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Hedge Fund “Outsourcing” and the something for Nothing mentality.

Is all well with Quantopian? They seem to have gone remarkably quiet since announcing the tie up with Big Steve Cohen earlier in the year.

I dropped in recently and the activity on the forum seems to have declined. The blog by the (CEO?) or whoever seems to have been dropped and they have disappeared from the news.

One problem in my view is that without exception EVERYBODY uses the internet to try and get something for nothing.  And “outsourcing” by hedge funds seems to be the latest example of that. To be fair Quantopian provides an excellent on-line backtesting engine for US stocks which is scott free and includes data. Their technical staff is excellent and their is much to be learnt from analysts such as Thomas Wiecki.

The problem is that it is hard to make any money – either for the punters who use the platform or the punters who provide it. For one thing given the open source environment for software and data most of us can program our own back testing engines and source our own free data. For another we don’t really relish working on systems and publishing them on websites just for the hell of it. It would be nice to actually make some money for a change from a lot of hard work. Probably difficult unless you have thighs to flash like the Kardashians or the bare faced cheek and rhino thick skin of some of the truly awful systems sellers out there on the internet. The systems sellers seem to profit from selling dreams to fools and by getting paid for books, seminars and general buffoonery.

If such people were the magicians they claim to be they would not need to engage in shameless self promotion – they would trade for themselves.

Back to Quantopian and their ilk.  They are an excellent bunch but have lost their way. Finance is not a hobby for people like myself – it is a way of life and has been for almost 35 years.  I have had good years and bad but at my age I would welcome taking less risk – hence I have cut way back on my own trading.

But that does not mean I enjoy giving my expertise away for free – and that is what the internet seems to require. Unless you are a seller of impossible trading dreams with a huge ego and the cynicism and morals of Bernie Madoff.

Guys like Quantopian (and there are quite a few others out there by now) need to find a way to recompense good quality research. At present the “carrot” is that by providing algos and entering into trading competitions you may (eventually….or may not) receive an allocation to trade and profit from that.

Well thanks but that does not pay the rent, nor will it ever. It’s a something for nothing world out there and most of these “outsourcing” hedge funds have teams of in-house quants anyway.  And they have to pay those guys.  Not so the fools who plug away day in day out publishing their research on their own blogs or, worse, on competition websites.

If the outsourcers found a fair way to pay for the outsourced research, matters might take on a more interesting mantle.

Until such time, goodnight sooty – why should we bother?

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