human - What We're Reading - StockBuz2024-03-28T17:08:43Zhttp://stockbuz.ning.com/articles/feed/tag/humanThe Computers Have Won And Wall Street Will Never Be The Samehttp://stockbuz.ning.com/articles/the-computers-have-won-and-wall-street-will-never-be-the-same2016-05-11T00:45:36.000Z2016-05-11T00:45:36.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://static4.businessinsider.com/image/5731eccb910584cc008c1f81-1362-1021/screen%20shot%202015-09-14%20at%2010.41.35%20am.png"><img class="align-right" src="http://static4.businessinsider.com/image/5731eccb910584cc008c1f81-1362-1021/screen%20shot%202015-09-14%20at%2010.41.35%20am.png?width=300" width="300" /></a>The computers have won.</p>
<p><span><a href="http://www.institutionalinvestorsalpha.com/Article/3552805/The-2016-Rich-List-of-the-Worlds-Top-Earning-Hedge-Fund-Managers.html">Institutional Investor just released its annual list</a> of the top-earning hedge fund managers, and six of the top eight are quants, or managers who rely on computer programs to guide their investing.</span></p>
<p><span>The list includes Ken Griffin of Citadel, Jim Simons of Renaissance Technology, and John Overdeck and David Siegel of Two Sigma.</span></p>
<p><span>In 2002, by contrast, just two computer-driven investors were included in the ranking, according to Institutional Investor.</span></p>
<p><span>The list highlights just how hedge fund investing has changed over the past 15 years.</span></p>
<p><span>It is not that t</span><span>he brash, characterful traders of old are a dying breed. </span><span>There are still plenty of</span><span style="line-height: 1.5em;"> alpha-male risk-takers in a company gilet wandering around New York and Greenwich, Connecticut.</span></p>
<p><span style="line-height: 1.5em;">It's just that they're losing</span><span style="line-height: 1.5em;"> ground to</span> <a href="http://www.businessinsider.com/two-sigma-artificial-intelligence-air-hockey-2016-4">tech specialists who program robots to play air hockey in their spare time.</a></p>
<p>The rise of quant-driven hedge funds is really just a part of the evolutionary shift that is taking place on Wall Street that encompasses how investment decisions are made and how they are put into action.</p>
<p>Simply put, technology is now a much bigger part of the investment process for many funds. They're using computing power to sift through reams of existing data — and <a href="http://www.businessinsider.com/foursquare-data-predicted-chipotle-results-2016-4">finding new sources of data made possible by the proliferation of consumer technology like the iPhone</a> — and <strong>all to try and predict what the market might do, or the next set of data might reveal.</strong></p>
<p>Their jobs pages are full of tech postings. Renaissance is looking for computer programmers with no finance experience required. Two Sigma has roles in data science, machine-learning, cloud computing, and software engineering.</p>
<p>And don't forget, Bridgewater Associates, the biggest hedge fund in the world, <a href="http://www.businessinsider.com/bridgewater-ray-dalio-why-he-hired-jon-rubinstein-2016-3">now has a former Steve Jobs lieutenant as co-CEO</a> and wants to extend <span>"</span><a href="http://www.businessinsider.com/bridgewater-hires-jon-rubinstein-2016-3">the systematized decision-making</a><span>" used in investing into management.</span></p>
<p><span class="KonaFilter image-container display-table click-to-enlarge"><span><span data-post-image="" class="image"><a class="zoomin" href="http://static4.businessinsider.com/image/573242e552bcd044008c2241-960/screen%20shot%202016-05-10%20at%204.21.21%20pm.png"><img src="http://static4.businessinsider.com/image/573242e552bcd044008c2241-1050-533/screen%20shot%202016-05-10%20at%204.21.21%20pm.png" alt="Screen Shot 2016 05 10 at 4.21.21 PM" data-mce-source="Renaissance Technologies" /></a><span class="source"><span>Renaissance Technologies</span></span><span class="caption">A Renaissance Technologies job posting.</span></span></span></span></p>
<p>These funds also tend to execute their trades with a minimum of human involvement, a process that has become easier as <a href="http://www.businessinsider.com/goldman-sachs-morgan-stanley-electronification-of-fixed-income-2016-4">many markets have moved to electronic platforms.</a></p>
<p>The vast majority of stock trading is now completed electronically. Tech-driven high-frequency trader <a href="http://www.businessinsider.com/hft-firms-in-us-treasury-market-2016-4">firms now dominate the US Treasury market.</a> Goldman Sachs and JPMorgan have described <a href="http://www.businessinsider.com/marianne-lake-says-jpmorgan-is-a-tech-company-2016-2">themselves as technology companies.</a></p>
<p>That obviously means <a href="http://www.businessinsider.com/robots-to-replace-wall-street-traders-2015-8">there is less need for the traders of old</a>. Unsurprisingly, that has a lot of people worried.</p>
<p>At this point, though, I'm reminded of a great anecdote from Nathaniel Popper's <a href="http://www.nytimes.com/2016/04/03/business/dealbook/goldmans-tech-chief-pushes-the-bank-to-be-more-open-like-him.html">recent profile of Goldman Sachs' chief information officer, Marty Chavez.</a> Chavez has pushed hard for a focus on technology, even though it may lead to job cuts for those replaced by it.</p>
<p>When faced with pushback from colleagues, Chavez was direct in his response, according to colleague Adam Korn:</p>
<p style="padding-left: 30px;"><span>He basically said something to the effect of: "If your job is a purely manual job and you are just clicking buttons, you should look to upgrade your skills set now."</span></p>
<p>Courtesy of <a href="http://www.businessinsider.com/quant-funds-dominate-hedge-fund-rich-list-2016-5" target="_blank">BusinessInsider</a></p>
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