The Dark History of Two Sigma - Stolen Models and Stellar Returns

Hacker Kang Gao stole trading models from Two Sigma hoping to build the next billion-dollar quant hedge fund. In this mini-documentary, we learn the dark history of the infamous Two Sigma.
Music Used in the video - open.spotify.com/artist/5dzPV...
Instagram: falcon.xu
LinkedIn: linkedin.com/in/rocky-xu-0487498b/
#hedgefund #quant
References -
www.institutionalinvestor.com...
www.manhattanda.org/da-vance-...
www.bloomberg.com/news/articl...
• New Rules for Tech: Tw...

[@Finaius]

A quant video long overdue. Enjoy! Also, check out Dr. Lopez De Prado's ground breaking book here - amzn.to/3nMK6Zo (Advances in Financial ML)!

[@shimronalakkal523]

Do you guys have a discord??

[@Finaius]

Sorry no.

[@iamkhabz]

FINALLY!

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Could we connect kindly ? I am in awe of your production but most of all your knowledge! Any social media u will find me ! Kindly will appreciate?

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Phew...finally.

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Told you the subs whould pour in if you kept up the quality. In a year i think you will pass all expectations, keep on going man! Great videos!

[@Finaius]

Thanks!!

[@richunclejoey2249]

I like "When someone tries to sell you their profitable trading patterns". I swear more of these gurus on social media make more off their views, hustling e-content sales and courses or affiliate sale of signal services then they make actually trading. I would go as far as to wager the majority of the "gurus" have never learned basic risk management, perfected their own trading psychology, or even made enough for a substandard of living off of solely trading at any point yet in their careers' or lack there of. Great video again. I had subscribed to this channel a while ago and today I had some free time when the markets slowed down for a NY session lunch and started exploring your content more deeply. Glad I did! Great channel Great Work. Hopefully your channel gets millions of subs, Thank you for you efforts

[@Finaius]

My pleasure

[@allisterlourenco9886]

@@Finaius what stratergy od you use to trade??

[@trias2900]

I totally agree with you 💪

[@sneakersforthelow9754]

Agree

[@LibbieMarsch]

You really do a great job at piecing the information together, it makes it easy to watch and take in information.

[@Borisivan]

A video about Bill Huang would really slap at this moment.

[@Finaius]

I'm thinking of doing the whole history of the Tiger gang.

[@ofyhwh-0076]

@@Finaius do it

[@chiterfromdahood]

@@Finaius That would be epic!

[@walterdeanlewis]

Great video. Well researched, and cool visual effects. I'd like to see your format applied to a decade (20's/60's/80's 90's 00s etc) series that could show the time, the bubble of the era, the villains, etc. Keep up the good work!

[@likemysnopp]

This channel is a goldmine im currently exploring. Really nice to see that my idea of that no strategy will work for a long time in the market seem to be a very true idea

[@ClutchJoyner]

Big fan of this channel!

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I m a big AC of this channel

[@saluxnizigama5561]

Me too

[@joshuawrong1314]

Been waiting for this one. Happy to see its finally released!

[@Finaius]

Heck yeah!

[@Alex-kf8fl]

you keep getting better & better with each video man, great work :)

[@CookbookAdventures]

Keep making finance videos, they are amazing. Thanks for all the hard work. I look forward to them.

[@GeorgesSegundo]

Each video of yours is a gift brother, thank you so much.

[@khalidhakimi93]

love your content, please make as much as you can. this is gold stuff

[@dontevntrip8627]

You make some great short films, I love these. Keep at it you will keep growing.

[@YouLoveMrFriendly]

Your channel helped save me from the delusion of day trading. I realize now what resources it takes to get an "edge"in these markets, and the lone wolf just doesn't stand much of a chance. Great videos and production.

[@jaghad]

If every person would think like you there would be no Amazon, no Tesla and so on. Still, it probably was a good choice, but don't put a cap on your potential. Then you will never know what you could have become.

[@abhijitdixit1164]

You are mistaken if you're considering that both multi billion hedge funds and retail day traders are seeking the same alpha, strategies of profitable traders can't be simply extrapolated to work with billions of dollars.

[@libertybelllocks7476]

@@abhijitdixit1164 Exactly. What works for $1MM account wont work for a $1Bil account, and vice versa. It is difficult, but possible, you must follow the machines

[@danaphanous]

​@@abhijitdixit1164 Not sure this is correct in the case of quant funds. Traditional funds maybe. Any consistently profitable signal that an individual trader is looking at with their eyes/models is likely also being looking at by quant algorithms...particularly if that information was shared online or in a "course". Any public trading strategy can be implemented faster by an AI, and as stated in this video, Two-Sigma alone looks at thousands of signals and researches new ones because as soon as one because public it stops working as quant funds compete to arbitrage. It doesn't cost them much money to have a different algorithm on standby even if the signal is for a smaller dollar amount like 1M. Now, one place where your advice DOES make sense is when it comes to buy and hold strategies on smaller stocks. An AI has little edge when it comes to analyzing a business and owning it for a few years or more, and most big fund managers completely ignore the small cap space other than to put them in indexes as it isn't worth their time. So fundamental analysis on individual companies does pay off.

