Ewan Kirk exits the hedge fund business after a string of recent losses, and it could be seen as a further blow to systemic trading investment funds. The view that AI-driven Bots, preprogrammed computers will outperform their human counterpart as investors have yet to materialize, albeit for now.
“Ewan Kirk exits the hedge fund business after a string of recent losses”
WEALTH TRAINING COMPANY
Ewan Kirk’s Cantab Capital based in Cambridge; England uses computer models to drive investment decisions. Cantab Capital is staffed by a handful of mega geeks, computer scientists, mathematicians, and even physicists.
Ewan Kirk a longtime advocate of systematic trading promoted his computer models in a Bloomberg interview, where he revealed that his quantitative hedge fund, Cantab Capital generated a 39% profit in the first quarter of 2019.
Ewan Kirk believed that the brute processing power of computers would give his fund an edge
“As a quant firm we are incredibly dependent on technology and computers are exceptionally good at doing thousands of things. So, we can look across thousands of different securities and stocks and come up with rules, or models which are known to make money over time” Ewan Kirk.
“The biggest thing we did right was not to trust our gut and agreeing with our computers” he added.
“The biggest thing we did right was not to trust our gut and agreeing with our computers”
But a few years later the story would be not so upbeat for the quantitative fund as Ewan Kirk exits with a string of losses
Perhaps Ewan Kirk’s computer models lacked the human gut instinct.
Nobel prize-winning behavioral economist Daniel Kahneman refers to gut instinct as “System 1” or fast thinking, which contrasts with “System 2” thinking, where we actively consider our options before concluding. Kahneman argued that human gut instincts are not always as random as they seem.
They can be based on a rapid appraisal of the situation. We might not always realize it, but the human brain is constantly comparing our current situation with our memories of previous situations, he argued. So, when a decision feels intuitive, it might be based on years of experience, giving you a winning edge. That is why learning from your trading losses today will help you make winning trading/investment decisions sometime in the future.
“Failure is part of success” Hank Aaron.
“investors withdrew CHF900m from Systematics funds over the year”
– Wealth Training Company
Ewan Kirk exits with losses not trusting gut instincts
Ewan Kirk’s Cantab renamed GAM Systematic profits were hit in 2018 due to impairment charges linked to the acquisition. When Cantab was sold to GAM, it had 56 employees and £4bn under management. But most recent full-year results for GAM, published in February, show assets under management at the Systematic business tumbled to CHF2.9bn at the end of last year, down from CHF4.4bn at the start of 2020. Investors withdrew CHF900m from Systematics funds over the year. Moreover, the GAM Systematic Multi-Strategy fund, one of its flagships, fell by more than 9% last year, according to closely watched industry data from HSBC.
Ewan Kirk exits the hedge fund industry pursuing other opportunities
This includes philanthropic work and non-executive director roles where hopefully no gut instincts are required.