Founders
Episode 387 #387: Jim Simons Built The World’s Greatest Money-Making Machine
Founders

Episode 387: #387: Jim Simons Built The World’s Greatest Money-Making Machine

Founders

Episode 387

#387: Jim Simons Built The World’s Greatest Money-Making Machine

David Senra is the host of Founders, where he studies history's greatest entrepreneurs. This is what he learned from rereading The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman.

Jim Simons never took a single class on finance, wasn’t interested in business, and didn’t start trading full time until he was 40. The company he founded —  Renaissance Technologies — has made over $100 billion in profits.

Starting out with the heretical belief that there was a hidden structure in financial markets, Jim decided to staff his “crazy hedge fund” with mathematicians, computer scientists, and physicists. He went to great lengths to collect more historic financial data than anyone else, spent a lot of time recruiting “killers” (people with single minded focus that wouldn’t quit), invested heavily in computers (and the people who ran them), and designed the most collaborative work environment.

Jim was a world-class mathematician, code breaker, exceptional manager of people with exceptional minds, a genius in system design, and deeply understood the power of incentives. He was also incapable of giving up, willing to endure a decade of struggle and pain, and hell-bent on doing something “historic” with his life.

Jim Simons lived a life defined by persistence, unconventional thinking, and an unwavering pursuit of excellence. Studying his life and work is time well spent. This episode is what I learned from rereading The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman.

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#387: Jim Simons Built The World’s Greatest Money-Making Machine

Introduction

Jim Simons created the world's greatest money-making machine. To do so, Simons chose a different approach. A world-class mathematician and former code breaker, Simons had a hunch that financial markets moved in orderly ways, just not in ways that could be detected with human intuition and insight.

Simons believed that collecting and analyzing data could provide an advantage and that automated trading was possible. Working from a ramshackle office in a Long Island strip mall, Simons hired mathematicians, physicists and computer scientists to amass reams of historic records and develop algorithms to process it all.

His team hunted for patterns hidden deep in the numbers that might reveal long-sought rules governing markets. After decades of struggle, his data-driven approach paid off. Since 1988, Renaissance Signature Medallion Fund has generated average annual returns of 66%. They have made more than $100 billion and Simons is worth more than 23 billion.

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