{"id":765102,"date":"2026-09-09T14:16:20","date_gmt":"2026-09-09T14:16:20","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/765102\/"},"modified":"2026-09-09T14:16:20","modified_gmt":"2026-09-09T14:16:20","slug":"the-wittiest-quant-describes-how-ai-is-changing-his-job","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/765102\/","title":{"rendered":"The wittiest quant describes how AI is changing his job"},"content":{"rendered":"

Giuseppe Paleologo, the head of quant research<\/a> at Balyasny,<\/a> is know for his puckish sense of humour<\/a> and social media musings.\u00a0He\u2019s now posted a very interesting thread<\/a>, detailing his experiences in using LLMs (specifically, OpenAI\u2019s Sol and Astra) to address one of the great curses of quant investing \u2013 the problem of \u201ccrowding\u201d.<\/p>\n

\ud83d\udca5Follow us on WhatsApp for news alerts.<\/a>\ud83d\udca5<\/p>\n

This is the phenomenon created because lots of quants are using broadly similar mathematical tools to process the same datasets, so they tend to come up with the same answers.\u00a0Which means that you occasionally get situations in which a particular portfolio is very heavily held by systematic investors.\u00a0 That means that when something goes wrong, and all the quants try to sell out of their positions at the same time, there isn\u2019t enough liquidity for them all to do so, and they end up losing a lot more money than they expected to.<\/p>\n

Modelling this phenomenon is obviously really important, but it\u2019s difficult; Paleologo had tried several times in the past without success.\u00a0 It seems that the Astra model was able to achieve some kind of breakthrough \u2013 he says that \u201cthe final report is about 35 pages long. Years of thinking coming to a conclusion. Qualitative and quantitative productivity improvement.\u201d<\/p>\n

You might see this as a pretty sinister prospect, in which the honest men and (some) women of quant investing are likely to be replaced by robots.\u00a0 That\u2019s not what Guiseppe Paleologo thinks.\u00a0 As he points out, Astra needed him to tell it that crowding was a problem in the first place, and to describe what a solution would look like.\u00a0The machine can find elegant mathematical solutions, as he puts it, but the human beings are needed to bring together the \u201cdirty engineering problems\u201d.<\/p>\n

In fact, it might be the case that even though AI models are rapidly solving the \u201cMillenium Problems<\/a>\u201d, that doesn\u2019t necessarily mean that they will be able to solve Millennium\u2019s problems.<\/a>\u00a0 Or Balyasny\u2019s, or Citadel\u2019s, <\/a>or any other financial employer which has to deal with markets as they are \u2013 messy, extremely human systems, which have to interact with the real world all the time, and where lots of the most important data isn\u2019t available because it\u2019s proprietary, secret or otherwise non-public.<\/p>\n

That also seems to be the view of Dan Taylor<\/a>, the CIO of Man Systematic, another big quant hedge fund.\u00a0 \u201cAt the margin\u201d, according to him, the availability of LLMs is already changing the skill sets that he\u2019s looking out for when hiring.\u00a0 And before long, we might even see humanities graduates in systematic investing firms.\u00a0 When the ability to find elegant solutions to big systems of differential equations starts to be democratised, the quant firms will need people who are capable of understanding the markets and thinking of interesting questions to ask.<\/p>\n

For the moment, then, the more worldly kind of quant \u2013 people like Giuseppe Paleologo, who don\u2019t mind getting their hands dirty with real world problems \u2013 shouldn\u2019t worry too much about their future.\u00a0<\/p>\n

Elsewhere, the more that people report on Leopold Aschenbrenner<\/a> and the Situational Awareness hedge fund, the clearer the picture grows of a subculture in which absolutely extraordinary behaviour seems to be regarded as normal.\u00a0 According to an \u201cassociate\u201d of Aschenbrenner\u2019s, the parties at which people talked about buying a galaxy<\/a> were also events where guests \u201cwould drink wine, read passages from The Iliad, strip naked, and grapple with one another\u201d.<\/p>\n

Amjad Masad, the CEO of Replit, says that \u201cIf you go to a San Francisco party, it is really inscrutable to an outsider\u201d, which seems like quite an understatement.\u00a0 As well as the naked wrestling and Greek poetry, the AI-adjacent scene is full of people who believe that the economic singularity is at hand, and so they only have five years to make enough money to ensure that they will be part of the permanent overclass, rather than the permanent underclass.\u00a0 Which might explain why Aschenbrenner used so much leverage, and why his investors seem to have encouraged him to do so.\u00a0<\/p>\n

But, as legendary trader John Arnold puts it, \u201cEvery trader needs a come-to-Jesus moment \u2026 you have to lose at some point early on and learn humility. The alternative is a feeling of invincibility\u201d.\u00a0 Situational awareness is important, but self-awareness is absolutely vital.<\/p>\n

Meanwhile \u2026<\/p>\n

Even hedge fund managers find it difficult to afford to live in Geneva.\u00a0 Millennium Management wants to increase its presence there, to attract more high-net-worth investors who don\u2019t fancy the trip out to its main Swiss office in Zug.\u00a0 But in order to make it work, they want to get a tax deal with the local authorities. (FT<\/a>)<\/p>\n

Truist, the regional heroes of the south-east USA, are growing their investment bank.\u00a0 They have hired Cem Altuntas to cover insurance brokers and Jeffrey Davis to do healthcare coverage. (Bloomberg<\/a>)<\/p>\n

Narayanan Mahesh has gone from Jefferies to be head of equities electronic execution for the Americas at Citigroup. (The Trade<\/a>)<\/p>\n

It seems much longer, but it was only eight years ago that DWS decided that it needed separate branding from Deutsche Bank.\u00a0 Fortunes have changed over that period, and now it\u2019s come back; \u201cDeutsche Asset Management\u201d will be the new name. (FT<\/a>)<\/p>\n

The world of international drug dealing is apparently big enough to have its own shadow banking system, made up of \u201cbrokers\u201d, who facilitate international transfers of money that doesn\u2019t want to go through an AML process.\u00a0 Except there are now a lot of vacancies in that part of the industry, as a lot of them got arrested in a major Spanish police operation. (Europol<\/a>)<\/p>\n

One of the most important things which will determine how well you get paid is whether you have access to a network of information to give you a good estimate of your market value.\u00a0College football kickers seem to have an excellent set of WhatsApp groups, and it\u2019s helped them achieve unprecedented pay and scholarship packages. (WSJ<\/a>)<\/p>\n

Follow me on X<\/a>. Follow me on LinkedIn.\u00a0<\/a><\/p>\n

Have a confidential story, tip, or comment you\u2019d like to share?\u00a0Contact: +44\u00a07537 182250 (SMS, Whatsapp or voicemail).\u00a0Telegram: @SarahButcher. Signal: sarahbutcher.22 \u00a0Click here to fill in our anonymous form<\/a>, or email editortips@efinancialcareers.com.\u00a0<\/p>\n

Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.<\/p>\n","protected":false},"excerpt":{"rendered":"Giuseppe Paleologo, the head of quant research at Balyasny, is know for his puckish sense of humour and…\n","protected":false},"author":2,"featured_media":765103,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,86,56,54,55],"class_list":["post-765102","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-technology","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/765102","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=765102"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/765102\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/765103"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=765102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=765102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=765102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}