wow... he must have made a killing... again. He's following libertarian/austrian school economic predictions, so I suppose now he's betting on the collapse of the dollar.
Hedge funds are leveraged to the hilt. Works great when you make the right bets but when the whole world gets scared and starts calling in their loans, you're SOL.
I wonder if you could relate financial hacking to code hacking. Once any system grows so large, you can no longer keep it in your head. Many financial instruments didn't exist when Buffet and Soros were making their money.
Of course we're now back to Taleb and his black swans.
Clarium is leveraged about 3.2 to 1, according to industry databases. Not my cup of tea, but less than many of their colleagues, especially given that Clarium is so active in debt and currency markets.
Buffet and Soros both invest in derivatives these days, they just use more common sense than your average quant when doing so. There is a huge difference between mark-to-market and mark-to-model. [It's common practice, for example, to have derivatives leveraged at 10-30X the value of a company while basing all contract prices on things like the volatility of the company's stock - and completely IGNORING the actual underlying value of said company and its prospects. Quants can build entire models projecting stock prices far into the future without even looking at the company's existing financial statements. It's ridiculous.]
I've been thinking about the relationship between financial hacking and code hacking a bit lately, because I know so many coders and quants that exhibit similar negative tendencies...to the point that they even have the same mannerisms, speech patterns, and physical tics. (To be painfully honest, my thoughts were prompted by the passing of Erik Naggum, the reading of an article about Asperbegers, and a conversation with a a quant @$$hole I occasionally have to deal with - all in the space of an hour or so.)
I think there is a (vocal) subset of both financial and code hackers that are so impressed with their own genius and the intellectual rigor of their models that they forget to keep one foot in reality and to use common sense. They forget or lose sight of the end goals and forget to be civil. They often win the "smartest person" ribbon for the day, at the expense of being unsuccessful in life. I'm oddly thankful that I lack the math or programming skills to be so dangerous. My discomfort with - and distrust of - elegant mathematic models has saved my fund from being clobbered a few times.
I'm genuinely baffled when people who are clearly so much smarter than I am can't see to apply their skills in positive or obvious ways. I'm conflicted, because I'm often jealous of their intelligence and skills, but I pity them for never seeing the forest for the trees. I think there is a subset in both types of 'hacker' communities that have this 'affliction.' They operate at a higher level of analytical/abstract thought in one way, but are crippled a bit in other regards. Different strokes and different folks make the world go 'round, I guess, but it is sometimes painful to interact with 'em.
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[ 4.8 ms ] story [ 16.2 ms ] threadI wonder if you could relate financial hacking to code hacking. Once any system grows so large, you can no longer keep it in your head. Many financial instruments didn't exist when Buffet and Soros were making their money.
Of course we're now back to Taleb and his black swans.
Buffet and Soros both invest in derivatives these days, they just use more common sense than your average quant when doing so. There is a huge difference between mark-to-market and mark-to-model. [It's common practice, for example, to have derivatives leveraged at 10-30X the value of a company while basing all contract prices on things like the volatility of the company's stock - and completely IGNORING the actual underlying value of said company and its prospects. Quants can build entire models projecting stock prices far into the future without even looking at the company's existing financial statements. It's ridiculous.]
I've been thinking about the relationship between financial hacking and code hacking a bit lately, because I know so many coders and quants that exhibit similar negative tendencies...to the point that they even have the same mannerisms, speech patterns, and physical tics. (To be painfully honest, my thoughts were prompted by the passing of Erik Naggum, the reading of an article about Asperbegers, and a conversation with a a quant @$$hole I occasionally have to deal with - all in the space of an hour or so.)
I think there is a (vocal) subset of both financial and code hackers that are so impressed with their own genius and the intellectual rigor of their models that they forget to keep one foot in reality and to use common sense. They forget or lose sight of the end goals and forget to be civil. They often win the "smartest person" ribbon for the day, at the expense of being unsuccessful in life. I'm oddly thankful that I lack the math or programming skills to be so dangerous. My discomfort with - and distrust of - elegant mathematic models has saved my fund from being clobbered a few times.
I'm genuinely baffled when people who are clearly so much smarter than I am can't see to apply their skills in positive or obvious ways. I'm conflicted, because I'm often jealous of their intelligence and skills, but I pity them for never seeing the forest for the trees. I think there is a subset in both types of 'hacker' communities that have this 'affliction.' They operate at a higher level of analytical/abstract thought in one way, but are crippled a bit in other regards. Different strokes and different folks make the world go 'round, I guess, but it is sometimes painful to interact with 'em.