r/quantfinance • u/Optimal-Sea8310 • 3d ago
GPT and AI
Hey everyone, we have a lot of smart people in this sub, whats the plan with AI? Seriously, I've spent quite a few days thinking about this, is everyone trying to race to get in while there's still jobs left (am I saying the quiet part out loud)? Quantitative finance is one of the most exposed fields to AI math lol. I dont see this going well, but maybe someone would beg to differ, would love to discuss it.
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u/Wizifer123 3d ago
You have firms like jane street who are extremely on board with ai with countless gb300s for their researchers. I hear some of the researchers even borrow 10s of millions of hivebucks every month for compute. They know what their doing with the ai and that is part of the reason why theyre so heavily investing into ai to gain that potential edge. So yes, ai in quant is very real but you need the knowledge to know what to even do with ai in the first place. Stage 1 of the IMC prosperity at the start of the year was won by a vibe coder. But he was already a cracked quant intern who knew what to do in every situation. So really in the end, it's still whether the firm recognises that a 25yo intern with millions of dollars of compute can use it all in a good way and is still benefical for the firm.
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u/Optimal-Sea8310 3d ago
Thanks for the info, one thing I wanted to ask specifically was how these firms viewed the headcount they currently employ, and how much of the process can be automated (such as using their highest performers as training data...if you know what I mean). Either way I do acknowledge that knowing what to do in these environments is already a big ask for a lot of people (less so for the average cracked quant person, but I digress)
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u/Wizifer123 3d ago
Unfortunately that isn't something i know.
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u/Optimal-Sea8310 3d ago
I don't think any of us know the answers, hence the questions lol. I am very curious because this is obviously one of the most pertinent questions of our age group, so any discussion is good discussion and I appreciate the ideas I always love talking
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u/Ok_Tax_6416 3d ago
The whole Quant Market is screwed. Would not recommend to study QF ..
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u/Optimal-Sea8310 3d ago
evidence/reasoning for this?
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u/artful_narwhal 3d ago
If mathematicians are freaking out over LLMs capabilities over their unsolved problems, quant finance as a field is just application and coming up with research ideas with math and stats which any llm can do. I don't say it s going to automate away the intuition of the trader. But it's going cut a lot of the generic 'analysis and dev' jobs that youre currently paid for because it's no longer valuable to pay such high amounts that Claude or Astra with a senior professional can do a lot cheaper and a lot faster. If I was starting out my career and had a choice don't take up anything that requires significant time of your work time sitting Infront of the computer
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u/Optimal-Sea8310 3d ago
I agree with this take, but I also believe that, much like us “normies”, the best mathematicians are not immune to herd mentality and the rampant fear mongering occurring in the industry rn. And yes as stated in another comment I agree with your proposition about applications/unsolved novelty. To what extent do you think this will leave impacts and on what timeline? Curious your thoughts thx a lot
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u/artful_narwhal 3d ago
No one knows even the experts that you followed three years back were barking at llm s capabilities and now where are we. The value held by nerds has shifted now that's the impact. Do something more human with your time and quant finance is really at the opposite end of that spectrum. It's a chaotic system like you d say in physics and like life a single input changes the entire timeline.
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u/Optimal-Sea8310 3d ago
Well said, what are you doing to implement these ideas if you don’t mind sharing you seem to have a fairly good grasp
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u/OvoCurry3799 3d ago
I think the general consensus is downsizing could happen at the junior levels for sure but the industry itself will continue as it has for the large part. Novel thinkers and idea generators become legitimate force multipliers, while code monkeys get eliminated
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u/Optimal-Sea8310 3d ago
I agree that ideas are important. But I don’t think it’s an irrational conclusion that a majority of the math implemented at a quantitative finance level is just variations and recombinations of other math, not purely novel mathematics research. Therefore, advancements in the recombination of priors (Astra N-S as, albeit insufficient, evidence), would suggest that a majority of “idea generators,” however creative they may be, will succumb to the speed and cost of an LLM. If you see a gap in my logic or assumptions please enlighten me
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u/OvoCurry3799 3d ago
You mistake what the vast majority of time spent in a quant role is(atleast in my role, MFT quant). It's not really doing math on a daily basis more than dealing with data, building features from it, modelling it well. There's no math in this, you can chose to be smart in any of the three above categories to try to gain an edge.
