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Culture War Roundup for the week of February 19, 2024

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I would love to know what the Medallion Fund strategies are, although I have a feeling that (like a magician's tricks) the strategies would seem remarkably dumb once they are revealed.

I do wonder whether they are using their publicly available funds (which have mediocre performance) to generate alpha for the Medallion Fund.

As someone who works at a prop shop I half guarantee you the strategies would look remarkably dumb if you were told what they were. It's surprising how simple the strategies we use to generate a ton of money are, like so surprising you'd expect any good mathematics undergraduate to be able to come up with them if you pointed them in the right direction and gave them two weeks to work on them. Regardless, they are extrmely effective, to the point where it's like picking up free money off the ground.

The difficulty is not in finding the strategies, it's in setting up the whole high speed structure and the relationships with exchanges/brokers/clearers etc. so that you have access to the markets in the first place.

That's basically my understanding of it as a layman outsider.

Financial Markets are so large and complex and useful information is so dispersed that one trader can notice e.g. an arbitrage opportunity between the price of tea in China vs. Australia that allows them to front-run the market. Or perhaps they catch some more esoteric correlation like how when the tea shipments to a particular Chinese province are delayed, productivity drops by 15% or some such.

And the problem then is how do you bring enough capital to bear quickly enough to seize the opportunity without alerting other actors, and, ideally, turn it into a repeatable (algorithmic) bet to pump money out of the system.

I do wonder whether they are using their publicly available funds (which have mediocre performance) to generate alpha for the Medallion Fund.

That would be illegal, right? Seems hard to imagine that nobody would blow the whistle.