Over 25% ANNUAL RETURNS for the last 28 YEARS

yes I know that, I just used the 30% annual return average to do a quick calculation.

>a PhD in STEM means you can predict human nature and market fluctuations

don't know many STEM PhDs, do you? When will you dumb fuckers understand you can't 'play' the market unless you've literally monopolised a major industry? This was either luck or insider knowledge, more likely pure luck.

>B-but you can't beat the market!
Quote by some Boglehead autist

Renaissance Tech has figured out the stock market. Their annualized Sharpe Ratio is like 2.0. For comparison, the SR of the stock market over the long run is around 0.6.

WTF

They have testified in congress and have even disclosed an outline of what their strategy is (not the exact details of the patented algos ofcourse). google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&ved=0CEcQFjAFahUKEwjVl_LOifrHAhWJ1h4KHTBAAj8&url=http://www.hsgac.senate.gov/download/?id=b81368f4-6448-4867-8572-f2340418d029&usg=AFQjCNGlNbiS9DOE_NjQ8Ks_BT_X54dIPw&sig2=s0RdwL0a8afNv6lUBfyxVQ&cad=rja]

They basically make MILLIONS of trades every year and make profit on the arbitrage. Its literally humanely impossible to do that with just insider knowledge.

why doesn't everyone buy their offering then

They limit the size of the fund because it doesn't scale after a certain point. The only way to join their exclusive club is if you're a genius and hired.

Because
>a) buy ins are probably several million $ MINIMUM
>b) they have closed their fund to outside investors for a while now. Their employees make most of the $$$
>c) some people (idiots) think the returns are too good to be true so avoid investing with them

>they're luckying!!!!!!!

for 28 fucking years? ok.

Performing extremely well consistently for over 20 years is not "luck."
The stock market isn't perfectly efficient and that means computers can make money. If they're programmed by nerds who know what to look for, they can make a lot of money.

>it doesn't scale
Lol, so they can achieve amazing returns only by playing with chump change?

If you flip a coin 10 million times you are almost guaranteed to at least get a string of 10 heads in a row.

These are the people that would have been defending Madoff Investment Securities and Enron in their prime

Their legendary Medallion Fund has 10 billion dollars in it. It's chump change compared to the entire stock market but paying out millions every year is a sweet job.

Okay what ticker symbol can I buy to get in on this

no. i don't defend anyone and my money is distributed as i see fit. your problem is not accepting that genius level IQs are able to achieve results beyond your imagining. don't worry kid, most people grow out of arrogance. most.

>believing a questionable result because the person who supposedly made it happen is smarter than you

I hope to Christ you are trolling and don't actually invest

>geniuses IQ can beat people that are known to be doing insider trading which is practically the same thing as predicting the future
>dont worry kid

Consider kys

stay mad kids. when einstein was working on this theories he was a simple clerk. and he changed the world. geniuses exist and they don't argue on anime discussion forums.

and no i will not kiss my sister. you're welcome too if you want user.

>These are the people that would have been defending Madoff Investment Securities and Enron in their prime
No. The RenTech fund is closed to outside investors. They're doing a pretty good job scamming themselves!

Efficient market tards BTFO

Can I give these guys $10k and collect my returns in 25 years? I'll let them keep half the profits.

Not on the first 10 flips tho.

So this hedge fund is the first fund you've literally every heard of in your entire life?

HYIP

every trading model has a "capacity"

this is why an individual can compete in the algotrading arena even in the presence of ultra HFTs which have hundreds of PhDs in mathematics, physics, and signal processing on their payrolls. they don't go after small opportunities at all, but some dude who can write code can write and deploy a small capacity model from his bedroom in his underwear.

I don't see how that's relevant. Picking stocks isn't at all like flipping coins.
They aren't just making money but making significantly more money than everyone else, by a huge margin, for 28 consecutive years. That's not luck.

Just like how some people make significantly more money playing the lottery than others right?

