Citadel founder and CEO Ken Griffin had some free advice for an at-capacity crowd of MIT students on the Wong Auditorium during a campus visit in April. “Should you end up in a profession where you’re not learning,” he told them, “it’s time to alter jobs. On this world, in case you’re not learning, you could find yourself irrelevant within the blink of a watch.”

During a conversation with Bryan Landman ’11, senior quantitative research lead for Citadel’s Global Quantitative Strategies business, Griffin reflected on his profession and offered predictions for the impact of technology on the finance sector. Citadel, which he launched in 1990, is now one in every of the world’s leading investment firms. Griffin also serves as non-executive chair of Citadel Securities, a market maker that’s often known as a key player within the modernization of markets and market structures.

“We’re excited to listen to Ken share his perspective on how technology continues to shape the longer term of finance, including the emerging trends of quantum computing and AI,” said David Schmittlein, the John C Head III Dean and professor of selling at MIT Sloan School of Management, who kicked off this system. The presentation was jointly sponsored by MIT Sloan, the MIT Schwarzman College of Computing, the School of Engineering, MIT Profession Advising and Skilled Development, and Citadel Securities Campus Recruiting.

The long run, in Griffin’s view, “is all about the appliance of engineering, software, and arithmetic to markets. Successful entrepreneurs are those that have the tools to unravel the unsolved problems of that moment in time.” He launched Citadel just one 12 months after graduating from college. “History thus far has been kind to the vision I had back within the late ’80s,” he said.

Griffin realized very early in his profession “that you possibly can use a notebook computer and quantitative finance to cost traded securities in a way that was way more advanced than you saw in your typical equity trading desk on Wall Street.” Each businesses, he told the audience, are ultimately driven by research. “That’s where we formulate the ideas, and trading is how we monetize that research.”

It’s also why Citadel and Citadel Securities employ several hundred software engineers. “We have now an enormous investment today in using modern technology to power our decision-making and trading,” said Griffin.

One example of Citadel’s application of technology and science is the firm’s hiring of a meteorological team to expand the weather analytics expertise inside its commodities business. While power supply is comparatively easy to map and analyze, predicting demand is way more difficult. Citadel’s weather team feeds forecast data obtained from supercomputers to its traders. “Wind and solar are huge commodities,” Griffin explained, noting that the times with highest demand in the ability market are cloudy, cold days with no wind. When you may forecast those days higher than the market as an entire, that’s where you may discover opportunities, he added.

Pros and cons of machine learning

Asking in regards to the impact of latest technology on their sector, Landman noted that each Citadel and Citadel Securities are already leveraging machine learning. “Available in the market-making business,” Griffin said, “you see an actual application for machine learning because you’ve gotten a lot data to parametrize the models with. But if you get into longer time horizon problems, machine learning starts to interrupt down.”

Griffin noted that the info obtained through machine learning is most helpful for investments with short time horizons, akin to in its quantitative strategies business. “In our fundamental equities business,” he said, “machine learning just isn’t as helpful as you’d want since the underlying systems usually are not stationary.”

Griffin was emphatic that “there was a moment in time where being a extremely good statistician or really understanding machine-learning models was sufficient to generate profits. That won’t be the case for for much longer.” Certainly one of the guiding principles at Citadel, he and Landman agreed, was that machine learning and other methodologies shouldn’t be used blindly. Each analyst has to cite the underlying economic theory driving their argument on investment decisions. “Should you understand the issue otherwise than people who find themselves just using the statistical models,” he said, “you’ve gotten an actual likelihood for a competitive advantage.”

ChatGPT and a seismic shift

Asked if ChatGPT will change history, Griffin predicted that the rise of capabilities in large language models will transform a considerable variety of white collar jobs. “With open AI for many routine industrial legal documents, ChatGPT will do a greater job writing a lease than a young lawyer. That is the primary time we’re seeing traditionally white-collar jobs in danger as a result of technology, and that’s a sea change.”

Griffin urged MIT students to work with the neatest people they’ll find, as he did: “The magic of Citadel has been a testament to the concept that by surrounding yourself with vivid, ambitious people, you may accomplish something special. I went to great lengths to rent the brightest people I could find and gave them responsibility and trust early of their careers.”

Much more critical to success is the willingness to advocate for oneself, Griffin said, using Gerald Beeson, Citadel’s chief operating officer, for instance. Beeson, who began as an intern on the firm, “consistently sought more responsibility and had the foresight to coach his own successors.” Urging students to take ownership of their careers, Griffin advised: “Make it clear that you simply’re willing to tackle more responsibility, and take into consideration what the roadblocks will likely be.”

When microphones were handed to the audience, students inquired what changes Griffin would love to see within the hedge fund industry, how Citadel assesses the chance and reward of potential projects, and whether hedge funds should give back to the open source community. Asked in regards to the role that Citadel — and its CEO — should play in “the broader society,” Griffin spoke enthusiastically of his belief in participatory democracy. “We want higher people on each side of the aisle,” he said. “I encourage all my colleagues to be politically lively. It’s unlucky when firms shut down political dialogue; we actually embrace it.”

Closing on an optimistic note, Griffin urged the scholars within the audience to go after success, declaring, “The world is all the time awash in challenge and its shortcomings, but regardless of what anybody says, you reside at the best moment within the history of the planet. Profit from it.”