Quantitative Trading•寒蝉•6dOpinion

Why I Chose Personal Quantitative Investing

Quantitative hedge funds are becoming increasingly dominant. This is an undeniable fact. Leading institutions have data sources extending down to Level 2, tick-by-tick trades, and alternative data; computing power running backtests around the clock on thousands of machines; and talent pools packed with math and science PhDs from Tsinghua, Peking, Fudan, and SJTU. Individuals cannot compete on a single one of these dimensions. But that is exactly why I have to do it myself. This isn’t about competing to see who is stronger. It’s about calculating along a different logic. In the battlefield of markets, money is life. No matter how excellent or disciplined an institution is, its interests can never be perfectly aligned with mine. When extreme market volatility, fund redemptions, and pressure on net asset value all arrive at once, there’s no need to question which it will choose: surviving on its own or making money for me. I’m the one who gets compromised. This isn’t a moral issue; it’s determined by the structure. That’s why I absolutely refuse to hand the fate of my life—which they can convert into money—over to someone else. More deeply, investing is a lifelong compounding process. Throughout our lives, we are constantly making investment trade-offs: choosing an occupation, deciding where to spend our time, and deciding who to work with. Most people simply don’t realize it. Stock investing happens to be the most direct and brutal training ground. It forces you to confront the boundaries of your own understanding: what you think is logic is actually emotion, and what you think you understand, you actually don’t. That kind of cultivation can’t be outsourced. Entrusting someone else with your wealth means paying someone else to grow while you stand still. Conversely, the earlier you start, the greater the returns that accumulate over time through time and practice. These three principles explain why I invest, why I do it myself, and why I don’t buy funds. They also naturally lead to the choices that follow. Why I don’t trade crypto. I’ve spent time in crypto and found that its market logic is completely different from stocks. Crypto prices are essentially driven by faith and narratives, with almost no fundamental anchor. Stocks, by contrast, are backed by companies, profits, and cash flow—there’s a way to break them down and a way to value them. I need to make decisions in a market that can be analyzed and falsified. Otherwise, you can’t even explain how you made or lost your money. Why A-shares instead of US or Hong Kong stocks. It’s not that I’m pessimistic about US stocks. Rather, as a Chinese person, I have no advantage in the US market. The gaps in information channels, cultural understanding, and industry feel can’t be closed by reading a few more research reports. In your home market, at least you can understand what people are saying and have a rough idea of how an industry works. Stock picking is a form of competition, and its first principle is not to fight on your opponent’s home turf. Why I’ve started leaning toward quantitative investing. The biggest problem with discretionary investing is that profits and losses share the same source: whatever allows you to make money will probably let you lose it too. Intuition, market feel, and familiarity with a particular industry may work in certain periods, but they can’t be replicated, verified, or improved. What I need is consistent output, not occasional major wins. Especially once capital and decision-making frequency increase, it becomes unrealistic to track every signal with the human brain. Quantitative investing isn’t about predicting everything; it’s about systematically reducing uncertainty—anchoring decisions in rules that can be backtested, tracked, and corrected. Personal quantitative investing vs. quantitative institutions: different tracks, different things to compete on Given all this, quantitative firms are already so strong. Why am I still doing personal quantitative investing? They do high-frequency and intraday trading, while I operate at the daily level. Their cost structure includes not just capital, but also data centers, dedicated network lines, operations teams, and compliance staff. My costs are my capital plus a few servers and a reusable framework. Their strategies must support substantial capital, so small-cap, illiquid instruments are meaningless to them, while they may represent opportunity for me. They have to explain drawdowns to LPs and track benchmarks, so their strategies involve many compromises made to “look professional.” I don’t. This isn’t self-consolation. We’re not on the same track, and we’re competing on different things. Back to the original thread: don’t hand over your fate, don’t take shortcuts, and never stop practicing. Quantitative investing is only the means; doing it yourself is the goal.