Richard Craib - Crowd-Sourced Alpha with Numerai (S7E28)

Bullish:

• $NUMERAI - Numerai has grown from $60M to $600M in assets with JP Morgan investing $500M in capacity and a recent Series C at $500M valuation, demonstrating institutional validation of their crowdsourced alpha model.

  • “Over the last few years, NumeraI has quietly grown from roughly 60,000,000 in assets to over 600,000,000,000. JP Morgan has invested and secured 500,000,000 in capacity. And Numerai recently raised the series C at a $500,000,000 valuation led by top university endowments.”

    Corey·1:34

  • “This is no longer a toy project. It is a real institutional scale market neutral hedge fund with a very unconventional alpha engine.”

    Corey·1:52
• $AIMODELS - AI agents and LLMs are transforming model development capabilities, with Numerai users now effectively '100 IQ points higher' through agentic workflows that can run thousands of experiments in parallel.

  • “We see it as a gift from God that Anthropic is investing so much money into their models and OpenAI investing so much in their models and basically giving it to all of Numeraire users for below cost. Every Numeraire user is now like a 100 IQ points higher and they were already very high.”

    Richard·45:38

  • “Now they can actually make agentic workflows that do every layer of their work for them and then run 10,000 experiments in parallel.”

    Richard·45:58

  • “It's really the future. It's like singularity moment for Numerai.”

    Richard·47:30
• $SPY - The market portfolio represents 500 of the world's best CEOs actively managing capital with hundreds of thousands of top talent - far from passive investing.

  • “Actually the market portfolio is amazing. It's like my favorite thing.”

    Richard·52:20

  • “In reality, it's actually you've got 500 of the world's best CEOs to actively manage your capital all day, every day. And by the way, they have like hundreds and hundreds of thousands of the top talent in the world working for them. So why do you think the market portfolio is boring? That's almost sci fi level amazing.”

    Richard·52:33
• $MLINFRA - Machine learning has evolved from being dismissed in finance to becoming essential, with the deep learning revolution fundamentally changing what's possible in quantitative finance.

  • “I don't think that's how people understand it today at all. I think it's evolved.”

    Richard·7:43

  • “Later on, I realized when I came across Renaissance that what's really going on is a this is a mathematical problem. This is a machine learning problem.”

    Richard·4:50

Bearish:

• $TRADFI - Traditional finance media and approaches miss the point entirely - the real game is mathematical and machine learning driven, not what's portrayed in newspapers and CNBC.

  • “The trouble is there's so much that's written about finance is actually kind of a junk diet version of it. So you could watch CNBC all day, you could read the newspapers and things like that, but it's all kind of missing the point to me. Like, that's all in the media realm instead of the what's real.”

    Richard·4:30
• $HFT - Crowding risk in quant strategies is causing major stress even for prestigious firms running supposedly neutral portfolios, suggesting systematic issues in common quant approaches.

  • “I'm sure many of your listeners are following some of the stress in quant at the moment where these otherwise very knowledgeable and prestigious quant firms are doing incredibly badly.”

    Richard·39:25

  • “Well, it's crowding. Crowding, it's like you're holding a bunch of stuff that everybody else holds. And that makes things more dangerous than it seems from a risk model.”

    Richard·40:06