Finding Signal in the Noise: Machine Learning and the Markets (Jane Street)

[czhu12]

Been following signals and threads for a while, and it’s amazing. Have to be in a learning mood, but it gets pretty technical. Podcasts are a tough medium to do that in but if you really zone in, signals and threads is fantastic

[bob1029]

This one and Machine Learning Street Talk are my two favorites at the moment.

[laidoffamazon]

> In Young Cho thought she was going to be a doctor but fell into a trading internship at Jane Street

Genuinely perplexing how they always try to show each multi-million earning engineer as some normal person and not someone that went to Exeter and Harvard

[ecshafer]

Graduating from a SUNY school, Jane Street gave me an interview and a fair shake. I didn't get the sense of elitism there. There does happen to be a lot of really smart engineers, mathematicians and scientists going to Harvard, MIT, etc.

There are places that without that Ivy League or Target School degree you don't hear back, I don't think Jane Street is one of them.

[foobar10000]

I don't really see a lot of elitism in these circles - there's a chunk of such engineers that did not in fact go to Exeter and Harvard - but what they have in common is they are all to a fault very bright technical people that can produce complicated things quite quickly, and can communicate effectively with people around them - to make sure that what they produce is in fact useful :)

[upbeat_general]

Seconding another commenter. I went to a state-school (maybe in the top 5 US state schools) and got an offer without any elite background.

[hardwaregeek]

I love this podcast but I can’t listen to it while running. It’s too interesting so I risk falling off the treadmill :D

[polygot]

Very interesting podcast, I find that the guest was very candid so it was great to hear what it is really like working at Jane Street.

The reproducible-Python notebook problem/notebook for researchers mentioned in the podcast inspired me to create a new project, branch-pad https://github.com/alexyorke/branch-pad which is an interactive Python notebook environment that allows you to create and explore multiple branches of code execution.

[brcmthrowaway]

Ten years ago, all the $1mn+ earning engineers were in trading. Now they are in LLM/AI. Glad to see this happen, Jane Street has increased their advertising here because of this.

[__mharrison__]

I read this and think: "I would love to spend a day with Jane Street and teach them how to use notebooks." So much effort is wasted because of knowledge gaps or systems that don't encourage best practices.

I just taught a course to a client this week helping them with this (and other best practices for Python).

[ErikBjare]

I've been back and forth whether notebooks are really "best practice".

Currently leaning towards no, as they are hard to test, compose, and version control (it is possible, but you need bespoke notebook-specific tools, and most just don't).

[edanm]

I'm intrigued - I didn't listen to the post but wonder what kind of best practices you're talking about.

Do you have this written down anywhere or on video anywhere? I'd love to learn more about what you mean.

[1oooqooq]

Keynesian for machines

[mhh__]

Notebooks: just use Marimo. They've fixed python notebooks.

[Workaccount2]

I will eternally find it sad how much talent is wasted on trading. So much money, so much intelligence, so much time and effort, all the provide almost no tangible value to society.

[bblcla]

Tyler Cowen did an 'ask me anything' at Jane Street when I interned in 2016. One of the interns asked him exactly this: "What do you think of the fact that we all work here instead of, I don't know, curing cancer?"

He replied with, roughly, "Those of you who work here probably couldn't do anything else other than perhaps math research. Arguably, working here is the economically efficient use of your time."

I think about whenever I see a comment like this. Quant firms select for a very specific set of skills. In particular, I've found that many traders/software engineers in quant are very smart but not very self-directed. Places like Jane Street work well for people who can excel, but only when given a lot of structure and direction. I think this is not unrelated to why so many people 'accidentally' end up as traders after going to an Ivy League school!

[madars]

Why would it be wasted? I like apples and I like being able to buy them any day of year, even out of season. The only reason I can do so is because there is an entire industry of people who manage the inventory, distribution, try to predict supply and demand, and take on a risk doing that. The principal reason why I can buy and sell equities at very small spreads any day of the year is similar: traders are competing to take the other side of the bet.

