Back when Microsoft was considered a very smart company, they inspired the phrase “eating one’s own dog food“. This meant that they used their own products and was understood to be a superlative practice.
As a small algorithmic trading shop, we certainly eat our own dog food. As we develop StratBox, we continuously trade on it. If we introduce bugs, we pay for them – quite literally and immediately. Believe me, we are highly motivated to ensure that it’s a bug-free environment. Likewise with our models. If we think a model is worthwhile, we trade it. If we’re not sure, we trade it in small size to see. We eat our own dog food – trading and software models alike.
One of the great attractions of wall st has always been its “eat what you kill” mentality which suggests potential for both great reward and, well, hunger. Motivation is clear. Interests are properly aligned.
Thus, the news we’ve been bombarded with out of wall st has been depressing indeed for finance professionals. The culture we admire about our industry has been perverted. After months of solidly horrible and generally worsening news, Credit Suisse’s bold move yesterday was a real ray of light. Their move to “feed” their top management the slop they’ve been creating is a sadly unique example of a finance firm ensuring that interests are ethically aligned.
And it’s the first genuinely good piece of news out of wall st that I can remember in a very long time. Happy Holidays, Credit Suisse!
I’m delighted that Scott Johnston once again allows me to share one of his excellent monthly newsletters. Scott’s an experienced hedge fund exec who’s currently a PM and principal at the Belstar Group, an asset allocator and fund-of-funds. Contact him at sjohnston {AT} belstargroup [DOT] com.
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Dear Partners and Friends,
The Madoff scandal has so many facets, it is difficult to know where to start. The sheer size of it is mind boggling. Many thought that the initial $50 billion number, which came from Madoff himself, was likely an exaggeration, but as of this writing, it may not be. I think back to Ivan Boesky, the singular scammer of the 1980s. I think he managed a few hundred million
Is this a hedge fund scandal? I think you’d have to say that it is, despite the fact that Madoff did not, himself, run a hedge fund. He accepted brokerage accounts, which he then managed through his own brokerage firm. But many formed de facto hedge funds around Madoff for the sole purpose of feeding money to him.
Scammers will always be with us. It should not be shocking to anyone that there are those willing to lie and cheat to make money. Bernie Madoff is simply the latest of a long line of con men: Charles Ponzi, Bernard Cornfeld, Ivan Boesky, Sam Israel, Dana Giachetto, Raffaello Follieri (Anne Hathaway’s boyfriend)…it’s a long list.
Read more…
With all due respect to the auto industry and the worthies in washington, the big news this morning is about Bernard Madoff. Although it’s been very well covered by the always insightful and acerbic Cassandra as well as a variety of more traditional news outlets, this bit of news has a particular personal irony for me.
I had visited the offices of Madoff back in May. Situated in the striking “Lipstick” building, his multi-level offices were really gorgeous and impressive. His trading floor was large, modern and immaculate. You could trade there, perform open-heart surgery, make sushi or fab chips. Immaculate.
I was there as I had a trading strategy that I wanted to capitalize and I was hoping some sort of a deal might be worked out. Although they were extremely nice and gave me a fair hearing and asked good and detailed questions on the model, they ultimately declined the opportunity and sent me on my way. Nonetheless, I came away impressed by them and their remarkable money-generating enterprise.
Under-capitalized but game, the strategy I’d pitched them has made us over 200% since that May meeting.
You only find out who is swimming naked when the tide goes out. – Warren Buffett
I hope you’ll forgive me a post as off-topic as the picture accompanying it is peripatetic. As far as I can tell, it has no algorithmic trading application. But I’ve spent my life around software and it’s pretty rare that I find something that truly wows me.
And Shazam is one of those rare beasts.
I don’t know how they do what they do, but what they do is really something else. Install a free iPhone application (I think there are other implementations available as well), start it up and point the phone’s mic at the source of some music. In a few seconds, the software will identify the song, download its album cover and assorted info, and point you to where you can purchase the song. It’s not perfect – it couldn’t identify the beginning of Beethoven’s 5th, but it was able to identify Carmina Burana and had no problems with any popular music I pointed it at.
I’m certain that if you had a contest between this system and your favorite neighborhood audiophile, Shazam would win hands down for speed and accuracy. It’s really something else.
