There are a number of issues with Nunerai including the total lack of details on their funds performance. If they have one. Also regarding Quantipian I don't think they have ever expressed high returns as their aim. Low volatility yes. And has anyone ever seen any figures as to Quantipian returns?

Do any of these algos have predictive ability? Are they any better than traditional technical analysis? The jury seems to be out. To quote Shakespeare it all seems to be much ado about nothing. Sound and fury signifying nothing.

@Zenothestoic,

In the institutional private equity world, details on fund performance has always been an issue, perhaps because of the term "private".

The reason I brought Numerai's new blockchain protocol, Erasure, to this forum is because it might address some of the features Quantopian have discontinued like the phase out of brokerage integration and live algorithms. It also opens up an opportunity for Q developers to earn some extra bucks other than through Q's contest and allocation scheme by giving them the ability to sell their algos in an open digital marketplace provided the developer is willing to stake his claim by putting some skin in the game and building a trusted reputation of his/her claim of prediction accuracy.

I think I'm right in saying Numerai used to reward you in cash? And that now you get some crappy altcoin called Numeraire? Whose performance has been nothing less than dismal and where there is no liquidity? I fully admit I have not followed Numerai since it took this route and that perhaps I am missing something?

This is not "private equity" and nor is Quantopian.

Both would be "private equity" if you were given the chance to invest in an unlisted pre venture capital business - IE the management companies. The fund run by Numerai (if it exists?) and the fund or money run by Quantopian for Steve Big Boy Cohen are not private equity funds. Both invest algorithmically or quantitatively in listed financial market securities - eg stocks, bonds or derivatives thereof.

I am interested and I am not being difficult or sarcastic in any way.

My strong suspicion is that any money run by Numerai or Quantopian has not produced exciting results but I would love to be proved wrong. Pity that neither Q or N make public the performance of funds they run. Or do they?

Incidentally James what is your role or stake in any or all of this? And is there any supporting evidence to show that either Q or N are having any investment success and or are able to successfully predict financial market prices?

I am just interested. Again, I'm not trying to be rude, much as it may sound that way.

Incidentally James what is your role or stake in any or all of this? And is there any supporting evidence to show that either Q or N are having any investment success and or are able to successfully predict financial market prices?

I am just interested. Again, I'm not trying to be rude, much as it may sound that way.

@Zeno,

Let me answer you point by point chronologically.

Numerai rewards participants in both cash and Numeraire (NMR). NMR is the most liquid crypto in the Ethereum blockchain platform. The dismal performance of NMR is primarily due to the general downturn of the crypto market. Liquidity of NMR will most likely increase due to decentralization of NMR through the new Erasure platform.

Our interpretation of private equity are very different. I think you take the narrowest view by limiting it to investing in unlisted pre venture capital business. Q and N are seed funded by venture capitalist who use private equity to bankroll their respective hedge funds. In effect, Q and N are only answerable to their investors and are not obliged under any regulatory bodies to divulge performance to the public. It is "private" between them and their VC investors.

I have no idea as to the performance of either Q or N for reasons I have just mentioned. But for a Wall Street Journal article on Q performance I believe last year, there are no other public pronouncements of its performance. I do not know the source of WSJ article or whether it is accurate or not.

Zeno, I have on role or stake in any of this, just an active participant of both Q and N. And I understand why your glass is always half empty!

@Zeno,

In most of your posts here in Q, I noticed your central theme in questioning if anyone is able to successfully predict financial market prices. I will answer your question with this question, if you discovered a highly predictive and successful system that makes you tons of profits, would you share it with the world? This I believe is where the informaation gap exists.

Yes, I am deeply deeply skeptical of prediction. I prefer modes of trading which "earn".

Even then you are predicting whether the ability to earn will continue.

To give you an example a Vix options strangle back tested to 2006 looks very attractive indeed. It is "earning" from contango in the futures contracts. Predictions include that contango will continue to be a feature of that market. But I prefer to make that prediction than that the S&P will go up or down next week or next year.

