Quant hedge funds are getting slammed and scrambling for answers
businessinsider.comCurious if AI is playing any role.
Some hypotheses that comes to my mind:
1. A well funded player has built a statistical model of the statistical models of some hedge funds.
2. Industrial espionage.
3. Tools back-doored by developers (as seen in "Office Space").
4. Reversion to the mean (positive results of the model were largely randomness combined with a small sample size).
It's worth noting that many nation-states would have incentive and resources for hypotheses one and two.
My answer --- quantitative analysis is pseudo-scientific BS based on one big flawed assumption --- that statistics can be used to logically predict markets.
Sound familiar?
Apply similar techniques on a broader, more generalized scale and you get AI.
More precisely, the assumption is that past indicators can predict future outcomes. Stats are just the vehicle to execute on that assumption