> So for an outsider, I say it's pure speculation.
And you assert this on what basis? There's enough that's been published to get some broad idea of what happens within the firm.
> And I speculate that their outsized gains are due to market manipulation, front running, or other insider activities (as in, illegal/unfair).
If they were engaging in illegal activities, it's very likely the firm, which is undoubtedly scrutinized by regulators, any such activities would have been discovered.
> No one is smart enough; no algorithm or model is future-proof; nobody gets returns like this unless they define the scenarios themselves.
RenTech constantly updates its algorithms. Alpha decay is a well known phenomenon. The firm utilizes sophisticated risk management techniques in order to avoid drawdowns, in all likelihood. Assuming this is the case, they're able to more effectively compound returns while simultaneously levering positions. Here's an example of a risk parity strategy [0], which may help explain how risk management works.
And you assert this on what basis? There's enough that's been published to get some broad idea of what happens within the firm.
> And I speculate that their outsized gains are due to market manipulation, front running, or other insider activities (as in, illegal/unfair).
If they were engaging in illegal activities, it's very likely the firm, which is undoubtedly scrutinized by regulators, any such activities would have been discovered.
> No one is smart enough; no algorithm or model is future-proof; nobody gets returns like this unless they define the scenarios themselves.
RenTech constantly updates its algorithms. Alpha decay is a well known phenomenon. The firm utilizes sophisticated risk management techniques in order to avoid drawdowns, in all likelihood. Assuming this is the case, they're able to more effectively compound returns while simultaneously levering positions. Here's an example of a risk parity strategy [0], which may help explain how risk management works.
[0] https://towardsdatascience.com/ray-dalio-etf-900edfe64b05?_b...