As we’ve discussed at exhausting length, the quants have won. International Mathematical Olympiad winners are more prized on Wall Street than Ivy League champion quarterbacks. Even as performance has declined, inflows have increased. Ken Griffin is stealing quants from other people, and then Steve Cohen is stealing them from him. Everyone is getting into the game, from Jamie Dimon to Paul Tudor Jones to shipping companies the regular old stock-pickers looking for a little cachet. They’ve become so confident that they’re now solving global warming. Which all means that, unless you’re already three-quarters done with your Ph.D in a relevant field, the ship has probably already sailed.
But when one door closes another opens. Quantitative investing may be the present and future, but computers cannot invest on their own. They need to be fed data. Lots of data—almost literally an unlimited amount of data, if at all possible. And if you can create one of those data streams, well, by God, your robots will control Ray Dalio’s robots. And that’s a good place to be.
“Quant hedge funds are buying as much data as they can,” Aroomoogan says. Top banks like Goldman Sachs are hosting events for their clients to meet with data vendors because their customers want to know everything about the latest available data. Investment banks want their own quants to be on top of things, too.
The so-called “alternative data” market was worth about $200 million in the US last year and is expected to double in four years, according to research and consulting firm Tabb Group. In addition to public websites, hedge funds are collecting and crunching data generated by credit card transactions, satellite images of parking lots, and customers reviews.