I also encourage everyone to read CFTC response to the Vatican's (!) Congregation for the Doctrine of the Faith https://www.cftc.gov/PressRoom/SpeechesTestimony/giancarlore... It talks about about the social utility of derivatives and refutes the narrative that they are basically tools of "speculation." Traders take on risks others can't bear, creating massive economic value that ripples through the entire system.

[twoodfin]

If it didn’t provide value, nobody would pay for it.

The alternative to highly technical, agile quantitative trading is fat middle men, wide spreads, and capital sitting in 8%* stupider places than it would otherwise. That’s a pretty big deal even if the observable effects are extremely diffuse.

* Made up number, but if we woke up on Monday with nothing but the tech we used to trade in 1984 it would probably hit much worse.

[__cxa_throw]

Theres large portions of the tech industry that are pretty useless to society too while paying incredibly high salaries random examples include: - facebook/google ads teams - various SaaSLOP companies

Lots of smart engineers that work on making buttons pretty and A/B testing crap rather than pushing the boundaries of science.

[czk]

This reminds me of Renaissance Technologies (Jim Simons, PhD in math from uc berkeley).

He started the company in 1982 after he left academia for finance and leveraged quant models for training, they mostly hire PhD mathematicians, physicists and scientists, working on algorithms.

They have a fund called Medallion that is closed off from outsiders (you have to be an employee I believe), and it averages 66% annual gross returns (39% net after fees). Generated hundreds of billions in profits.

[xrisk]

At least it’s arguably better than working for giant ad engines.

[lend000]

From a technical challenge standpoint, trading is extremely difficult. But it provides high upside which only starting a business can exceed. However, starting a business has all the other uncertainty (regulatory, accounting, insurance, licensing, taxes, customers, branding, sales, product-market-fit), making it far more psychologically challenging overall. Startup founders need to learn and juggle a lot of things instead of hyper-fixating on markets. Basically, if you know you are sufficiently intelligent and talented as an engineer, your expected return is likely much higher in trading (especially via a big quant firm), with much lower risk.

If we want more talented traders to become founders building economic value (which we should all agree on), we need to make it less onerous to start a business.

[keyle]

I take the silver lining. Smart people getting rich is better than dumb people getting rich. Hopefully some day they'll do something good with that money.

[thrance]

I'd argue it provides negative value even. The goal of these people is to extract money from the markets, without actually producing anything. In biology, we'd call that parasitism.

[LeroyRaz]

I agree, how dull and uninspired. I'm very much with Paul Graham, who believes in the creation of wealth (as opposed to the extraction of money).

[EGreg]

It's a zero-sum game. People don't understand this: https://community.intercoin.app/t/intercoin-compared-to-the-...

I guess advertising is too, in the limit. So a lot of the business model on the web is also not much value to society.

[whiplash451]

I recommend you read the life of Jim Simons (through The Man who Solved the Market) as well as a recent HN thread on DeepSeek showing how their trading arm finances the whole company.

There is much more nuance in this world than your post implies.

[tikhonj]

Eh, hard to say that when the main alternative (math, physics or CS research) requires jumping through a lot of selective hoops, barely has positions available, and absolutely no trouble filling all the positions they do have.

[vismit2000]

This sentiment is also covered in 'Zero to One' by Peter Thiel.

[laughingcurve]

Society has the problem, not the individuals.

[dgfitz]

Smart people who grew up poor making their own way, isn’t that the idea? Or do we just assume they’re all rich, privileged folks?

[logicchains]

Please share what industry you work in? And if it's social media/ad tech or military, get off your high horse you smug hypocrite.

[objektif]

Would you rather people spend their time on centering divs? Or come up more ways to make people click on ads. I see this type of view often on HN from big tech employees. Get off your high horses people.

[anonym29]

Are you proposing a universal hierarchy of value where the goals individuals set for themselves are inherently worth less than the goals you want to set for them, if the goal they want for themselves is prosperity?

Who elected you Supreme Leader?