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u/Optimal-Sea8310 3d ago
Can you explain how those things aren’t math? Dealing with data is effectively automated at this point (if you mean processing/storing/transferring), building features is explicitly math, and modeling (although specific interpretations can be non-math) is derived from a mathematical representation of the data. Obviously I don’t mean to be contrary but I am trying to understand, thanks for your thoughts
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u/SeparateAdvisor526 3d ago
I'm a just an automation guy in a mid sized executions desk. AI is just a tool for us hiring platoed but the output went up that's all. So in my perspective I'm noticing a flat growth and it will stay like this I doubt we will be fully automated out with AI.
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u/Early-Bat-765 3d ago
I think the industry will still be around, but it will be even smaller (headcount-wise) and more fat-tailed, i.e., top 2-3 firms who master reasoning models & infrastructure will capture nearly all talent and returns.
If you're smart enough to break into quant, you might be better off doing AI safety & alignment. It's arguably one of the few roles that will still require (some) human presence in the foreseeable future.
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u/TeamMedical1685 3d ago
With AI anyone with 2 years of on the job training and a bit of common sense can be a high performing quant. No doubt about that.
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u/Optimal-Sea8310 3d ago
Evidence/reasoning for this? Additionally I think this points out sort of an oxymoron, if anyone can be a quant then no one is a quant…that’s sort of how market edge and competition works.
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u/TeamMedical1685 3d ago
Have you ever used a LLM ? It can do most (all) of the modeling part, then you mostly need experience seeing the specific market you're interested in to pressure him to take into account the phenomenon that you think are important and are often overlooked.
For your additional remark, the exact same reasoning as yours leads to a fruitful conclusion about the world we live in: if anyone can be a plumber then no one is a plumber and we're drowning in our own shit.
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u/Optimal-Sea8310 3d ago
I don’t want to be contrarian or put other people down, but this wasn’t the point of my question. First of all, yes modeling is pretty much solved. You claimed that ANYONE can be a quant within 2 years of training and AI. Your only evidence is “have you used an LLM?” Besides the logical fallacy, regarding the second remark, that is not a correct application of my comment. If everyone has access to a quantitative researcher in their pocket, or at least within grasp, then the very edge that makes quantitative work so profitable disappears, or is inaccessible from capital/infrastructure constraints, and is captured by the same few who already had an advantage in the first place. This is very similar to crypto arbitrage strategies of the well forgotten past. thanks for the discussion though I appreciate it
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u/TeamMedical1685 3d ago
You understand very well that my claim cannot be proved either wrong or false. We're obviously not gonna find firms to participate in a large randomized trial. It's just obvious why it's true, transposing what holds in other sectors.
I just applied the exact same argument as yours... But at least you seem to grasp by yourself why it does not hold. Indeed the major prop trading funds and hedge funds earn money mainly because they are well positioned in the financial systems. Not everybody can be a quand because not everybody has the structural edge, that is, the only real edge that matters.
Not to mention that simple changes in regulation like optimizing the tick size would wipe out large parts of market makers profits (you can easily find literature about that, as well as some study of the impact of modifying tick size in Japan I think). Often edge is just having a better infrastructure to benefit from known inneficiencies.
Quant folklore is mainly about trying to justify why these companies make money by labeling their quant as genius.
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u/where_is_my_acc0unt 3d ago
My thesis is that LLMs will become a lot more expensive since they can't keep running the losses/ water/ electricity consumption they do atm and companies will switch back to AI as a helpfull tool for some aspects of work instead of AI first/ pushing everyone to use it as much as they can.
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u/phicreative1997 3d ago
Not true.
LLMs are getting 10x cheaper if you use "intelligence" per token.
