any books that cover all the material at the right level.

    Not all the hedge fund sector is quantitative. Most if not all L/S, event-driven or merger-arb equity funds don't use especially quantitative techniques. Certainly not the sort you'd need a PhD for. There's no reason to think that all macro funds are quantitative either.
    Right. And the traders at those funds tend to have track records (i.e. my option 2 in my first post). With a very small number of exceptions, you don't just walk into a job managing your own book at a hedge fund with no experience. You either come in from somewhere else, or you get hired into a quant fund as a PhD.
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    (Original post by haskell)
    Right. And the traders at those funds tend to have track records (i.e. my option 2 in my first post). With a very small number of exceptions, you don't just walk into a job managing your own book at a hedge fund with no experience. You either come in from somewhere else, or you get hired into a quant fund as a PhD.
    As far as equity funds go, "traders" are usually just there to execute/structure trades and not to give investment theses. This latter role is done by an analyst, usually from a buy/sell-side ER/IBD background. Even those managing their own book don't usually have PhDs, they are IBD/ER/AM guys who worked their way up. It's simply not generally a quantitative field.
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    (Original post by haskell)
    Because I have a friend who I'd like to recommend a book to, but I don't know of any books that cover all the material at the right level.



    Right. And the traders at those funds tend to have track records (i.e. my option 2 in my first post). With a very small number of exceptions, you don't just walk into a job managing your own book at a hedge fund with no experience. You either come in from somewhere else, or you get hired into a quant fund as a PhD.
    Your answer is around a very neiche type of fund. Most guys come from a huge variety of backgrounds. Most of the guys I know have come from research/strategy and IBD backgrounds, none have PHDs, by the sounds of it most they pissed around at uni and had a good time. The whole hedge fund industry is not quant, and just quickly I think you are getting confused between traders and PM's on the buy side. Though at places like SAC the two terms get somewhat blurred a little.
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    (Original post by MinorityInterest)
    As far as equity funds go, "traders" are usually just there to execute/structure trades and not to give investment theses.
    Which is why I specified, in my first post in the thread, "someone who manages their own book, rather than someone who executes other peoples trades", i.e. the interesting part of being a trader.

    Even those managing their own book don't usually have PhDs, they are IBD/ER/AM guys who worked their way up. It's simply not generally a quantitative field.
    You seem to be saying that people sometimes have PhDs (which is almost always the case in quant funds, but includes plenty of guys at non-quant funds, eg Cliff Asness of AQR, or Antti Ilmanen of Brevan Howard) or they have a track record (you mentioned IBD/ER/AM - I'd also include prop traders at banks and traders at energy firms). Which is exactly what I said in my very first post.
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    (Original post by haskell)
    Which is why I specified, in my first post in the thread, "someone who manages their own book, rather than someone who executes other peoples trades", i.e. the interesting part of being a trader.


    You're missing my point. Re-read what I wrote about traders in equity funds. People who manage their own books at such funds are almost always not traders. Or at least they shouldn't be thought of as traders.

    (Original post by haskell)
    You seem to be saying that people sometimes have PhDs (which is almost always the case in quant funds, but includes plenty of guys at non-quant funds, eg Cliff Asness of AQR, or Antti Ilmanen of Brevan Howard) or they have a track record (you mentioned IBD/ER/AM - I'd also include prop traders at banks and traders at energy firms). Which is exactly what I said in my very first post.
    Ok, I think we're together on this point now. But again, at an value/event-based equity fund, the quant route is pretty redundant.
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    (Original post by MinorityInterest)


    You're missing my point. Re-read what I wrote about traders in equity funds. People who manage their own books at such funds are almost always not traders. Or at least they shouldn't be thought of as traders.
    Fair enough. I am probably skewed by my experience with quant funds. I both manage my own book and execute my own trades (in the sense that I write code that causes the trades to be executed) as does every other 'trader' I work with.

