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Who Is the Latest Guru of Wall Street's Computerized Funds?

His name is Arvind Raghunathan of Roc Capital Management, as reported in the Wall Street Journal (subscription required).

Roc Capital Management was split off from Deutsche Bank (DB). Deutsche Bank invested $500 million in Roc's start up operations. This gives fund raisers a stronger talking point when soliciting funds. Roc now has $1 billion under management.

Continue reading Who Is the Latest Guru of Wall Street's Computerized Funds?

How to avoid falling into the data mining trap

Are you looking for Nirvana when you invest? Forget about it. It doesn't exist.

Let's start with two big losers that relied on financial data and ended up on the trash heap. First we have Long Term Capital. Founded by John Meriwether, Robert C. Merton, and Myron Scholes. They formed the largest hedge fund in the U.S. in the 1990s with an estimated 4.6 billion in capital. Merton and Scholes had won the Nobel Prize in economics for developing a pricing model for options called the "Black Scholes Model." Since both men had won the Nobel Prize, this should have been Nirvana. Now comes along the Russian financial crisis and Long Term Capital was on the wrong side of history. They took such a beating that the Federal Reserve had to help bail them out for a time until they went bust in 2000.

Continue reading How to avoid falling into the data mining trap

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