flourpower471 (u/flourpower471)

flourpower471 commented on Pattern of brain damage is pervasive in Navy SEALs who died by suicide nytimes.com/2024/06/30/us... · Posted by u/thelastgallon

munificent · a year ago

This would also explain why accounts of "shell shock" and PTSD rose so dramatically during WWI but were less common in prior wars where explosions were less common.

flourpower471 · a year ago

However also confounded with the rise very different forms of warfare.

Prior to ww1 there were limited periods where you would live on edge - if you have to march armies into position and have pitched battles (e.g. Waterloo) the soldiers have some warning and mental preparation time.

WW1 saw the start of widespread normality of living in trenches and never knowing when the artillery shell might kill you.

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

worik · a year ago

I am disturbed to see so much enthusiasm here for "trading"

Markets matter, and some speculation is useful, but the purpose of markets is not speculation. Obviously.

If you want to make some money get trained and get a good salary. Save your money in safe assets

if you want to get supper rich be super creative, ensure going broke will only effect you (i.e. do not do this while supporting a family), and found a firm. You will likely fail, but there is a chance of super wealth and a bigger chance of a wild ride that will be good for you

Trading from the perspective of greed runs the risk of total destruction. Putting you in jail, maybe. Bankruptcy if not too unlucky. Many people out of work because of your misallocation, and if you do not care about that I'm not interested in you

The financial system is a zero sum game. (The economy in general is not) There is always someone cleverer and they likely do not care if they crush you. International finance is a snake pit

Friends, look after friends. Maximise happiness. Be honest, be ethical, be safe

Live long and prosper

flourpower471 · a year ago

>>> If you want to make some money get trained and get a good salary. Save your money in safe assets.

You mean like the good salary you get working for a trading firm?

I'm not sure what this comment you made is meant to be, but it reads like a blend of somebody who's high and a tik tok wellness influencer.

Trading is not a zero sum game in the sense you intend to suggest it is. It is 0 sum only if all participants have the same trading horizon.

The pool grows in the same way because it is linked to the economy. The markets are a variety of players with different requirements.

Most transactions occur between parties who have different horizons. Yes the hft makes money over 5s and the pension fund loses it. But the pension fund is looking at the return over the next year, so the small loss to the hft is just a cost of acquisition.

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

chronic7202h · a year ago

> Id say the industry average for somebody moving to a new firm and trying to replicate what they did at their old firm is about 5%.

Because 95% of experienced candidates in trading were fired or are trying to scam their next employer.

“Oh, yeah, my <insert HFT pipeline or statarb model> can do sharpe <random int 1 to 10> for <random int 10 to 100> million pnl per year. Trust me bro”. Fucking annoying

flourpower471 · a year ago

Obviously not true. The deals for most of these set ups are team founders/pms are paid mostly by profit share. So the only scam is scamming yourself into a low salary position for a couple years till they fire you.

Orders of magnitude more leave their jobs of their choosing than are fired.

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

aniviacat · a year ago

Claiming that being smart isn't required for trading is not the same as claiming that people doing trading aren't smart.

(Note that I personally have no opinion on this topic, as I'm not sufficiently informed to have one.)

flourpower471 · a year ago

I was specifically addressing the "being smart isn't necessary for trading".

The op is making some implication across numerous posts that it's all basically a big con and it's all very simple.

It is like claiming you don't need to be rocket scientist to go to the moon because they just use metal and screws.

The individual parts might be simple in isolation. But it is the complexity of conducting large scale, large scope research in an environment that gives you limited feedback and will adapt to your own behaviour changes that is where the smarts are needed.

OP seems to not understand the inherent difficult of doing any research.

Almost anybody could be taught to make a simple circuit and battery from some basic raw materials. The fact it is simple and easy now we know the answer does not mean it was simple or easy to discover. Some of the greatest minds dedicated their entire lives to discovering things that now most 10 years olds understand. That doesn't imply you only need to have the intellect of a 10 year old to make fundamental breakthroughs in science.

Working in quant trading is almost pure research - and so it requires a certain level of intellect - probably at least the intellect required to pursue a quantitative PhD successfully (not that they need the PhD but they need the capacity to be able to do one).

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

posting_mess · a year ago

Quantitative trading is simply the act of trading on data, fast or slowly, but I'll grant you for the more sophisticated audience there is a nuance between "HFT" and "Quant" trading.

To be "super right" you just have to make money over a timeline, you set, according to your own models. If I choose a 5 year timeline for a portfolio, I just have to show my portfolio outperforming "your preferred index here" over that timeline - simple (kind of, I ignore other metrics than "make me money" here).

Depending on what your trading will depend on which algo's you will use, the way to calculate the price of an Option/Derivative hasn't changed in my understanding for 20/30 years - how fast you can calculate, forecast, and trade on that information has.

My statement wont hold true in a conversation with an "investing legend", but to the audiance who asks "do you use llama3" its clearly an appropriate response.

flourpower471 · a year ago

I don't really understand your viewpoint - I assume you don't actually work in trading?

Aside from the "theoretical" developments the other comment mentioned, your implication that there is some fixed truth is not reflected in my career.

Anybody who has even a passing familiarity with doing quant research would understand that black scholes and it's descendants are very basic results about basic assumptions. It says if the price is certain types of random walk and also crucially a martingale and Markov - then there is a closed form answer.

First and foremost black scholes is inconsistent with the market it tries to describe (vol smiles anyone??), so anybody claiming it's how you should price options has never been anywhere near trading options in a way that doesn't shit money away.

In reality the assumptions don't hold - log returns aren't gaussian, the process is almost certainly neither Markov or martingale.

