trading the market with math instead of gut feelings, until the math becomes the gut feeling.
means systematic investment approaches that use statistical models, algorithms, and data instead of human judgment to decide what to buy or sell.
from emerged in the 1970s and 80s as physicists and mathematicians left academia for wall street, applying probability theory to price options and exploit statistical patterns; renaissance technologies and jim simons made the approach legendary in the 80s and 90s.
renaissance technologies — jim simons medallion fund, near-mythical returns since 1988
long-term capital management — nobel laureates' fund collapsed spectacularly in 1998
two sigma — machine learning driven hedge fund managing billions
aqr capital — cliff asness applying academic factor models at scale