We are all reborn, who wants to be the richest man?

U.S. stocks. This was Cheng Wei’s first reaction when he entered the small dark room.

It is already nine o'clock in the evening. At this time, the only stock markets that can be operated in the trading room are the Western stock markets, and the U.S. stock market is about to open.

Until the end of the first Saturday in November, the United States uses daylight saving time, and the market is open from 11:9 to 30:4.

Hong Kong Island uses the Eastern Time Zone 21, which is the same as the capital time, corresponding to 30:4 pm to am.

"You are all math geniuses of Far East Bank. We have gathered you here for only one purpose, which is to study and improve our quantitative trading system."

What is quantitative investment? A simple definition is to use mathematical models rather than human brains to determine the types, directions, timing and quantity of transactions in the market.

When talking about quantitative investment, one person must be mentioned, and that is Thorp, the creator of quantitative investment.

Everyone is familiar with the phrase "Good luck tonight when eating chicken". Many people don't know that this phrase is actually a catchphrase created by Chinese Americans when playing blackjack, and the birth of quantitative investment is inseparable from blackjack.

A tycoon once said that gamblers cannot beat the casino. Even if they play a hundred games without losing or winning, their money will still be taken away by the casino because the casino takes a commission.

But mathematicians obviously do not agree with this view. This story starts with a gamble involving American soldiers.

In 1953, several soldiers were playing blackjack at a U.S. military training ground. An old hand saw the game and thought it was a very simple game.

From a deck of playing cards, excluding the jokers, all numbers ten and above are counted as ten points, and all numbers below ten are just the face value of the card.

However, there is one exception: the A card can be counted as either one point or ten points.

The game starts with two cards. The player has two open cards, and the dealer has one open and one hidden card, and then starts calling. If the dealer's cards have more than 17 points, he cannot call anymore. The player wins as long as the player's points are greater than the dealer's and do not exceed 21 points.

So this old hand used a computer and his own knowledge to calculate the players' winning rates under various types of cards and how to get the cards to have the greatest advantage.

This old bird is Baldwin, and this conclusion strategy is the Baldwin strategy.

After learning about Baldwin's theory, our protagonist came on the scene and walked directly into the casino with the money. Soon he lost all his chips.

Unlike most gamblers, Thorp is a mathematician. He discovered that Bob's strategy was to assume that there were 52 cards in each deck, but the reality was different. The cards that had been played at that time were invalid.

That is to say, if ten cards are played in the previous round, the next round will start with 42 cards, so the cards that appear in each round are dynamic.

According to Lao Bao's algorithm, there are only more than 3300 algorithms, but according to Thorp's idea, there are more than million algorithms.

So Thorpe thought, since the fluctuations of the ten-point big cards are more powerful to players, why not quantify them?

So he counted the A to 4 that appeared on the board as plus 9, and the other cards as minus . Every time a card was played, he would add and subtract in his mind. The bigger the number, the higher the player's chance of winning.

This is the counting method.

After coming to this conclusion, Thorpe did not keep quiet and make a fortune, but published it in the newspaper.

People in Las Vegas were amused when they saw you. Since you are so good, why don’t you come and try it?

Try it? Try it and you'll die.

So Thorpe rushed into Las Vegas again, killing gods and Buddhas, and made his opponents sing "Conquer" in Las Vegas.

But who are the people behind Las Vegas? Can they be your ATM? All kinds of drugging and assassinations are coming.

This made Thorp feel that he could not continue to play in Las Vegas, so he began to look for a safer casino, and the stock market came into his sights.

However, being able to become a gambling god does not mean that you can directly become a stock god.

At that time, he saw a report that the stock of Outlite, a battery supplier for Ford Motor Company, was illegally sold at a low price. Considering that it is in the science and technology innovation track and has favorable factors such as future development trends, he now gives it a buy rating.

This little taste made me feel "annoyed" all of a sudden. It was so authentic. Many stockholders must have bought stocks because of such reports, right? I just don't know if you were stuck with a halving like the claimant.

Seeing that he had to pay tuition fees again, he made a decision to quantify the prices of financial assets.

The legendary figure had a sharp mind and soon discovered that there were great arbitrage opportunities in the common stock warrants of listed companies.

