The engineers …
Or at least, very little. This is an old thread and the OP hasn’t been around for many years, but if he were still around, I’d recommend to him John Allen Paulos’s book A Mathematician Plays The Stock Market.
Wait, you think observatories have full-time engineers on staff? Why? They’re a lot more expensive than astronomers.
They have entire engineering schools at the universities that operate the observatories. They pay the guy who built the equipment to drive up and explain to the researchers how to use it. Lathes, brakes and soldering irons …
I’m not saying there are no astronomers working full time at their trade, but typically for the smaller observatories, the pay check is for teaching astronomy, like in a classroom. Are they an “astronomer”, or are they a “teacher” … I guess it’s just a question of semantics …
“Careers in Astronomy” - American Astronomical Society
watchwolf, you do know that you’re talking to a guy with a degree in astronomy, right?
Yes, almost all astronomers are employed by universities. But almost all observatories are operated by universities, too. And like most scientists, even if they get paid for teaching classes (not all professors do), the bulk of their pay usually comes from government grants.
That’s simply not true. Edward Thorp’s stat arb, for example, traded with anonymous counterparties, generally with the goal of trading small enough quantities not to move the market. This is very much “predicting”, and only in incidental (and, for the most part, undesirable) ways “nudging”. The same is true, for example, of the first traders who valued options with Black-Scholes.
Back to the OP.
Canadian mathematician James Stewart was a millionaire (and quite a guy by the sounds of it). He made a fortune by essentially cornering the (college) math textbook market.
Among many good causes, here is one magnificent thing he did with his money. There are loads of other articles (and pictorials) about Integral House available on-line. Quite the place.
… and if they happen to have a million, inflation would never allow them to spend it, so why bother?
©Ζήνων
How much of his success comes from his own personal use of his system, and how much comes from him selling other people access to his system? It says there that he runs a hedge fund, which means that anyone at all who wants access to his system has it. That alone is enough to guarantee that it won’t consistently beat the index, because if it did, then everyone would just buy his fund, and it would become the new index.
No, I did not …
Are you a millionaire?
The folks I knew from Kitt Peaks were always whining about having to drive back into town to teach classes …
Chronos’s worth is beyond count.
Just because he has a hedge fund doesn’t mean anyone can buy in. James Simons, mentioned above, famously has a closed fund. The only money in it is what the employees of the fund put in.
The efficient market hypothesis is mostly correct because inefficiencies get corrected. There’s no reason to assume that it’s impossible that some people have figured out ways to be better than average at correcting them. Still doesn’t the vast majority of investors though.
Oh, I’m not disputing the fact that academics aren’t paid much (at least, compared to other professions with the same amount of education and selectiveness). It’s just that all the rest of the details you’re giving are wrong.
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Hedge funds aren’t required to make sufficient disclosures to exactly answer that, and yeah, anyone with trading ideas for more money than they personally have (or want to risk) will start a fund, and under a typical compensation structure, will make money whether their customers are successful or not.
But do you seriously question that Thorp (or the first traders to value options using Black-Scholes, or modern HFT operations–which are mostly about raw speed but sometimes a little mathematical–, or …) has achieved historical performance that is vanishingly unlikely to result from random chance? Active management is a zero-sum (before fees, with respect to passive management) game of skill. Is it surprising that someone wins?
From a brief article on Thorp:
Most successful funds will show a similar pattern, of limiting external money to an amount that they think they can trade before the market impact of their trades offsets too much of the inefficiencies that they think they’ve found. The really profitable stuff (James Simons per above, almost all HFT) doesn’t run outside money.
It’s the comparison to the OP … mathematicians are generally thought of as really smart people, but are generally thought of as not making a lot of money.
Astronomers are tons and bunches smarter than mathematicians and they get paid even less; at least they used to, and I did specify “back in the day” when I started this line of reasoning.
The Smartest Human Being on Earth has to rely on $15 per year donations at His message board. Just a comparison …
My citation said 6,000 astronomer jobs in the US … is the AAS unreliable then? Because there’s 6,000 carpenters in any given large city and they certainly have career paths that lead to a million dollars.
I know of no meaningful way to compare the intelligence of the two professions.
No, why would you doubt that?
Because you said that detail was wrong.
OK, then, change that to “relevant details”, since the number of astronomers in the US doesn’t seem to be related to whatever point it is you’re trying to make.
You seem to agree that “the fact that academics aren’t paid much (at least, compared to other professions with the same amount of education and selectiveness)” … and I’m thinking lawyers and MBA’s here.