John Overdeck’s Two Sigma AI push has gone into overdrive with the quant fund recently hiring Mike Schuster, a scientist who worked on the Google Brain team.
John Overdeck’s Two Sigma AI push is a natural progression.
The $41 billion AUM fund, based in New York City, is one of the world’s largest quant funds which is where investment decisions are determined by numerical methods rather than by human judgment.
You won’t see many traders on the Two Sigma trading room as they have been replaced by computers and IT specialists. So unless you are a super-geek it might be a case of humans need not apply.
“John Overdeck’s $41 billion AUM fund, based in New York City, is one of the world’s largest quant funds”
John Overdeck’s Two Sigma AI push is leading the charge in the world’s most lucrative and competitive business.
Anything that is likely to give a hedge fund a heads up, a competitive edge over a rival will be put to the test. So the race is on to build the knock out enigma-the “first mechanical brain”.
The hedge fund titans (who many of their founders are now multi-billionaires) are throwing big money into AI, after all, it’s a high stakes game and the big players have figured that he who owns the best mechanical brain game will win the pot. So the race is on.
John Overdeck’s Two Sigma AI push entails expanding the hedge funds AI division.
Already two top scientists have been poached. Mike Schuster from silicon valley, a former Apple engine who then went on to work on Google brain is believed to be leading Sigma’s AI division together with another top scientist.
“John Overdeck’s Two Sigma AI push entails expanding the hedge funds AI division”
However, Mike Schuster will report to Alfred Spector, the firm’s chief technology officer and another Google alum. The pair had worked together during their time at the tech company.
Mike Schuster’s AI division will lead a team of coders and engineers with the aim of pushing forward the boundaries AI technology in the area of machine learning and “deep learning”.
Two Sigma new AI division will also focus on the application of cutting-edge technology advancements in AI.
“There are big questions on how to do predictions on very large data sets” – Alfred Spector
John Overdeck’s Two Sigma AI push is to go where no one has gone, to predict the future and more
Alfred Spector, the firm’s chief technology officer, said “There are big questions on how to do predictions on very large data sets”, he added “We want to do more”.
Indeed, data scientists are attempting to use big data to predict the future. Using data to tell the future is the goal. Already the world’s largest global online store knows what you are about to buy before you do and Google kindly tells you to leave for that meeting now if you aim to arrive on time because traffic on the road is heavy. Moreover, Pandora somehow is able to create your ideal playlist.
John Overdeck’s Sigma AI push comes when Big Data can already predict your whereabouts tomorrow or next week, your next purchase, the type of music you like, your music taste, political leaning, sexual orientation and probably a lot more
Never before has human activity generated so much data. Think about it. Every action performed online, every sales process, product interaction, prescribed drug, and environmental anomaly, is being tracked by various sources. In the past companies were trying to work out how to store all this data and we are now at the embryonic stage, thanks to advancements in AI how to make the data useful.
John Overdeck’s Sigma AI push comes at of time stiff competition for talent between financial firms and Silicon Valley, Two Sigma has hired a hard-to-find AI experts with years of experience.
Schuster, who is head of Sigma’s AI division has more than a decade of experience. He was the first staff research scientist at Alphabet Inc.’s and at Google for 12 years, conducting basic research on machine learning and neural networks and working on the Android speech recognition system and Google Translate, according to his LinkedIn profile.
John Overdeck’s Two Sigma, which has about 1,300 employees, is looking to expand Schuster’s team, Spector said. Two-thirds of the hedge fund’s headcount is involved in research and development.
“There are a lot of people claiming to be doing artificial intelligence and machine learning purely to get funding or generate publicity. In some cases this is being a little bit disingenuous, using machine learning when something simpler would be fine and in others, it’s just bare-faced lying. This obviously doesn’t just apply to start-ups” – Dr Tristan Fletcher
John Overdeck’s Two Sigma is one of the biggest hedge funds to use machine learning and big data to make systematic trades. David Siegel, a former chief technology officer at Tudor Investment Corp., and John Overdeck from D.E. Shaw & Co. founded the New York firm in 2001.
John Overdeck’s Sigma AI push is being instigated despite co-founder David Siegel having has had somewhat of an unimpressed view of what he referred to as “white whale, artificial intelligence”.
Two Sigma assets surged from $2.5 billion over a decade ago, but it struggled to make money in January and February in some funds as volatility has risen.
“People may have unrealistic expectations” co-founder David Siegel has said. “Machine learning systems can easily with high confidence make mistakes” Siegel has also noted the fact that AI “doesn’t have anything that resembles common sense”
Indeed, AI is ultimately a high-level program interacting with another program which can be broken down into binary zeros and ones, in other words on and off state.
Dr. Tristan Fletcher, research director, Thought Machine sums up the pitfalls and dangers…
“There are a lot of people claiming to be doing artificial intelligence and machine learning purely to get funding or generate publicity. In some cases this is being a little bit disingenuous, using machine learning when something simpler would be fine and in others, it’s just bare-faced lying. This obviously doesn’t just apply to start-ups ” he added.
“The danger is that you get disappointments that blemish the entire field: perhaps some unscrupulous people use machine learning in a massively incorrect way and you get a well-publicized failure that tarnishes the reputation of the entire genre.”
John Overdeck’s So Sigma AI push will have to figure out how to avoid such mistakes before quant rival Renaissance Technologies do.