    There are funds who have people whose sole job is to execute trades on behalf of other people (i.e. they have discretion over execution, within constraints, but not over positions). I would not even want to call that trading, and I don't think it's what people mean when they say that they want to be a trader in a hedge fund (though people may disagree with me on that!)
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      (Original post by haskell)
      In the time between now and your first job, the hedge fund sector is only going to get more quantitative.
      As I head into my sixth year in the business, I'm not persuaded that significantly more alpha is coming from this.
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      (Original post by President_Ben)
      As I head into my sixth year in the business, I'm not persuaded that significantly more alpha is coming from this.
      why?
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        (Original post by lol_wut)
        why?
        The fat alpha got whittled away within two years. Partly because of competition within the space, partly because of reactions from the counterparties the alpha came from.

        Entry into the space is more expensive than ever - and if you fail to get the fat straight away - you're back on the design stage of your 'edge' for another six months or so.

        If you do manage to get a slice of the action, in about six months, the next development cycle in hardware and quant strategies may mean you're on the cold outside again.

        This has been the case for a few years. Headhunters aren't loaded with demand for quant kids like they used to be - and many of those who did join in the rush a few years back and have since left to pursue a lot of tech orientated ventures.
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        (Original post by President_Ben)
        The fat alpha got whittled away within two years. Partly because of competition within the space, partly because of reactions from the counterparties the alpha came from.

        Entry into the space is more expensive than ever - and if you fail to get the fat straight away - you're back on the design stage of your 'edge' for another six months or so.

        If you do manage to get a slice of the action, in about six months, the next development cycle in hardware and quant strategies may mean you're on the cold outside again.

        This has been the case for a few years. Headhunters aren't loaded with demand for quant kids like they used to be - and many of those who did join in the rush a few years back and have since left to pursue a lot of tech orientated ventures.

        Interesting....isn't your fund quant based?

        So you think the majority of alpha is generated by traders with good ideas/ timing, as opposed to correlations and meta data exploited by quant strats?
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          (Original post by gangst)
          Interesting....isn't your fund quant based?
          No.

          So you think the majority of alpha is generated by traders with good ideas/ timing, as opposed to correlations and meta data exploited by quant strats?
          Where alpha comes from, in the general sense of understanding financial markets, is something you should dedicate some quality time to.

          The 'first' big alpha from superior infrastructure was when people got news that Napoleon had been defeated and were snapping up UK bonds for about 40% of par. These days, it's a bit less 'glam' than having a better boat that could sail in rougher seas.
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          (Original post by President_Ben)
          No.



          Where alpha comes from, in the general sense of understanding financial markets, is something you should dedicate some quality time to.

          The 'first' big alpha from superior infrastructure was when people got news that Napoleon had been defeated and were snapping up UK bonds for about 40% of par. These days, it's a bit less 'glam' than having a better boat that could sail in rougher seas.
          I agree, information networks are key.

          Would you say this applies to all forms of information?? I.e. Cohen has always been known to use a very broad information network both within companies and via the Street (ignoring recent insider trading allegations), and a lot of hedge funds use close contacts within companies/ industries.

          Is there much benefit in hedge funds pay $xx(x) million for colocation and pricing edges, whether it be HFT based or pricing data crossing the Atlantic on those super high speed cables from the US to Europe which hedge funds are paying a fortune to use.

          I guess my point is, the latter type of data largely links in to quant strategies, so is it less likely to help a fund generate alpha.

          Cheers.
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          (Original post by President_Ben)
          As I head into my sixth year in the business, I'm not persuaded that significantly more alpha is coming from this.
          It's certainly harder to make money from quant strategies now than it was, say, 7-8 years ago. But that just makes the work all the more interesting for people who have both good economic intuition and good modelling!
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            (Original post by gangst)
            Would you say this applies to all forms of information?? I.e. Cohen has always been known to use a very broad information network both within companies and via the Street (ignoring recent insider trading allegations), and a lot of hedge funds use close contacts within companies/ industries.
            Close to all. It's very meta.

            Is there much benefit in hedge funds pay $xx(x) million for colocation and pricing edges, whether it be HFT based or pricing data crossing the Atlantic on those super high speed cables from the US to Europe which hedge funds are paying a fortune to use.
            You don't want to be so slow it hurts. So fast it pays is a tricky game.
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            (Original post by President_Ben)
            Close to all. It's very meta.



            You don't want to be so slow it hurts. So fast it pays is a tricky game.
            Thanks!
           
           
           
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