[@gracegraci8064]

Boll...s, pal! I am a lone wolf and my head is over the water from years ago.

[@aisniper4095]

I think your amazing channel deserves above 1M subscribers. It'd be amazing if you could make more technical videos and talk more in-depth about the quant strategies, research process, data, models, and ...

[@Finaius]

Duly noted.

[@fminc]

@@Finaius This is the first video I have seen of yours, although for some reason I was subscribed already. I understand what the gentleman is asking of you, is quite the tall task, in itself. But that was very encouraging, to see your response. Thats the spirit. Thanks for your work.

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Recently came across your channel, and I am loving it! New subscriber

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Although Finaius is doing what he can production wise he’s on a great start. Very good information shared and I can’t wait to see your journey unfold further. You’ve earned a supporter here.

[@DailyProg]

Amazing videos so far. I always look forward to the next ones

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[@jeffgoucher6956]

I love your channel mate, haven't found anything else like it. Keep up the great work!

[@Finaius]

Thanks!!

[@rokyericksonroks]

Two Sigma are assholes, but their algorithms work so we have to respect that. I think.

[@bouzie8000]

This was so fun to watch. Doubly informative as well

[@tapanginoya583]

Yoo, the animation and music became next level in this video

[@miguelo.]

The storytelling is Netflix quick-series-worthy.

[@arthurswanson3285]

Especially the Gao part. He did time in Rikers!

[@plastelina_ytb]

As others have said: really enjoy the content and story telling 👍🏽

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Awesome content! Love the Westworld theme music too!

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[@soufianeibnouelmahdi296]

One of the best channel on KZbin about finance history 👏

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[@ForsakenPrayers]

You should make a video on Jane Street Capital or Hudson River Trading

[@ambarishj3314]

Still an amazing channel. Thank you buddy.

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Another amazing video! Keep it up! :)

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thank you for the new masterpiece

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I love these videos. Very few make stories regarding these topics. I hope KZbin is sustainable enough so that you can keep doing them. Very well crafted!

[@Finaius]

🫂

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🙏 thanks for posting amazing videos man I love them

[@kenchen7737]

Awesome video as always!!!

[@Bernoulliflyer]

Very interesting and entertaining! Thank you.

[@sebastianburnaz6760]

Super cool documentary!

[@pesachase7023]

When that guy leaves jail he'll become a Bond villain

[@LibbieMarsch]

Thank you for being informative

[@pankajpawar6604]

Amazing job sir 🙏🙏🙏

[@KeithAdam]

Great video man! Solid research and great editing

[@katietutorials4628]

For assistance on crytpo investments/trading •••••

[@katietutorials4628]

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[@adityasharma3526]

Waiting for a 3 weeks commenting before watching I know it's excellent.🙏🙏🙏

[@Finaius]

Hah yeah

[@adityasharma3526]

My portfolio lost 40% then recovered last year doubled my capital. I had position in gold too that gave 25% return when everything was going down. While normal cash instrument for long term remain intact @ 8.5%

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love the channel!

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For assistance on crytpo investments/trading •••••

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[@gbballpl]

Is the music the intro from west world?

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Thank you for the beautiful videos !

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love your videos, keep it up!

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Good to see veer Singh back

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Excellent channel!

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Hey love your videos keep it up!

[@LicoInvestments]

Great stuff as usual! Thanks for the upload- but now I want to watch Westworld.

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Great channel, Great videos.

[@eddyshasha1996]

What an excellent video!

[@saluxnizigama5561]

Keep it up!!! Big fan

[@mikedean6576]

Amazing content!

[@ebitdareadthebook1535]

Love the videos! You should do one on Milken, Tiger Cubs, Stevie Cohen, Galleon/Raj, etc

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For assistance on crytpo investments/trading •••••

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The westworld theme song is hype

[@ajaxbeta8278]

great video again. you are becoming my favorite channel for sure, looking forward to the next!! keep at it and build a big email list. then youll get acquired by bloomberg or someone

[@Finaius]

Thanks. Haha I hope!!

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you make great videos!

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just discovered this channel, definitely subbed

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Storyline is amazing

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love the Pizza Hut meeting place..

[@ExplainedExplanation]

Great content

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Good one

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2:53 That laugh was sick😷

[@infiltr80r]

I think the guy next to Bezos is Vint Cerf.

[@danijcruz]

Best channel!

[@stevengreidinger8295]

The title of the video implies that Two Sigma stole models, not that an employee stole from them. That's not fair to this particular firm. Two Sigma may or may not be the good guys in this game. That depends on whether we support the organizations that invest with them. Is Two Sigma trying to help a bunch of nonprofits while charging reasonable fees, or are they trying to just grab 150% of the benefit for themselves? The video didn't address that question at all.

[@rhythmandacoustics]

My 2020 returns are phenomenal, but I really do not care about stock prices. I am long-term fundamentals, value investor. I rejoice that there are market crashes. As long as you buy shares thinking of them as businesses and not pieces of paper and avoid leverage, you will do well. Debt is what causes business and individuals to go bust.

