Paul

About Paul Rowady

Paul Rowady is the Director of Research for Alphacution Research Conservatory, a research and strategic advisory platform uniquely focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. He is a 30-year veteran of the proprietary, quantitative and derivatives trading arenas. Contact: feedback@alphacution.com; Follow: @alphacution.

The Privatization of Alpha

“Study the science of art. Study the art of science. Develop your senses — especially learn how to see. Realize that everything connects to everything else.” — Leonardo Da Vinci (~1500) "Hedge funds — there are too many of them and most of them are lousy." - Stevie Cohen (2016) The highest Sharpe Ratios - which, for the uninitiated, is a measure of risk-adjusted returns for specific strategies and financial portfolios - now live behind a declining roster of gilded gates. And the impacts of this "privatization of alpha" are enormous for the asset management industry and its stakeholders. Alphacution expects additional consolidation, concentration, re-engineering, disruption, disintermediation, and exits to be on the menu for this group along the road ahead. Here's the setup: Continuing on the overarching and transformational theme for how information technology impacts the constellations of strategies, players and markets in the financial universe, Alphacution has been leveraging its growing model library to focus on the development of a comprehensive asset management ecosystem "map" to demonstrate, along with many other [...]

By |2020-10-14T21:50:51-04:00October 17th, 2018|Open|
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Does Big #FinTech Innovate? Introducing Alphacution’s #BigFinTech Index

Jensen Huang, CEO, Nvidia: "Software is eating the world, but AI is going to eat software..." One of the most fascinating aspects of innovation is its resistance to scaling. At least this is one observer's interpretation. Those trying to innovate at increasing scale - like, inside a large enterprise - might prefer to describe it as frustrating, to say the least. The rabid interest in startups - small groups of visionaries and entrepreneurs that are able to deliver radical levels of change to the provision of solutions for unmet market needs - is a reaction to this resistance. During the post-global financial crisis (GFC) hangover, it became vogue for large banks to establish externalized "innovation laboratories" to protect relevant and critical innovations from the harsh bureaucracies and incumbent politics inherent to large enterprises. Best case, they keep the proximity of innovation close; worst case, the messaging serves as a marketing tool. Of course, #fintech innovation has been a raging hotbed of innovation for the past few years, and many expect [...]

By |2020-10-05T21:23:11-04:00October 10th, 2018|Open|
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When #Hedgefunds Ate Their Own

If you have bought into our arguments that the capacity of alpha is finite and that the leading managers of automated trading methods can achieve "winner-take-all" performance characteristics in the sources of alpha that they target, then it stands to reason that the causes for where assets are concentrating and which funds are closing are related. Without even looking at track records, these two facts lead to the conclusion that systematic strategies are more consistent than, and therefore, winning a battle over allocations to traditional, fundamentally-oriented and "manual" strategies in modern markets. Something amazing - and, potentially terrifying - is happening at the crossroad of asset management and global markets. The drumbeat of clues in support of this theme is increasing and those observers with keen insights into market dynamics are beginning to notice. Alphacution has played a small role in giving voice and illustration to this theme by placing a bow around a unique interpretation of unprecedented market phenomena worth paying attention to, most relevantly to this part of [...]

By |2020-08-17T07:14:06-04:00October 10th, 2018|For Subscribers|
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#Hedgefunds: Is the Capacity of Alpha Unlimited?

Like the financial markets equivalent of "dude", or "bro" or the many satisfying derivations of "F**K," the term "alpha" seems to pepper our market discourse in a way that has few peers. Rightly or wrongly, there isn't an investment or trading context into which it is not shoehorned. We hear it everywhere, at all times, and in numerous forms: Achieving alpha... Delivering alpha... Portable alpha... (A strategy that had its heyday around 2006 and has recently tried to make a comeback.) Tainted alpha... (Not gonna go there right now.) And, my personal favorite (for its level of misguidedness), generating alpha... There are conferences named after it, like the CNBC and Institutional Investor ANNUAL Delivering Alpha Conference, now apparently in its 8th year. And, of course, some of the most brilliant and creative companies of all time have been named after it! - and, I'm not necessarily talking about firms like Visible Alpha or AlphaSense or the defunct quant strategy development platform, Alphacet... To be fair, the list of common usages [...]

