from Hacker News

Hedge funds embrace machine learning up to a point

by josephby on 12/8/17, 6:47 PM with 41 comments

• by TuringNYC on 12/8/17, 8:20 PM

  Funds would not share what they are doing because then others would do the same, narrow spreads and reduce profits for all participants. But you can get a good idea of what they might be working on by some of their workers' expertise. Notice how places like RenTech (https://en.wikipedia.org/wiki/Renaissance_Technologies and https://www.bloomberg.com/news/articles/2016-11-21/how-renai...), Two Sigma, and others hire loads of NLP and machine learning academics.

• by TuringNYC on 12/8/17, 8:05 PM

  I worked at a hedge fund for 9 years. Regression models are used for EVERYTHING. Regression is machine learning. This article has a narrow focus and doesnt understand what machine learning is.

• by vadimberman on 12/9/17, 7:38 AM

  An anecdote from 1990s continental Europe.

  A friend of mine, upon reaching a status of a "high-net worth individual", was invited to invest in a hedge fund associated with a bank of regional importance (major for that small country). They demonstrated the best of the tech of the time, and then shifted the tone to, "but we also use more traditional approaches".

  Unusually large portion of their "consulting research staff" was female and spread Europe-wide. Not because they were progressive or pursuing diversity agenda; these were call girls. The call girls were paid for timely tips. Even if they only report that a particular top executive stayed overnight far away from home, was in a foul mood, and a couple of top-ranking colleagues were present, this can be used to detect an significant internal event not reported publicly. If the girl was crafty enough to extract more information, even better.

• by bllguo on 12/8/17, 8:12 PM

  I don't think technically sophisticated funds are going to be sharing any details at all for pieces like these. There is bound to be fancy ML in play at hedge funds, though - do not underestimate the lengths to which people will go to get an edge in the markets.

• by matchagaucho on 12/8/17, 7:42 PM

  "Share-price time series going back decades still contain far less information than, say, the image data used to train Facebook’s facial-recognition algorithms."

  What?

  Clearly these ML models aren't trying hard enough. Correlating stock movements with the weather, geo populations, ... there are potentially infinite patterns buried in the data that a hedge fund could uncover.

• by swyx on 12/8/17, 9:56 PM

  I like the shoutout to Numerai. I think they are so left field that traditional hedge funds don't even have the ability to understand how much better Numerai can be.

• by dboreham on 12/8/17, 11:31 PM

  Huh? I did my commute with a guy who worked for an automated trading shop when I worked in London in 1994 and he talked constantly about what sounded just like machine learning.