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The UnRules: Man, Machine and the Quest to Master Markets

By Igor Tulchinsky

Published October 2018 by Wiley

£11.99/ US$15.99/ EUR13.60

Hardcover and e-book

ISBN: 9781119372103

Wednesday, October 17, 2018 9:35 am EDT
"part of the forefront of a new quantitative renaissance in investing"

WorldQuant CEO Igor Tulchinsky shares the compelling story of his flight from adversity to opportunity and his climb to global success

As life becomes increasingly complicated, we need rules that bring discipline and order to counter that uncertainty. In THE UNRULES: Man, Machines and the Quest to Master Markets, Igor Tulchinsky — an immigrant from the then–Soviet Union turned pioneer of quantitative finance — outlines the rules for success in both the markets and life.

Founder and CEO of WorldQuant, which the Wall Street Journal has called “part of the forefront of a new quantitative renaissance in investing,” Tulchinsky is a Wall Street powerhouse who has been named to the Bloomberg 50 list of the most influential people who define global business. THE UNRULES marks the first time the public will hear from Tulchinsky about how he built WorldQuant from a one-man quant desk to a leader in quantitative investment, and the personal journey that led him to develop a set of principles that anyone can use to succeed.

Tulchinsky immigrated to the U.S. from the Soviet Union at the age of 10 and watched his parents, both professional musicians, leave everything behind and struggle to build a new life in America. This journey shaped the values that drive him today: hard work, persistence, discipline, risk-taking, and the belief that change is inevitable and the future is always uncertain. In THE UNRULES, he shares his immigration journey and subsequent experiences in video gaming, computer science, and finance, and presents a set of rules for succeeding in both business and life — including the “UnRule” that subverts them all. Some of the Rules:

  • Life is unpredictable. There are limits to planning; the key is to act. Create the dots and connect them later, because you don’t know which dots will materialize.
  • Take action. Nothing else counts.
  • Aim for the anxious edge. Make everyone benefit. Opportunity is unlimited. You can always find ways to do better and succeed, in any circumstance, in any business or economic climate. Especially in the stock market, as in science, opportunity is always there because ...
  • ... ideas are infinite. Knowledge grows from knowledge, and good ideas constitute new knowledge, which alters reality as it grows.
  • Make everyone benefit. Endeavors that benefit many diverse people have a way of succeeding. Align your endeavor with everyone around you and you will create your own tailwind.
  • Think big — it’s easier.
  • Quantity is quality.

All of these rules, however, are subject to the paradoxical master UnRule: Every single rule is flawed, and no rule works all the time. No single dogma describes the world. But many rules describe the world a little bit.

Tulchinsky is a true pioneer in the field of quantitative investment. He has been at the forefront of applying digital computing to finance, hiring talent globally when no other firms were doing so, and harnessing the methodology of quantitative finance to advance other fields, including genomics. In THE UNRULES, he also underscores the driving force of his philanthropic work — talent is distributed globally, but opportunity is not. From his personal experience as an immigrant to his perspective as a CEO who has discovered talent around the globe, he reveals the origins of his personal mission to make education accessible to everyone and to provide a path to a meaningful life for every worker in the age of AI.

Part memoir, part primer on the maths and science driving quantitative investing, and part philosophical guide to meeting the challenges of a demanding career, THE UNRULES offers rare insight into a pioneer of global business.

ABOUT THE AUTHOR

IGOR TULCHINSKY is Founder, Chairman, and CEO of WorldQuant, LLC, a global quantitative investment management firm, which he established in 2007 after more than a decade as a quantitative trader at Millennium Management. During his career, he’s been a video game developer, a software programmer at AT&T Bell Laboratories, and a venture capitalist. A strong believer in education, he is founder of the WorldQuant Foundation, which furthers charitable initiatives, including making high-quality education more accessible worldwide. He also founded WorldQuant University, a nonprofit that offers the world’s largest master’s degree program in financial engineering, entirely online and tuition-free. He is also the author of Finding Alphas: A Quantitative Approach to Building Trading Strategies.

