Specs might find this interesting:

The Observatory of Economic Complexity is a tool that allows users to quickly compose a visual narrative about countries and the products they exchange. It was Alexander Simoes' Master Thesis in Media Arts and Sciences at the MIT Media Lab, which you can read here.

Orson Terrill writes: 

It's a wonderful example of taking a few concepts, and scaling them beautifully.

Here is a possible meal for a lifetime nested within the same body of work:

"…Moreover, we show that their nestedness remains constant over time and that it is sustained by both, a bias for industries that deviate from the networks' nestedness to disappear, and a bias for the industries that are missing according to nestedness to appear. This makes the appearance and disappearance of individual industries in each location predictable. We interpret the high level of nestedness observed in these networks in the context of the neutral model of development introduced by Hidalgo and Hausmann (2009). We show that the model can reproduce the high level of nestedness observed in these networks only when we assume a high level of heterogeneity in the distribution of capabilities available in countries and required by products. In the context of the neutral model, this implies that the high level of nestedness observed in these economic networks emerges as a combination of both, the complementarity of inputs and heterogeneity in the number of capabilities available in countries and required by products. The stability of nestedness in industrial ecosystems, and the predictability implied by it, demonstrates the importance of the study of network properties in the evolution of economic networks."



The idea of systematic trading was not generally accepted 10-15 years ago. Markets were mostly viewed as efficient at that point. Or mostly efficient and any excess returns were just a compensation for risk taking – still efficient in a loose definition of efficiency. Today, trading systems are everywhere. Systems are now called "indexes" or "smart beta". Different strategies are now called "factors". Is 2/20 fee structure going the way CD, Dodo, floor broker, etc. If outperformance can be replicated by some "factors", who needs an expensive trader/manager?

Peter Pinkhaven writes: 

"Strategies that have reasonable sharpe ratios are usually cyclical" - Asness

I believe AQR were one of the pioneers of the recent systematic factor investing.

Bill Rafter writes: 

The automatic trading systems make the markets more efficient and more liquid. They are not predictive but extremely efficient in their reactivity. What the spec should do is view that as an advantage rather than a problem. It would only be a problem if he were a scalper. There is a very good solution to this for the spec (professional or near-pro), and it revolves around knowing which games to play and which to pass.

There will certainly be some professional specs who outperform, and they will be worth the fee. However that fee may continue to be 2&20 on the basis of value, or it may work lower for any number of reasons. Full disclosure: "someone we know" charges 1&10, as they want to keep clients forever rather than have the fee level be an issue in the future.


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