By |2020-10-05T21:22:58-04:00September 23rd, 2018|Open|
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Alphacution Podcast Series Ep4 – Technology for Financial Services: Hyped vs. Overhyped

Many thanks to Clare Rhodes, Managing Director, Articulate Communications for hosting this podcast series. Here is a link to Episode 4 of the series - Technology for Financial Services: Hyped vs. Overhyped (September 19, 2018) where the podcast series was originally published.  

By |2020-12-03T21:15:41-05:00September 23rd, 2018|Podcasts|
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α < ∞ ?

Like the financial markets equivalent of "dude", or "bro" or the many satisfying derivations of "F**K," the term "alpha" seems to pepper our market discourse in a way that has few peers. Rightly or wrongly, there isn't an investment or trading context into which it is not shoehorned. We hear it everywhere, at all times, and in numerous forms: Achieving alpha... Delivering alpha... Portable alpha... (A strategy that had its heyday around 2006 and has recently tried to make a comeback.) Tainted alpha... (Not gonna go there right now.) And, my personal favorite (for its level of misguidedness), generating alpha... There are conferences named after it, like the CNBC and Institutional Investor ANNUAL Delivering Alpha Conference, now apparently in its 8th year. And, of course, some of the most brilliant and creative companies of all time have been named after it! - and, I'm not necessarily talking about firms like Visible Alpha or AlphaSense or the defunct quant strategy development platform, Alphacet... To be fair, the list of common usages [...]

By |2020-08-17T07:14:07-04:00September 20th, 2018|For Subscribers|
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Alphacution Podcast Series Ep3 – Capital Markets’ Digital Transformation

Many thanks to Clare Rhodes, Managing Director, Articulate Communications for hosting this podcast series. Here is a link to Episode 3 of the series - Capital Markets' Digital Transformation (September 7, 2018) where the podcast series was originally published.  

By |2020-10-09T22:38:57-04:00September 18th, 2018|Podcasts|
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Those Fees Are No Laughing Matter!

Image Credit: Arpad Busson and actress Uma Thurman attend the premiere of Zulu during the 66th Cannes International Film Festival  - Hubert Boesl/DPA/Alamy He pressed "record" on the cassette machine, leaned back and took a long, deep drag from a cigarette. "Let's begin," he said with a heavy accent. In a risky break from protocol, and much to the frustration of my partner - Quantlab co-founder and chief scientist, Ed Bosarge - I asked if I could bum one of his smokes. "But, of course," the Frenchman said with a smirk... Scene: Swanky leather-drenched, art-stuffed office, midtown Manhattan, 1998. Arpad "Arki" Busson, then already at 35 a legendary rainmaker for legendary hedge fund managers, like Tudor Investment's Paul Tudor Jones, had agreed to meet with two of the top geeks from a quant trading upstart to pitch their new strategy to his EIM Group, a prestigious fund of funds (FoFs) platform of the era. In a bizarre twist of unacknowledged credentials, it was difficult to pretend to ignore the fact [...]

By |2021-02-05T15:28:55-05:00September 16th, 2018|Open|
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#Algorithm: Benchmarking the Cost of Post-Trade Processing

Patterns...  Preferably, persistent and predictable patterns...  It could be said that history is influenced by a series of pattern discoveries whereby new patterns are discovered with new tools, new technologies or new methodologies. Discovery always starts with variance of perspective, like a new pair of eyes.  And, that kind of trick never gets old - even during an era of hyper-intensive innovation. So, with that bit of philosophy as our backdrop, we arrive at today's lesson:  Alphacution discovered a persistent relationship between assets and headcount for asset managers, which led to new insights about strategy selections, technology spending, and workflow automation among a broad community of asset managers, hedge funds and others. This analysis was presented in its initial asset manager technology spending study, the Context Machine (April 2018). Upon further analysis, it turns out that there is also a persistent relationship between assets and headcount for asset servicers, like custodians and administrators. The significance of this discovery represents the beginnings of our ability to benchmark asset servicing costs and [...]

By |2020-10-05T21:22:35-04:00September 9th, 2018|Open|
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Alphacution Podcast Series Ep2 – Technology Strategy, Business Performance in the Digital Era

Many thanks to Clare Rhodes, Managing Director, Articulate Communications for hosting this podcast series. Here is a link to Episode 2 of the series - Technology Strategy and Business Performance in the Digital Era (August 22, 2018) where the podcast series was originally published.  

By |2020-12-03T21:18:42-05:00September 5th, 2018|Podcasts|
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