[@Finaius]

That's a good attitude!

[@habibbialikafe339]

Rennaissance Tehnologies saw over 2 billion in redemptions after poor performance. However, the medallion fund remains strong, but it was the other funds the firm manages that performed poorly.

[@anveshsameer]

Intro music 🎶 gave me chills & profits

[@kiklocus4660]

amazing BG music

[@nayanmipun6784]

I trade with the 400 moving average, and I have seen other programmer's (some of who are not traders) automation where the software can't even properly trade the entry and exits according to the 400 moving average which is actually very easy, trading is not hard if you know the tricks

[@systematicfx]

that's what I have been doing for a few years now. Having the data helping me.

[@nandotorres14]

Nice videos... Congrats!!!!

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[@katietutorials4628]

(*+*1*6*3*0*9*9*8*3*0*6*2*)

[@thekid3563]

great channel

[@blacklist7564]

Thanks again. Please do a video on self-funded traders like a top ten list or so.

[@Finaius]

Gotcha!

[@darleneatkinson6730]

Rocky, I'll be upfront with you, I just love your videos I put zero in any investments I am past retire age so risking my fund to me not wise. I might be here today gone off the earth tomorrow I have other loved ones to think about beside myself. However, great videos they are super well edited and recorded uploaded awesome to watch. Thank You do much plus it like DIO of these people.

[@Finaius]

Of course. Thanks!

[@suyash159]

My trading patterns are so good, it'll generate thoughts in your head to never trade derivatives again

[@jailsinghrajaputra]

Nice content Tq

[@thatoyaonebogopa9483]

Great vid. Please give me more quant stuff lol. I hv had to watch same vids over añd over just to get my daily fix....😅😅

[@TheSepz]

In 2020 we did 39% net and this year we are on our way to 60% profit. We have proof. We have been also developing our own model since 2015 and we are aiming to launch it in 2023. Thanks for your video.

[@katietutorials4628]

For assistance on crytpo investments/trading •••••

[@katietutorials4628]

(*+*1*6*3*0*9*9*8*3*0*6*2*)

[@User-gj1ub]

sigma male grindset 🔥🔥🔥🔥🔥💯💯💯💯💯💯 #trillionaire

[@itsdivertido9020]

netflix production quality. waiting for your uploads.

[@pleaseenteraname3607]

Your channel will be the standard for information on hedgies

[@17teacmrocks]

retail and finance ppl look at like no more than a dozen technical indicators and fundamentals. data science-driven funds today can examine tens of thousands of features in ML pipelines, producing very low tracking error models across the entire stock universe. the kaggle competition where two sigma opened input to the DS community for their core factor model I think had a feature set that was only a few hundred inputs. I was just reading a submission from one of the winners. Depending on the data provided, it may actually be more effective to reduce the final model's factor loading set to avoid overfitting. I've seen other approaches where they do include numerous features, but orthogonalize their contribution to remove duplicate correlated impact.

[@afor910327910327]

You rock!

[@coughforme21]

Buying retracements on movers that have spiked or massively run-up seems to work well.

[@conductingintomfoolery9163]

So buy the dip

[@alexs3711]

Keng Gao’s fund is now holding over CNY 10B AUM. I guess not too bad for him. Quant Fund is rising in China.

[@EliTheCryptoAndAiGuy]

Can you do one about Robertson Tiger Management, Tiger Global, Archegos, and Millenium?

[@maxcroce6216]

do Millenium management next!!!

[@MrAlaister]

Great video, thank you. Please do a video on Seth Klarman

[@sharemedia8069]

Mr. Gao was back to China and got money from some rich people to set up a private equity fund.

[@Ptro1]

Should make it a podcast also

[@alyew44]

Man your stories are good but they're just too short that I need more in-depth knowledge you know more than story

[@alfredthevarajah1344]

In 2020 my portfolio had a return of 12%. Not bad for a retail investor.

[@thomas7365]

From the beginning to the end of 2020 The S&P 500 returned 15%. You would have been better off just following an index fund like a reasonable person. If you were trading instead of long term investing, you did even worse in comparison because what would have been capital gains are now taxed as income.

[@alfredthevarajah1344]

@@thomas7365 I live in Norway and we don’t pay tax on capital gains unless we take out as dividends. I am not going to take any dividends for next 5 years. ✌️

[@ndeetrust8901]

Started my trading journey around 2017. Around 4th quarter of 2020 i started to make consistent returns. In 2020 i made 48% overall profit. It could have been luck due to the bull market but was going through my trading strategy i put together and sticked with it. Currently 2021 im up 221% for the year. I made my yearly salary already. Huge confident boost that my hard work is paying off hopefully in the next year or so ill leave my job and do this and other investments full time.

[@Finaius]

That's awesome!

[@Joker-2357]

i have invested in small cap equity mutual funds in india around 200k $ i got around 120% return within an year

[@Joker-2357]

Also without no stress

[@cumuIonimbus]

8 MONTHS?? Totally worth it, if you ask me. Bro dodged a bullet.

[@yvonney6732]

Who made the music? The music is awesome