Jim Simons is arguably the only investor talked about in the same breath as Warren Buffett in terms of greatness. Indeed, his returns have been way ahead of Buffett’s – a spectacular 66% p.a over three decades. Few people knew about him until Gregory Zuckerman’s 2019 book – The Man Who Solved the Market . Even then very little is still known about how exactly he delivered those returns.
“A prodigy in mathematics, he did his undergraduate work at the Massachusetts Institute of Technology and was only 23 when he received his doctorate from the University of California, Berkeley.
Beginning in 1964, Mr. Simons taught at M.I.T. and Harvard University while simultaneously working as a breaker of Soviet codes at the Institute for Defense Analyses, a federally funded nonprofit group. But he was fired from the institute in 1968 for publicly expressing strong anti-Vietnam War views.
Over the next decade, he taught mathematics at Stony Brook University on Long Island, part of the State University of New York, and became chairman of its math department. While running the department he won the nation’s highest prize in geometry in 1975.
Then, in 1978, he abandoned his scholarly career and founded Monemetrics, an investment company with offices in a small shopping mall in Setauket, just east of Stony Brook on the North Shore of Long Island. He had never taken a financial course or shown more than a passing interest in the markets. But he was convinced that he and his small team of mathematicians, physicists and statisticians — mainly former university colleagues — could analyze financial data, identify market trends and make profitable trades.
After four roller coaster years, Monemetrics was renamed Renaissance Technologies. Mr. Simons and his growing staff of former scholars initially focused on currencies and commodities. Every conceivable type of data — news reports of political unrest in Africa, bank statistics from small Asian nations, the rising price of potatoes in Peru — was fed into advanced computers to glean patterns that enabled Renaissance to score consistently huge annual returns.
But the real bonanza came when Renaissance plunged into equities, a much larger market than currencies and commodities.
Stocks and bonds were long seen as the purview of Wall Street brokerages, investment banks and mutual fund companies whose young, tireless M.B.A.s analyzed listed companies and turned over their research results to senior wealth managers, who then relied on their experience and instinct to pick market winners. They initially scoffed at the math nerds at Renaissance and their quantitative methods.”
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