NASA Engineer Earns Crypto By Helping Crowdsource Stock Picks
One NASA engineer is using his smarts not only planning to explore outer space, but also earning cryptocurrency by picking stocks.
When 32-year-old Hayden Burgoyne isn’t plotting a mission to explore Jupiter’s moons as part of project Europa Clipper, the Los Angeles resident spends his spare time as an amateur quant – poring through market data for Paul Tudor Jones-backed crowdsourcing firm Numerai, according to Bloomberg.
Without revealing their models, the contributors pick stocks they think will outperform in the coming month and make bets in online trading tournaments using a digital currency issued by Numerai. The San Francisco-based firm, established in 2015, then invests in the corresponding stocks.
Those picks from the likes of Burgoyne, a world away from Wall Street, have powered the market-neutral fund to a 9% gain this year through August. In 2020 it was up 8% when many storied quants faltered.
“I have no finance background so it puts people like me on an equal footing with somebody with an economics PhD,” he told Bloomberg.
Burgoyne uses an “assortment of data” on 5,000 stocks to make his picks. He uses metrics like price history to valuation ratios, sometimes without even knowing what the underlying metrics are.
Those who perform well get “NMR” tokens, which are now worth about $50 a piece.
Numerai founder Richard Craib commented: “By setting up the problem and being in charge of data people look at, we can get exactly the type of signal we want. Although they might not work individually, when you combine them altogether the increase in accuracy and performance is huge.”
Craib also commented on paying out in crypto: “Even if we gave away 100% of our profits of the fund to our users we will never be able to pay as much. What I like about cryptocurrencies is the idea that actually through the community, the cryptocurrency is valuable for its own reasons.”
Burgoyne has 630 NMR tokens backing his predictions.
Another Numerai trader, Sharon Moran, commented: “As a mother of three with a daughter in private college, there’s the money consideration. But the ability to learn and grow and apply some of what I’ve been learning as far as modeling was the initial motivation.”
And people are taking notice: one pension fund that has $45 million in assets with Numerai could increase their allocation to $130 million if the firm hits “certain milestones”.
While quant funds and factor-based investing have consistently shown themselves to be unreliable at best, crowdsourcing ideas as a quant model still hasn’t been fully vetted. And something is working for Numerai.
Thu, 10/07/2021 – 18:40