The guys doing the very best option pricing are building empirical (so not theoretical) models that adjust for all sorts stuff like temporary correlations that appear between assets, dynamics of how different instruments move together, autocorrelation in market behaviour spikes and patterns of irregular events and hundreds of other things .

I don't know of any firm anywhere that is trading profitably at scale and is using 20 year old or even purely theoretical models.

The entire industry moved away from the theory driven approach about 20 years ago for the simple reason that is inferior in every way to the data driven approach that now dominates

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

Izkata · a year ago

> but most "trading" isn't as complex as they'd like you/us to believe

I know nothing about this world, but with things like "doctor rediscovers integration" I can't help but wonder if it's not deception but ignorance - that they think it really is where math complexity tops out at.

flourpower471 · a year ago

Drs rediscover integration is about people stepping far outside their field of expertise.

It is neither deception or ignorance.

It's the same reason some of the best physics students get PhD studentships where they are basically doing linear regression on some data.

Being very good at most disciplines is about having the fundamentals absolutely nailed.

In chess for example, you will probably need to get to a reasonably high level before you will be sure to see players not making obvious blunders.

Why do tech firms want developers who can write bubble sort backward in assembly when they'll never do anything that fundamental in their career? Because to get to that level you have to (usually) build solid mastery of the stuff you will use.

Trading is truly a complex endeavour - anybody who says it isn't has never tried to do it from scratch.

Id say the industry average for somebody moving to a new firm and trying to replicate what they did at their old firm is about 5%.

Im not sure what you'd call a problem where somebody has seen an existing solution, worked for years on it and in the general domain, and still would only have a 5% chance of reproducing that solution.

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

posting_mess · a year ago

They hire people who know that maths doesn't "top out here", so they can point to them and say "look at that mathematicians/physicists/engineers/PHD's we employ - your $20Bn is safe here". Hedge funds aren't run by idiots, just a different kind of "smart" to an engineer.

The engineers are are incredibly smart people, and so the bots are "incredibly smart" but "finance" is criticised by "true academics" because finance is where brains go to die.

To use popular science "the three body problem" is much harder than "arb trade $10M profitably for a nice life in NYC", you just get paid less for solving the former.

flourpower471 · a year ago

It is just a different (applied) discipline.

It's like math v engineering - you can come up with some beautiful pde theory to describe this column in a building will bend under dynamic load and use it to figure out exactly the proportions.

But engineering is about figuring out "just make its ratio of width to height greater than x"

Because the goal is different - it's not about coming up with the most pleasing description or finding the most accurate model of something. It's about making stuff in the real world in a practical, reliable way.

The three body problem is also harder than running experiments in the LHC or analysing Hubble data or treating sick kids or building roads or running a business.

Anybody who says that finance is where brains go to die might do well to look in the mirror at their own brain. There are difficult challenges for smart people in basically every industry - anybody suggesting that people not working in academia are in some way stupider should probably reconsider the quality of their own brain.

There are many many reasons to dislike finance. That it is somehow pedestrian or for the less clever people is not true. Nobody who espouses the points you've made has ever put their money where there mouth is. Why not start a firm, making a billion dollars a year because you're so smart and fund fusion research with it? Because it's obviously way more difficult than they make out.

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

posting_mess · a year ago

No hedge fund registered before the last 2 weeks will use Llama3 for their "prod work" beyond "experiments".

Quant trading is about "going fast" or "being super right", so either you'd need to be sitting on some huge llama.cpp/transformer improvement (possible but unlikely) or its more likely just some boring math applied faster than others.

Even if they are using a "LLM", they wont tell you or even hint at it - "efficient market" n all that.

Remember all quants need to be "the smartest in the world" or their whole industry falls apart, wait till you find out its all "high school math" based on algo's largely derived 30/40 years ago (okay not as true for "quants" but most "trading" isn't as complex as they'd like you/us to believe).

flourpower471 · a year ago

Well I work in prop trading and have only ever worked for prop firms- our firm trades it's own capital and distributes it to the owners and us under profit share agreements - so we have no incentive to sell ourselves as any smarter than the reality.

Saying it's all high school math is a bit of a loaded phrase. "High school math" incorporates basically all practical computer science and machine learning and statistics.

If I suspect you could probably build a particle accelerator without using more math than a bit of calculus - that doesn't make it easy or simple to build one.

Very few people I've worked with have ever said they are doing cutting edge math - it's more like scientific research . The space of ideas is huge, and the ways to ruin yourself innumerable. It's more about people who have a scientific mindset who can make progress in a very high noise and adaptive environment.

It's probably more about avoiding blunders than it is having some genius paradigm shifting idea.

flourpower471 commented on Financial Statement Analysis with Large Language Models papers.ssrn.com/sol3/pape... · Posted by u/mellosouls

antimatter15 · a year ago

Figure 3 on p.40 of the paper seems to show that their LLM based model does not statistically significantly outperform a 3 layer neural network using 59 variables from 1989.

  This figure compares the prediction performance of GPT and quantitative models based on machine learning. Stepwise Logistic follows Ou and Penman (1989)’s structure with their 59 financial predictors. ANN is a three-layer artificial neural network model using the same set of variables as in Ou and Penman (1989). GPT (with CoT) provides the model with financial statement information and detailed chain-of-thought prompts. We report average accuracy (the percentage of correct predictions out of total predictions) for each method (left) and F1 score (right). We obtain bootstrapped standard errors by randomly sampling 1,000 observations 1,000 times and include 95% confidence intervals.

flourpower471 · a year ago

Not to mention, as somebody who works in quant trading doing ml all day on this kind of data. That ann benchmark is nowhere near state of the art.

People didn't stop working on this in 1989 - they realised they can make lots of money doing it and do it privately.