People like Renaissance have earned from the bid offer spread among other perhaps less salubrious methods. Have they "predicted"? Hmm, I rather wonder.

Most hedge fund managers turn out at the end of the day to be one trick ponies. They have their time in the sun and then the rain starts pissing down on them. Witness JW Henry. Witness the recent lack of performance by Winton et al. Look at the later performance of those stars of the Big Short.

Yes, I am deeply skeptical. As a fund manager the best way to score is to take management fees and build a business not make predictions or pick stocks. Ditto a hedge fund manager.

Perhaps it is because in over 30 years of close observation I have seen so much, so very much bullshit come and go in the financial markets.

And as for the crypto disaster being responsible for the collapse of NMR well I guess it just shows that people should not accept payment in worthless junk. Altcoins are yet another con. Unless they are true securities and bring a stake in a growing business (watch out for trouble from the SEC) or form a new and successful currency which catches on.

I fear that as a whole financial markets are a con.

Q and N are only answerable to their investors and are not obliged under any regulatory bodies to divulge performance to the public.

No. Much the same can be said for the majority of hedge funds. And that of course is entirely their choice. But it leaves many questions begging.

Again, don't get me wrong. But I have seen so many people waste so many hundreds of hours over the years trying to push their hopeless systems on this and other forums. Many are called and few are chosen.

Most of these people seem to be computer / IT geeks or analysts of some kind with computer skills.

In my very honest and well meant opinion they would probably be better teaming up with or working for a good bunch of fund raisers and selling their research to they guys who can really bring in the investors.

Performance is secondary to many of these people. They charm their way down the pants of institutional investors and come up with average performance. The people who make the money or at least the rainmakers are very often the marketing guys not the geeks in the HF world.

Who cares how they perform so long as the money keeps rolling in and the fees are paid? Crappy performance can last for many years before investors see the light and run for the doors.

No one wants to pay for anything however. I was approached a year or so ago by a giant NY based HF looking for me to do some work for them. Funnily enough they didn't want to pay for it. It was another of these endless stupid competition things where you submit algos and then they might or might not put some money behind them.

The internet has greatly encouraged these sort of something for nothing gigs. Same in so many industries, publishing, blogs whatever.

It was the same old stuff just like the dull Q fund: low vol, low return boosted by leverage. Lehman Brothers writ large.

Forgive the verbal incontinence. I am a bored old fart on a dull and rainy Friday afternoon and needed a break from the VIX.

The financial markets are non stationary and non linear, to survive and even succeed, one has to be able adapt and evolve. So you mentioned before that you are experimenting with Genetic Algorithms, you might be on the right track if you postulate the problem /objective properly.

Well volatility has been stationary, more or less for many decades. Hence the earnings capability.

"The financial markets are non stationary and non linear, to survive and even succeed, one has to be able adapt and evolve."

No, not really James. All you have to do is employ slick salesmanship and run a closet index fund.

Or look at Atradis once the biggest HF in Singapore. They struck it lucky in the Big Short, raised big AUM, made a fortune for the managers and then closed the fund down 60%

Or Odey. Good marketing desultory performance but a billionaire fund manager from the fees.

Zeno,

You said:

In my very honest and well meant opinion they would probably be better teaming up with or working for a good bunch of fund raisers and selling their research to they guys who can really bring in the investors.

This is exactly what the new Numerai platform is trying to do, fill that gap. I quote their article:

There are just too many problems with credibility to want to buy the next prediction. Did this person get lucky? Are they simply lying? If their past performance is real, where is the guarantee that it will continue? The seller of the predictions knows their quality but the buyer has asymmetric information. There is simply no way for the buyer to verify the quality of the predictions.

Because of these questions around the credibility of the seller’s claims and the quality of his predictions, the people with genuinely predictive data cannot find a market for buyers of their information. No one believes what they have to say. The asymmetric information between the buyer and seller leads to what’s called market collapse. The seller’s information is trapped because no market can form around this data because no buyer can assess the quality (see Nobel Prize winner George Akerlof’s work for more on market collapse).