ADVANCE PRAISE

“This beautifully written memoir reminds us why so many of our nation’s greatest thinkers are immigrants like Belarusian Igor Tulchinsky. With equal dexterity, he unpackages the ultimate American Dream story, through higher education, modern R&D, quantitative investing, the rise of Big Data, and the future merging of biomedical research and digital information. This book is a powerful guide to character, leadership, and innovation in this turbulent 21st century, and is suffused with a lovely sense of optimism for our future. Igor rules!” —Admiral James Stavridis USN, Dean of Tufts University’s Fletcher School

“Through his own fascinating story, legendary quant investor Igor Tulchinsky explains how the complex worlds of technology, financial markets, and human behavior intersect with remarkable clarity. This brilliantly insightful book is a useful primer for a future that is fast upon us.” —General Stanley McChrystal, Founder of McChrystal Group

“Part memoir and part how-to business manual, this book is a must-read for anyone with the ambition and drive to succeed in today’s rapidly advancing tech industry. Igor Tulchinsky gener­ously shares the many lessons he learned on his remarkable journey, from escaping oppression in the former Soviet Union to building a truly innovative financial powerhouse in the USA. ‘Life is unpredictable,’ Igor writes. ‘There are limits to planning; the key is to act.’” —Milan Galik, President of Interactive Brokers Group

“The UnRules is a great handbook for seeing how data science and analytics are transforming the trading and investing world. Out with the old and in with the new! As important, Igor shows us that his heart is as big as his mind by setting an example any highly successful person should follow.” —Paul Tudor Jones, Founder of Tudor Investment Corp.

A SELECTION OF THE RULES

  1. You only live once. Your time on earth is the only truly irreplaceable resource. You can always make another dollar, but you can never make another minute. You should view your life through the prism of the old question, “If today were my last day, what would I be doing with it?”
  2. Life is unpredictable. Events don’t unfold as anticipated, so there are limits to what can be planned. Create the dots and connect them later, because you don’t know which dots will materialize. By fostering opportunities, then taking advantage of outcomes, you maximize success. Other rules feed off that.
  3. Take action. Nothing else counts.
  4. Establish only concrete, quantifiable goals, and always go from A to B. Concrete things are attainable. Abstract and nebulous wishes are not. If you don’t have specific goals, your movement through life will be a Brownian motion — random.
  5. Develop willpower and play to your strengths.
  6. Persistence compounds your ability.
  7. Obstacles are information. If you can’t get something to work, there’s a reason. Maybe it’s a bad idea. Maybe you are misinformed. Maybe your actions are inappropriate. Learn, adjust, and attack it again.
  8. Aim for the anxious edge. Make everyone benefit. Opportunity is unlimited. You can always find ways to do better and succeed, in any circumstance, in any business or economic climate. Especially in the stock market, as in science, opportunity is always there because ...
  9. ... ideas are infinite. Knowledge grows from knowledge, and good ideas constitute new knowledge, which alters reality as it grows.
  10. Arrogance distorts reality.
  11. Blame no one else. Minimize regrets. Accept responsibility for what happens, even if it’s not all your fault. This realization will empower you because it forces you to focus on action — on things you can control. Whatever happened, happened; you must retrieve the information and move on.
  12. Don’t compromise. Play to your strengths. Everyone has weaknesses. But it’s a waste to spend time on those weaknesses rather than on improving your strengths. Weakness can only be improved marginally, but strengths can be improved proportionately more, given how much time you spend on the effort. Don’t spend time bemoaning what you lack.
  13. A good business runs itself. You create this by choosing the right people. A lot of your effort must be invested in that activity. As a result, it’s vital to develop optimal compensation schemes. If that’s done well, you need only add more pieces to grow.
  14. Minimize bureaucracy. Aim to be as flat organizationally as safely possible. Time is money; time is scarce. Bureaucracy wastes time and loses money. If you have the right people, the right systems, and the right compensation schemes, you can scale up without a huge addition of bureaucracy. Many processes in both business and research have an exponential payoff over time. Wasted time produces even greater losses in an exponentially growing operation.
  15. Value diverse and competing methods. Because all theories are flawed, the best approach is to collect as many of them as possible and use them all, in as optimal a fashion as you can devise, simultaneously.
  16. Value multiple, independent points of view. Smart advisers, each counseling you independently, can dramatically improve the quality of your decisions. Think of each one as an alpha: Five uncorrelated alphas have a very good Sharpe ratio — much better than one.
  17. Make everyone benefit. Endeavors that benefit many diverse people have a way of succeeding. Align your endeavor with everyone around you and you will create your own tailwind.
  18. Think big — it’s easier.
  19. Quantity is quality.
  20. Take aggressive risks, but manage losses.

THE UNRULE       

  1. All of these rules, however, are subordinated to a paradoxical master rule, the UnRule, which prevails in both markets and life: All theories and all methods have flaws. Nothing can be proved with absolute certainty, but anything may be disproved, and nothing that can be articulated can be perfect. This rule is rooted in the constant necessity to change, to be flexible, to take losses, to always move on, to get your ego out of the way. It represents a flight from fixed and rigid ideas, from dogmas and ideologies.

The UnRules is published by Wiley and will be available wherever books and ebooks are sold.

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