Quant Lessons

There have been generalized observations about the ' quant failures ' since the peak of downside volatility. The conversations basically revolve around the notion that all strategist were pointed the same direction. No doubt many brand name managers and their underlings got hammered, but in different strategies. The real problem was not that they all had indentical trades, it was their spread sides to cover risk were all related to everyone elses spread sides. The direct and indirect linkage pulled in directions contrary to there purpose, magnifying losses, shrinking liquidity. Building adaptive programs is absolutely possible, but brand funds will always be vulnerable to the mass they carry because by their very nature the are a target. In the end there is no strategy like the one that gets you out before the problems develop.