Quantitative Funds

Is anybody else a firm believer in a fund based solely on a quantitative model? Granted, with all this volatility we’ve experienced lately, a lot of sell stops might be triggered, but that’s where back-testing and the quantitative model can help eliminate those triggers… I know every prospectus, commercial, and literature state that, “…past performance does not guarantee future success…”; however, I think there are certain strategies that work well, over time. If you don’t agree with me, check out, “What Works On Wall Street” by James O’Shaughnessy–great book! Using a quantitative model eliminates emotion and adds in discipline! Does an individual like myself, who would eventually like to be a part of/run a quantitative fund need a Ph.D in some sort of computer science, mathematics, or finance?

also, Jack Schwager’s “Market Wizzard” series of books (HarperBusiness, NY) - a chapter each on dozens of traders/quants - got me started on the “great search” in the 1980s. oh, and buy a calculator…

If O’Shaughnessy is so smart why is he writing books instead of having naked supermodels count his money on his private island?

Publishing diversifies his investment returns thus allowing him to take more risks and have more naked supermodels.

Quant funds are indeed run by PhDs in finance. Even if you run your own fund, the sales aspect would be tough without the names and titles. Plus you’d need some really good comp-sci guys around as well. As sexy as the idea of such a fund is, take note of the staggering losses suffered by the quant funds in the last few months. It seems that even the smartest guys with all the tech and resources behind them can’t quite live up to the “always make money” promise all of these funds have made.