More like how some people can tilt the odds in blackjack or come out on top in poker.

The stock market isn't completely random. If it was, you would see different hedge funds report these insane gains every year. Instead, they're all concentrated in one fund, which has been making those gains consistently for 20+ years.

RenTech makes over a million trades every year by statistical arbitrage. The statistical probability of luck after a couple million trades is null.

Not true at all if only a minor set of those trades are actually impactful.

>What is statistical arbitrage

Getting lucky on a few trades while having 99% of them being a wash does not imply anything.

All trades are impactful because each trade incurs slippage and transactional costs. The chance of luck with millions of dollars of losses each year from trading is null.

The point of strategies like this is having a large number of trades with small movements.
Do you think they would pay for 1 million trades if only 100 affected their bottom line?

Isnt the guy who founded this a literal computer/math genius? and they only hire other computer/mathematical geniuses?

Having a linear equity curve because your model has a positive average expected return on each trade it makes and then making millions of those trades per day isn't luck.

If you have a model with a high Sharpe Ratio, you need to trade as frequently as you can. If you traded less frequently with higher dollar amounts, you'd have significantly worse drawdown and your equity curve would not be essentially a flat line trending upwards.

Yeah, the founder has said he won't hire people with finance experience because they have to unlearn too much to be productive.
Their strategy is entirely based on statistics and math.

Yes, he was also a codebreaker for the government. He says they look for "subtle anomalies" in the markets and combine a few of them together to build systems as they're generally useless (i.e., unactionable) by themselves.

Rentech was founded by an NSA codebreaker. Jim Simons is actually quite famous in the American math field. They have very brilliant people in there. MBAs arent welcomed, kek.

It's a bit sad when people pull out these one-off examples to support arguments that are otherwise devoid of evidence or truth. "EMH is false, just look at these guys." "Anyone can beat the market, if you just git gud." "Here's one guy who proves that active investing is better than muh index funds." The lack of intelligence in these statements is astounding.

Efficient market theory has NEVER stated that it's impossible to "beat the markets" but rather that its VERY improbable. There are millions and millions of people trying to make money in the markets, and there's maybe a handful of examples of high-profile investors that consistently produce above-market performance (even fewer when you dismiss those with short-term track records, those with high-risk portfolios that flunk on a risk-adjusted basis, and those who can't repeat their performance in successive periods.)

Ever hear the expression: "The exception that proves the rule"? This is what that means: there are a tiny handful of exceptions that prove the EMH rule.

Stated another way, we can all agree that playing the lottery is a terrible strategy for building long-term wealth. And yet some people -- a tiny, tiny handful -- do win the lottery and acquire great wealth. Does that make us all lose our minds and start dumping our life savings into scratchers? Thankfully for most of us, the answer is no.

(cont.)

I'll be the first to admit that RenTech's performance is amazing. I wish I had money in that fund back in the day, just as I wish I had a winning lottery ticket after the numbers are announced. But their success has nothing to do with their intelligence, effort, or resources. There are hundred of investment firms with equivalent brains, stamina, and tools ... but that don't perform the same way. People think "luck" is a dismissive term for their success, but really all we're saying is that they managed to beat very, very long odds. Odds so long that no one with a brain would play that game. Odds like a lottery ticket.

Statistics and probabilities are confusing for many people, I understand. There will always be dummies who play the lottery because they just don't get it. Or they think they have nothing to lose, and their life becomes a self-fulling prophesy because they throw away the opportunity to do smart things with the money. Active traders are the same thing. Either they don't know the long odds, or they delude themselves into ignoring them. They look at the tiny handful of rare winners and engage in vivid fantasies where they themselves are also big Wall Street winners. And they assume because they have so little capital, they might as well just gamble it away rather than embarking on the slow but proven road of building wealth over a lifetime.

