How Jim Simons Built the Best Hedge Fund Ever
The former code breaker and math professor figured out how to do one thing very well in markets.
Bloomberg, October 28, 2019
I feel like I have been keeping a secret for a long time that I can finally share: Over the long Labor Day Weekend, I read the galley of Wall Street Journal reporter Greg Zuckerman‘s new book, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution.
I devoured the book in one sitting, it was a terrific and enjoyable read.
I had been very much looking forward to this book coming out. Jim Simons has been a man of intrigue for like, forever. When I was an incoming Applied Math + Physics major at SUNY Stony Brook,1 he was the outgoing Math department chairman.
For the next few decades, I followed his career. He was an enigma, both mysterious and unknown.
Zuckerman has done a masterful job paining a fairly revealing portrait of who Simons is, and how he built Renaissance Technologies into its current state of success.
The numbers are simply unfathomable and eye-popping:
Although rumors of its performance have long circulated on Wall Street, the actual numbers are even more mind-blowing: From 1988 to 2018, Medallion returned 66.1% annually before fees. Net of fees, the gains were 39.1%. Estimated trading profits during those 30 years amounted to $104.5 billion. (About those fees: If the standard hedge fund management fee of 2%, plus 20% of the profits sounds expensive, then what do you think Medallion’s “5 and 44”?)
The rest of the book is similarly filled with little known or previously unknown information. I had to work hard to find negatives to say about the book, the most significant of which is the title.
Overall, it is a great story well told. I strongly recommend it.