Gareth Henry, a graduate in actuarial mathematics has had successful jobs at various firms including Fortress Investment Group. He is currently Managing Director at a major investment firm. His training in mathematics together with his skills in communicating with clients is a rare combination which has led him to the top in his field. His ability to communicate resulted also in his relationships with mentors whom he credits with much of his success by implementing their winning methods.
Gareth Henry has been a proponent of alternative investment tactics, and he has been very involved in the area of quantitative investing, a strategy now accepted in the investment community and used by mutual funds, hedge funds and institutional investors. Quants, as the developers are called, compose complex mathematical models that can detect investment opportunities and create excess returns.
The history of quantitative investing goes back many decades to a time when traders started using charts to analyze patterns instead of relying solely on obvious factors such as company earnings. In the 1980s computers allowed a big leap in the opportunities for quantitative investing, and nowadays computer algorithms allow lightning speed trading opportunities.
Gareth Henry points out that the success of modern quantitative investing can be credited to the absence of emotion by the use of computers. Emotion can be the enemy of making rational decisions since people get carried away by their emotions that very often have no predictive ability, often quite the opposite, leading to losses.
The other side of the coin, as described by Gareth Henry, is that computer algorithms are created by people who develop the complex mathematical programs used in finding investment opportunities, and the success of the programs is only as good as the people who have created them. Financial markets change and circumstances change, and so quantitative systems must also change to keep predicting investment opportunities.
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