At the end of the day, my advice is not to argue with the delusional active traders on the board. Do you argue with the sadsacks you see buying lotto tickets at the mini-mart? Of course not. Darwin will take of them in due time. And besides, we're going to need someone to mow our lawns and make our lattes in the years to come.

>Ever hear the expression: "The exception that proves the rule"? This is what that means: there are a tiny handful of exceptions that prove the EMH rule.
That's not what that expression means at all.
It refers to statements like "No parking on Sunday." This is the exception that proves the rule that parking is, generally, allowed.

No one is arguing that EMH is completely false, but you'd have to be fucking retarded to think Renaissance has just been on a hot streak for 20+ years. Inefficiencies DO exist and what firms like Renaissance do is exploit those inefficiencies.

(You)
>At the end of the day, my advice is not to argue with the delusional active traders on the board.
Especially those who don't understand what EMH means, don't know how statistics work, and don't understand common English idioms.

this

en.wikipedia.org/wiki/Exception_that_proves_the_rule
>The phrase is derived from a legal principle of republican Rome: exceptio probat regulam in casibus non exceptis ("the exception confirms the rule in cases not excepted"), a concept first proposed by Cicero in his defence of Lucius Cornelius Balbus.[4] This means a stated exception implies the existence of a rule to which it is the exception. The second part of Cicero's phrase, "in casibus non exceptis" or "in cases not excepted," is almost always missing from modern uses of the statement that "the exception proves the rule," which may contribute to frequent confusion and misuse of the phrase.
Did you really think English had an idiom that meant "if there is an exception, the rule must be true?"
That's an anti-logical statement. It wouldn't be a very useful idiom.

The fact is that if this were luck, the gains would be distributed across several hedgefunds instead of Renaissance consistently making insane gains every year for 20 years.

The fact is that EMH is MOSTLY true, but inefficiencies exist and can be exploited. That's exactly what quant firms like RenTech do.

>STEM means genius meme

>>At the end of the day, my advice is not to argue with the delusional active traders on the board.
EMH predicts that the number of traders who will outperform the market will be a positive number but very, very small. The fact that RenTech and other market-beating traders have been and remain extreme exceptions proves the EMH rule.

If you can't even understand English, then why would you try to debate complex financial topics?

>The fact that RenTech and other market-beating traders have been and remain extreme exceptions proves the EMH rule.
So what you're saying is that it isn't an exception in the first place.

>>>At the end of the day, my advice is not to argue with the delusional active traders on the board.
noun ex·cep·tion \ik-ˈsep-shən\
one that is excepted; especially : a case to which a rule does not apply

>EMH says it's possible for a minority of people to beat the market
>therefore, RenTech is an exception to EMH
I don't think you're very good at words, user.

>>>>At the end of the day, my advice is not to argue with the delusional active traders on the board.
EMH: You cannot beat the market.*

*Exceptions apply (rare) due to random chance.

madoff's also was very consistent on his returns, plus the guy even sat at the nasdaq board

you're good

So in other words, it's not actually an exception, because the rule is a statistical model with outliers and this is one of those outliers.

More to the point: can you explain why only this one firm sees returns like this? If it's due to luck and not due to a higher quality in their strategies, then it couldn't be consistent.

how do you even get an invitation to invest with them?

>>>>>At the end of the day, my advice is not to argue with the delusional active traders on the board.
"Can you explain why only this one guy tossed heads on coin 10 times in row? If it was luck, he couldn't be that consistent. Despite the fact that millions of people who flip coins don't get the same outcomes."

I'm taking my own advice. Retards should be ignored, not indulged. Let's get some intelligent discussion, or let's see this stupid thread die the death it deserves.

It's more like "why is this the only coin-flipping firm that consistently gets heads hundreds of times in a row?"

It has nothing to do with luck, they do quantitative finance and algorithmic trading which means shit like EMH does not apply.

The butthurt is strong in thisone

It would be more strange if there wasn't at least one company out there with massive returns.