
The making of Jim Simons - drkimball
https://www.wsj.com/articles/the-making-of-the-worlds-greatest-investor-11572667202?mod=rsswn
======
melling
“Jim Simons looked to math and computers as ways to eliminate the emotional
ups and downs of investing. “I don’t want to have to worry about the market
every minute. I want models that will make money while I sleep.”

“ Mr. Simons developed a unique perspective. He was accustomed to scrutinizing
large data sets and detecting order where others saw randomness. Scientists
and mathematicians are trained to dig below the surface of the chaotic,
natural world to identify simplicity, structure, and even beauty. Mr. Simons
concluded that financial prices featured defined patterns, much as the
apparent randomness of weather patterns can mask identifiable trends.”

The world’s greatest investor was a math professor.

[https://en.wikipedia.org/wiki/Jim_Simons_(mathematician)](https://en.wikipedia.org/wiki/Jim_Simons_\(mathematician\))

Also, all the Quanta Magazine stories that are published on HN are from a
magazine that Simons funded:

[https://news.ycombinator.com/from?site=quantamagazine.org](https://news.ycombinator.com/from?site=quantamagazine.org)

~~~
qeternity
Warren Buffet was not a math professor...

~~~
throwawaymath
They're referring to Simons; over a 30 year period RenTec's Medallion Fund has
beaten Berkshire Hathaway.

~~~
qeternity
I’m well aware. Medallion has also managed a fraction of the assets,
specifically because their strategy doesn’t scale. Simons, as brilliant as he
is, is a trader not an investor.

------
soniman
Does any billionaire get better press than Simons? Meanwhile, there was a
senate hearing and report about his tax fraud. Rentech was basically an
unregulated market maker. How often does the senate hold a hearing on a
billionaires massive tax fraud? And yet not a squeak about it in the press.

[https://www.hsgac.senate.gov/subcommittees/investigations/he...](https://www.hsgac.senate.gov/subcommittees/investigations/hearings/abuse-
of-structured-financial-products_misusing-basket-options-to-avoid-taxes-and-
leverage-limits)

~~~
bradleyjg
Bill Gates? Haven't read an even slightly negative article about him in more
than a decade.

~~~
SkyMarshal
B/c for the past decade he’s been eradicating malaria and being a legit hero.
Not a whole lot to complain about Gates during that time frame.

~~~
dmix
So basically yes, other billionaires have indeed generated plenty of positive
coverage while doing legitimate good in the process.

Jim Simons is not yet a household name yet like other billionaires, such as
most of the ones who've donated at least half-their-wealth.

------
arzt
I wonder if anyone has insight into how they have been able to do this
consistently in the modern era of quantitative trading (this article had scant
detail)? His returns are such an outlier and strategies such a closely guarded
secret that they leave people on Wall Street in awe.

~~~
rjdagost
To my knowledge, all he has ever said on the subject is: "I think people would
be quite surprised if they knew how simple our methods are". You probably
won't ever hear more information than that, until their strategies stop
working.

~~~
doctorpangloss
> anyone has insight

In a world where all their statistical arbitrage has ceased to be viable,
financial professionals believe that the outsize returns of the Medallion fund
in recent history are siphoned from their institutional funds via shell games.

Then, their famous ability to make money even in down markets is attributed to
how they smooth out an extremely profitable short term trade, that may have
occurred years ago, over the course of many years. This sort of surfaced in
their tax avoidance lawsuit too.

You too can make a "Medallion Fund." First, make a venture investment in
something that turns out to be Facebook. Keep that equity secret, even when
Facebook goes public. All that time, say that your fund has gained 15% year
over year, even during a recession. Do this for years until you have taken
your 2% management fee to your liking. You've turned your 200x return that
happened all at once into something that looks like the world's greatest hedge
fund. Lawfully of course.

~~~
throwawaymath
No, that wouldn't work. The options basket strategy you refer to did have
nontrivial tax advantages, but

1) Those tax advantages can only improve returns which are already
fundamentally strong, and

2) There is no "smoothing" effect achieved; the options baskets do not defer
returns for years at a time.

I get that the cynical take is, as ever, the attractive one on Hacker News.
But speaking frankly, what you're saying doesn't actually make sense. Among
other problems with your explanation, there's a straightforward wrinkle. While
it's not available to the general public, other institutions like Bloomberg
and WSJ have had (and still have) access to audited attestations of
Medallion's track record over a timespan of 25 years.

------
chockablock
FYI this article is an excerpt from a new book by the author:

> — Adapted from “The Man Who Solved the Market: How Jim Simons Launched the
> Quant Revolution” by Wall Street Journal special writer Gregory Zuckerman,
> to be published on Nov. 5 by Portfolio

------
miguelisolano
Related previous discussion:

[https://news.ycombinator.com/item?id=9764793](https://news.ycombinator.com/item?id=9764793)

------
scottlocklin
[https://archive.is/ozwSA](https://archive.is/ozwSA)

It's a fairly weak article and gets some of the history wrong.

------
mdonahoe
I don't subscribe to wsj, so I can't read the article, but Simons was on
Numberphile a while back.

[https://www.youtube.com/watch?v=QNznD9hMEh0](https://www.youtube.com/watch?v=QNznD9hMEh0)

~~~
hellofunk
That’s why there is a web link above.

~~~
Stratoscope
Ah, the glory days when that used to work with WSJ. I can't even get the
freewsj.com trick to work any more.

~~~
chockablock
Worked for me just now. ‘Web’ link took me to a Google search page, clicking
through to article gave me full text.

