Work for Nothing on Wall Street?

The new paradigm in Quant trading for amateurs is the so called “democratization of Wall Street”.  Instead of hiring and paying a few Quants, the latest fad seems to be to host a website, offer free data and back testing software and start a competition for the best algos. The winners (out of the infinite pool of losers) get some sort of capital allocation.

Talk about survival of the fittest! Raw capitalism, red in tooth and claw.  Might be a statistically better payoff playing the lottery? It all reminds me of outsourcing stuff to India and China……But at least those guys get paid. Well, something anyway!

No harm in it I guess but for the overwhelming majority of participants here the endeavour will yield the same sort of profits (for the same sort of effort) as devising open source software.

I mustn’t sound too naughty, cynical and ungrateful but the internet seems to have brought a great deal of benefit but also quite a few “burdens”. It has certainly helped the “haves” reap cheap (almost free) labour from the “have nots”. No one expects to pay for anything these days and will do their damndest not to. Each time I have a problem with my telephone I am put through to a charming Indian gentleman on the flood plains of Bangladesh who is paid a farthing an hour for his sterling efforts by fat cat employers in the developed world.  Presumably that farthing is better then nothing?

Journalism does not seem to pay either – I recently wrote a chapter for an investment book. I was not paid a penny for it – it was for my own glory and the greater good and was lured into it by vanity – Bill Gross and Jack Bogle had contributed chapters to the previous edition and will presumably do so again.

I wrote various articles for an magazine who talked of paying me. The articles were written but somehow payment never materialised. Look at all the crap people provide for free on Linked In. I think I would prefer to contribute to Linked Out.

I fear the so called democratization of Wall Street falls into the same category. 999 out of 1000 who put in the effort will receive nothing but some sort of education or experience but little else unless they can work out a way, against steep odds, of trading their way to a fortune in capricious markets.

There is certainly a big upside in trading forums forum for participants, myself included. Quantopian staff for instance have provided much research I have found very helpful even if I find the back testing harness not to my taste.

However I am under no illusions. My participation there (even were I to attempt to devise algos for the competition) will yield much the same results as most efforts on the internet. Like contributing to Facebook. Financially, it is unlikely to be a winner!


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