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Opalesque Exclusive: `When I see a day coming like this, I add all leverage I can get` - How `mini-quants`, trusting their models, outsmart the markets From Matthias Knab (knab@opalesque.com): Let's call him Pete. I have known Pete since 1998, when we got to know each other at a time I tried to set up a joint venture with an U.S. company. The joint venture never materialized, but our friendship remained. Anyone remember the SOES bandits? Well, Pete was never a typical SOES bandit, but he's been around since then and still shares a similar level of obsession when it comes to trading and the stock markets. However, as an successful and experienced engineer, unsystematic, impulsive trading was never his game. Today, Pete is what I would call a "mini-quant".

Worst year: up 60%, five down months in six years He trades every day up to three million shares, and for the past six years averaged about 100% net return each year. In six years, he has had five down months. In his worst year, he was up 60%, and since the volatility picked up in July 2007, the returns have been going "through the roof". Pete is focusing on U.S. equities markets and trades only his own capital. At the end of a day, his positions are mostly closed out; a mere 1/8 of his exposure may be carried overnight.

Pete is part of what could b......................

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