If you were surprised when Citadel CEO Ken Griffin declared last week that generative AI is no good at uncovering alpha in hedge funds, you haven’t been paying attention. Umesh Subramanian, Citadel’s ex-Goldman Sachs CTO, said the same thing back in May.
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Speaking last week at Bloomberg’s Enterprise Data and Tech Summit Subramanian reiterated his opinion and explained his reasoning. AI is very good at funnelling information to portfolio managers and at making sure that the “flywheel” spins faster, but it can’t actually make investing decisions, said Subramanian. It will help you see the present more clearly; it won’t predict the future.
For talented discretionary portfolio managers who understand its power, AI will – however – supercharge productivity. It’s a “force multiplier,” said Subramanian. It’s not a leveller – it won’t make bad performers better.
What about using AI to code? Subramanian didn’t address this specifically, but he did say that the way Citadel interviews software engineers may change, and that the ingredients of a successful long-term career in the area are evolving.
For example, without AI, Subramanian said it might make sense to ask engineering candidates to solve a problem during a three-hour interview. With AI, he said it makes more sense to have three one hour interviews in which candidates solve multiple problems “front to back.” Far more can be done.
In the new world, Subramanian said software engineers will thrive if they love solving problems however they can, instead of in a particular language. The strongest engineers are those who see the problems “for what they are,” who question them, who break them down, reshape them, and who then use tools to find the solution. You need to be obsessed with solving problems. You also need to be adaptable.
Subramanian said the ideal Citadel technology candidate is this kind of “applied engineer,” who operates at the intersection of “maths, finance and computer science.” His preferred candidates tend to have a lot of other employers competing for their talents. “I want them to have a lot of choices and I want us to be their top choice,” said Subramanian.
Citadel’s technologists come from a variety of places, including university campuses, banks and big tech firms. Before he joined Citadel in 2018, Subramanian himself spent over 13 years at Goldman Sachs, where he was global head of investment banking strats and then partner and chief technology officer. He said working for Citadel is different because Ken Griffin knows a lot about technology (“I think Ken is a technologist”) and can therefore guide him. It’s also different because Citadel doesn’t have to do things for the sake of them. – At Citadel, Subramanian can say “no” to things that make no sense. “I am one of the chief ‘no’ officers,” he reflected.
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