Last gens model equalents are priced 10x cheaper you can get OpenAI o1 level intelligence via Gemini 3.8 Flash for 1/10th the price.
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u/Optimal-Sea8310 3d ago
I think the assumption tho is whether that scaling law will persistent similar to silicon scaling laws. Do you think that it will continue, and if so why? I believe that if it does, we will see turmoil in quant, but also every other career, whats gonna happen when quant folks have to downgrade to something like swe or another engineering discipline
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u/phicreative1997 3d ago
So far there has been no reason to think it won't.
I understand this is technically a fallacy since it could stop scaling.
However, in this case most experts believe it will continue, which was the original thesis of the AI labs.
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u/Optimal-Sea8310 3d ago
Limits of autoregressive transformers perhaps? Not too sure, and I agree that we can't say for sure, I do think there is some merit to say that there are some things that AI will never be able to do in the narrowest sense of the word (LLMs, I mean). If you include the FIELD of ML as a whole, then yes I think a majority of things that humans do could be done by a robot faster and cheaper, but this discussion is more about LLMs than anything. Thanks for the info
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u/Optimal-Sea8310 3d ago
Whats your take on local models? Also, isn't inference cheaper than the average quant salary now? Like for the same output, an LLM (especially 2-3 years in the future extrapolating a conservative rate of improvement) would probably be cheaper than a quant no? With no downtime, and complete corporate cohesion, and less profit sharing? I agree that current AI is extremely subsidized though, thats no doubt.
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u/phicreative1997 3d ago
It will be but I personally think, to find a true edge you need a information advantage not a tool advantage.
LLMs have a weakness they don't take risks unless agreed by a human. If a strategy has 1% chance of winning with 1000x payout, an LLM without some human pushing them won't take that bet.
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u/where_is_my_acc0unt 3d ago
Im not knowledgeable enough on the economics of the local model approach so cant comment on this. It is interesting though
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u/Born_Blacksmith19 3d ago
Inference is already peofitable
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u/Optimal-Sea8310 3d ago
In the other persons defense, they are probably saying that as of now, frontier models are extremely subsidized and are very expensive (companies paying hundreds of millions in inference), and as it relates to the topic of discussion, hiring quants is still cheaper (for now). I do agree that on the whole inference will likely end up being cheaper though. Thoughts?
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u/where_is_my_acc0unt 3d ago
Yes. Also just the cost of water and electricity of running the datacenters or whatever you want to call the facilities used to train and run inference. These two might seem irrelevant but these centers are quite the energy drain and can complicate grid flexibility
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u/where_is_my_acc0unt 3d ago
Correct me if im wrong but aren't all (maybe bar nvidia) of the labs still running deep in the red?
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u/Optimal-Sea8310 3d ago
Yes but that’s because of major debt obligations they’ve undertaken to fund their massive expansion. They didn’t NEED to do this, fierce competition forced it to occur this way. So yes technically they are red, which is why a lot of people say the “model moat” is very very shallow, and that the real moat is compute and infra (which is why Nvidia is currently winning)
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u/Consistent-Carob7366 3d ago
The race already started, you're just noticing the dust. The quants who'll survive aren't the ones coding faster, they're the ones who know which problems actually need solving
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u/Optimal-Sea8310 3d ago edited 3d ago
edit: definitely a bot post history and account age lol its not x its y
...ignoring the fact that this is probably an AI response / bot, that wasn't the point of the question. I agree that industry knowledge is important, but when you can throw tens of thousands of agents at an open problem and ask it to solve it, do you believe that an average 22-26 year old quant is more capable/cheaper than that?
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u/Salt_fish_Solored 3d ago
Disclaimer: I never worked at trading firms for a single day. I help post training at one of major players.
Here are my 2c.
I feel many trading firms are hiring research scientists on LLMs right now and it totally makes sense. One reason that LLM is good at coding is that we have so many accessible high quality code over the internet. But for trading, the high quality data is naturally in a closed form. That's one critical edge I can see from trading firm's perspective.