Robert Carver, author and retired executive at quantitative hedge fund AHL, poses this seductive question to quants: “What if you could work for yourself, and still build hedge fund trading systems?”

Imagine developing a trading strategy and then selling it or licensing it to a fund for big dollars or a share of the profits. “For the quant,” writes Carver in an article for eFinancialCareers, “This is a pretty good deal, as they can now go and live on a beach somewhere after doing a few years of hard work.”

“This is the world of freelance signal generation,” explains Carver.

Freelance quants are not new, if not yet common. However, there are signs that interest in the concept is growing. Another eFinancialCareers article last month said quant fund QRT was recruiting “external alpha generators” and already had three on board with plans to hire 20 in the next few years.

Being a freelancer, Carver says, “Sounds like a fantastic opportunity for both quants and hedge funds.”

“But is this really true?”

Carver goes on to point out the pros and cons, which are not so much cons as potential pitfalls of such arrangements.

Selling the strategy to a fund sounds like a good deal, Carver agrees, unless the fund doesn’t pay or swipes the basic strategy. There are risks for the fund, too, he says, including the potential for the model to stop working or not work on data it hadn’t previously encountered.

Instead, Carver says a licensing arrangement is often preferred by both sides. The freelancer shares in the profits the model generates and the fund continues to get the quants continued involvement.

The downside is the potential for being underpaid, as well as the difficulty in even knowing whether the fee is correct, he says. “This is especially true for models providing signals rather than explicit trades, since there are no specific positions which can be directly attributable to a specific signal.”

Carver goes on to discuss code hosting arrangements, noting that “A truly paranoid freelancer trader may wish to host their systems on their own computers, or more likely on a secure cloud.”

Ironically, instead of becoming free of the daily grind, running such a hosting operation means hiring IT support and even junior traders. In essence, says Carver, The quant is effectively running their own mini hedge fund.”

“We’re going to need a bigger beach house.”

Photo by Mohamed Ali


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Green Key

Here’s a Free Course In Leading Virtual Meetings

With so many businesses limiting employee travel and having those not required to be in the office to work from home, virtual meetings are booming. Since February, Microsoft says use of its conferencing service Teams has jumped 500%. Companies with travel restrictions have increased their use of video conferencing service Zoom 30% in a month.

That’s sent IT teams scrambling to get their newly remote workers up and running with the technology.

Just as suddenly, managers are having to learn how to conduct virtual meetings on the fly. They are fast discovering that it takes different skills to conduct a meeting when the normal communication cues are difficult to read or non-existent. In-person meetings offer non-verbal clues to how participants are reacting to what’s being said. Nodding heads, eye contact, yawns, whether participants are leaning forward or kicking back are all part of the body language that tips us off to how effectively we are communicating.

Telephone conferencing provides none of that non-verbal information. Video conferencing is better, but still falls short. Problems are compounded by shortcomings with the technology and the comfort level of users and especially meeting leaders. Even for polished public speakers, virtual meetings present a unique type of challenge few have been trained to address.

That’s why the leadership consulting firm DDI is offering a free quickie course in leading virtual meetings. Managers with experience leading remote teams will find the microcourse a refresher. The scoresheets are good checklists to evaluate the effectiveness of the meetings you have been conducting.

For those new to virtual meetings, the course covers all the basics and a bit more. Some of the advice should be familiar to everyone who leads meetings — whether or not you actually follow it! However, you’ll discover why some of the basics are even more critical when you’re speaking to a remote audience. Some suggestions — like having each speaker identify themselves and taking attendance — will seem obvious once you hear about them, but are easily overlooked by inexperienced meeting leaders.

One particularly valuable section discusses methods for engaging your audience. Since even video conferencing doesn’t clearly convey the non-verbal signals we rely on to interpret emotional context, the course suggests using more inflection than you normally would and including “feeling words.” And because it is so easy for people to not participate, call on them. Instead of asking, “Any comments,” ask specific individuals if they are clear on what was said or if they have any questions.

The course takes 15 minutes or so and even for experienced meeting leaders, has enough valuable advice and tips that it will help make virtual meetings more productive and engaging.


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Green Key