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As_Losses_Mount - As Losses Mount, Quant Traders Limit Risk...

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As Losses Mount, Quant Traders Limit Risk By Reuters
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Thursday, November 13, 2008 Email this story | News Tracker | Reprints | Printable Version NEW YORK (Reuters)—Robust returns for a group of powerful hedge funds that thrived for years using sophisticated trading programs may be a thing of the past after a "Black Swan" event hit global markets this year. The carnage in financial markets worldwide, what many viewed as a so-called Black Swan event because it was out of the ordinary and had severe repercussions, has scorched returns for most of these funds. That forced them to embrace new models that place less capital at risk and employ little or no leverage. With the failure of many investment systems that ran on algorithms created by mathematicians-turned-traders, quantitative funds, also known as "quants" are also veering away from models with longer-term horizons. They have instead focused on high-frequency strategies, or very short-term trades that often are executed in seconds. "It is a confusing time to be running money … using quantitative approaches where recent events create statistical outcomes so out of step
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This note was uploaded on 04/09/2010 for the course NBA 5450 taught by Professor Richardmarin during the Fall '09 term at Cornell.

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As_Losses_Mount - As Losses Mount, Quant Traders Limit Risk...

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