Friday, February 3, 2017

Friday Feature TED Talk Review: Jim Simons Quant Founder : Renaissance Technologies ジム・シモンズ: ルネッサンス・テクノロジーズ: クワンズの社長。

There can only be one king, and Jim Simons is the king of quants. There are very few great innovators in finance who make their own success on their own terms. They are people who go their own way, do their own thing, and still makes billions of dollars in profit. Jim Simons is such a man, and has inspired many people interested in math and numbers. I always get the feeling that if I ever had a one on one conversation, he would see through me like a piece of glass. However, he may also play around with me to see if I had any worthwhile ideas he had not thought of.

He always had a gift for numbers, and worked within the intelligence department as a code-breaker for the US military. When you have an IQ gift, you do not always have the same EQ gift to match it. Luckily, he was able to find a balance in both later on. He did not grow up wanting to be a hedge fund manager at 12 or 13 years old, his career path took time. Unlike recent Tech Billionaires running unicorns today, his career development had a more reasonable and realistic in pace.

He went on to figure out financial markets and create one of the largest hedge funds ever, Renaissance Technologies. The flagship product, the Medallion Fund grew to over US$43 billion dollars in size. It charges some of the highest fees in the world, 5% annual fees and 44% performance fees. This seems high, but as it was founded in 1982, is has been a profitable success over a very long time. 

They use high frequency trading and complex algorithms to maximize profit from various markets globally. The poor returns within the hedge fund space today, now struggling to keep a 2 & 20 fee structure in place, need to understand what real long term solid performance is really about. The fee structure is not a negotiation, is just more a logical result of a proven process.

He is secretive by nature, and any interview with him is a rare treat. We have had similar stories that inspire, and the Russell Crowe movie " A Beautiful Mind" is a good example. Jim Simons is the real deal. Curiously, he hires non-financial people, often scientists, into his hedge fund. He does this on purpose. He finds that they have more freedom in their thinking as they have no expectations of what should work. 

The Top 3 Takeaways from this book that really impact any reader are:

1) There is a lot to learn about how a great mind thinks, and what life experience lead him to the quant space of finance. The mind of an intelligence officer is a very rare occurrence. It really is a special enigma. This difference needs to be understood.

2) The financial markets are always evolving, so a flexible mind is always needed. Why would an established mindset then be a good fit? It would not, a clear scientific mind with no set assumptions can be a powerful advantage. 

3) When becoming a successful quant investor, you have to put in the long hours, work hard and learn by experience. There is not short cut. Once the hard work is done, you "may" get lucky. That was a key lesson in his life.

In this very rare TED Talk, he explains his story and views on various markets. Enjoy the TED Talk, and learn from the best quant mind the world has to offer, enjoy! TED Talk with Jim Simons  A very thought provoking interview, highly recommended!

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