Squid Game based crypto collapses in $3m scam

[weijian]

Since Corgitator bought up Ren Tech. I read the book some time back (courtesy of NLB) and it was a good read. Recommend for all VBs to read it, not for the 66% per annum insane returns, but for the journey that Jim Simmons had to "go through" before reaching the promised land.

Multiple partners. Multiple changes in methodology. Underperformance in the roaring 1990s. Pure luck that a junior programmer found the system bug created by the partners. Practice Evolution.

https://www.amazon.com/Man-Who-Solved-Ma...073521798X

[specuvestor]

Problem and enigma is that it only applies to Medallion and not consistent

“There is nothing wrong with the models. it’s just the world is wrong.”
https://www.institutionalinvestor.com/ar...ers-Tanked

And till June
https://www.bloomberg.com/news/articles/...nt-returns

[Corgitator]

Problem and enigma is that it only applies to Medallion and not consistent

“There is nothing wrong with the models. it’s just the world is wrong.”
https://www.institutionalinvestor.com/ar...ers-Tanked

And till June
https://www.bloomberg.com/news/articles/...nt-returns

Is a well-known problem, at least for industry insiders. Medallion fund is the crown jewel that houses the original model. RT has gradually kicked out outside investors over the years from Medallion, and Medallion is now only open to employees. Why take 4%/44% fee structure when you can keep all the profits for yourself, especially since the model has capacity limitations?

The outside investors that were kicked out wanted back in, so much so that they were ok with investing in an inferior product, and RT gave them what they wanted. RT has publicly stated many times that these funds (that are open to outsiders) run a completely different model from Medallion. Now that these outside investors realize what they are getting is nothing close to Medallion, they get upset.

So what you have is a case of a world class western food chef that decided to stop serving western food to non-VIPS. But the non-VIPS still pestered and are willing to settle for oriental food. Obviously the chef can't make oriental food that's as good as his western food, but that failure shouldn't detract us from acknowledging that he is a world class western food chef.

Not a fan of quant or RT, but just wanted to acknowledge a great when I see one, because there's not that many around especially in finance.

[specuvestor]

So the conclusion of this dichotomy is that their old quant model is super good and new quant model is super bad? So how do we rate a chef that has great private dining reviews using machines but their store front can't serve decent food with machines?

No red flags popping up?

I'm just saying it as it is... not fan of quant as VBs here will know but neither an agenda against RT which I observe is one of very few quant that has consistent return over a cycle, at least for Medallion. If Buffett starts buying crypto I would be very keen to figure out if there's a reason or red flag.

[Corgitator]

So the conclusion of this dichotomy is that their old quant model is super good and new quant model is super bad? So how do we rate a chef that has great private dining reviews using machines but their store front can't serve decent food with machines?

No red flags popping up?

I'm just saying it as it is... not fan of quant as VBs here will know but neither an agenda against RT which I observe is one of very few quant that has consistent return over a cycle, at least for Medallion. If Buffett starts buying crypto I would be very keen to figure out if there's a reason or red flag.

The conclusion is that they keep the very best for themselves (who doesn't? and it's actually one of the ways to entice the brightest to work for them), and sell an inferior product to others, BUT it's a willing buyer willing seller transaction.

Above all, RT was very transparent upfront about the differences between Medallion and the other funds:

“There is just no reason for Medallion and RIEF to be in any way correlated,” he said.

“The only thing they have in common is that they are operated using the same software and have the same senior management team. Everything else about them is uncorrelated.”

Clients flocked to the funds. Despite warnings of lower returns, they still expected it would have some of the Medallion magic."

Should that be a red flag? I guess it's subjective, but I think not.

Is it opportunistic or selfish? I think so, but this isn't charity. The market is where people come to generate returns, not to do philanthropy. There's a different place for that.

Is it morally reprehensible? I don't think so, or at least by the industry's moral standards, I think this is already better than average.

Japan keeps the best farm produce for their own, and exports the rest to willing buyers from overseas. Everyone knows that. Is it wrong to do so? In a way, it's just creating different products to match the different needs and paying power of different clients.

[Wildreamz]

..

No red flags popping up?

..

The original Quant model (Medallion Fund) has a capacity limitation (currently about $9 - 10 billion; profits distributed every 6 months): https://www.afr.com/technology/inside-th...122-gsuohh

RenTech's other funds, say, Renaissance Institutional Equities Fund (RIEF) has a size of $29 billion in 2007 and $75 billion in 2020 (https://en.wikipedia.org/wiki/Renaissanc...rg_Drop-40) naturally can't use the same model/strategy.

I understand the implied message though (possible conflict of interest: e.g. insider trades, front-running etc. to favor the returns of 1 fund over another); it has been suggested before.