At that time, Thorp discovered that the warrant price was positively correlated with the stock price, and the price was affected by the stock price and the remaining time. If factors such as the risk-free interest rate in the market were taken into account, the warrant price could be quantified just like blackjack in a casino.

This is the Black-Scholes formula that finance majors will definitely learn.

Does the name make you think that this formula was created by a man named Scholes? In fact, it was Thorpe who first discovered this formula.

The reason why Thorpe lost the naming rights is not only that he wanted to make a fortune in silence, but also that he did not have a good relationship with the education community in the United States.

In this way, by controlling the pricing model in one hand and the hedging strategy in the other, Thorp's hedge fund became the pig in the wind.

In 1969, the S&P 500 fell 4.7% but he made 4 points.

In 1970, the S&P 500 only rose 4%, but he made 16.3%.

During the great bear market of 1973 and 1974, the S&P fell by 18%, but Thorp made points.

There is no wall that is impenetrable. When more people get on board, a situation is formed where the big one bullies the second one, and the second one bullies the third one. Strategy becomes more and more important for quantitative investment.

This is a golden age of quantification, where money can be made everywhere.

With more people who are jealous, there will naturally be a situation where there are more wolves than meat. Speed ​​becomes the key to who can get the biggest share, so everyone's trading frequency changes from medium and low frequency to high frequency trading.

This brings us to the second volume of quantization, which is about hardware.

This is also the reason why Wall Street does not buy local brands but purchases Honor computers. No matter how those local companies and congressmen try to make connections, Wall Street remains indifferent.

Are you kidding? The hardware couldn't keep up and I missed the best opportunity. Give me this profit.

In addition to computers and the Internet, there is another thing that can be considered hardware, which is the automated trading system.

Relying on its advantages in the industry, many automated trading software are developed by Far East Software.

Not only the quantitative trading system of the Far East system, but also the quantitative investment systems of the three brothers Leland, O'Brien and Rubinstein in the United States were all written with the help of Far East Software.

"Are you going to short the U.S. stock market and trigger a financial crisis?"

At 30: p.m., when the U.S. stock market opened, Far Eastern Bank President Du Huilian personally gave the start order, and the Far Eastern Group began to sell off Nasdaq stocks in large quantities, including Honor of Kings.

However, what Du Huilian did not expect was that less than ten minutes later, a scream came from behind him, which aroused his interest.

Standing up and walking to Cheng Wei, who was still in shock, Du Huilian asked with interest, "Tell me your judgment."

Cheng Wei came to his senses, swallowed his saliva, and looked at the big boss in front of him, whom he could never get in touch with, and calmed the waves in his heart.

"You are using the mechanism of quantitative system to trigger a global stock market crash."

After he said this, all the members who entered this temporary team with him were dumbfounded. Can the global stock market crash be controlled by one individual?

Cheng Wei ignored them and continued to express his understanding.

“All quantitative trading systems have a mechanism that when the selected stock falls below the set value, the stock will be sold and the government bond will be bought.

As long as a part of the Nasdaq stocks are pushed down, it will cause a chain reaction because many stocks are invested in the form of a portfolio.

When all the quantitative triggers are in place to sell stocks, a global stock market crash will occur."

Trembling. Cheng Wei's voice was trembling when he said this.

Is it fear?

No, it's because of excitement.

Although there was no actual operation, he felt excited when he got involved in it.

Harvesting the global stock market, what a great and spectacular move.

"Bah bang bang."

Cheng Wei guessed right. From the applause, one could see the appreciation for Du Huilian.

This is also the reason why Luo Nianzhong dared to say with Chris that a financial crisis could be triggered at any time, because quantitative analysis is rampant now.

When Far East Bank asked Far East Software to help develop a quantitative trading system, Erickson, then president of Far East Software, inadvertently said something.

"Why do we have to have this kind of combined stock format? Won't it drag down other stocks? What if one stock grows significantly after being sold?"

Erickson just said it unintentionally because he didn't understand finance, but Robert, who came to the Far East Bank for business, heard it.

Stock portfolio, automatically triggers the selling mechanism.

When the stock market is doing well and there are fluctuations, it doesn't matter. But as long as there are major stocks that crash the market, does it mean that other stocks will be dragged into the abyss?

So Robert approached Luo Nianzhong and came up with this long-planned big harvest plan.