The God of Quants speaks
Perhaps one of the coolest guys from the pocket protector posse, James Simons has become an absolute legend in our world of finance, with his army of physicists and mathematicians at the Quant juggernaut Ren Tech, he has beaten and wowed the street year in and year out, showing the world the future of hedge funds and perhaps, changed the game forever.
Now retired and back to his great love of mathematical research, the notorious recluse has given a rare, hour long speech at MIT, and he spoke about work, math, the markets, and life in general.
No, you won’t become a quant god watching this and no, he doesn’t spill the beans on what strategies they actually employ there, but he does talk about how he started, how he conceptualized Renaissance, Medallion, models, and taking a motorcycle to Colombia.
Video after the jump.
Speaking of what they actually do there, are there any future quant gods here on WSO that can tell me this?
I’ve always been fascinated with this area of finance, and while I think I’m fairly lucid with math and the sciences, I’m worlds away from understanding (or even thinking of) the strategies they use.
Anybody care to guess what they do there?
They’re not your neighborhood HFT shop that’s for sure.
Have a good one WSO.
Fascinating video.
I would be interested to know if there are any working quants here and their comments.
I read a while back that looking at their hires gives a clue about their techniques:ex- Bell Labs signal processing experts, physicists, computer science experts, great programmers. Also how Simons really considers themselves as contrarians, and how they scan through a ridiculous amount of data a day.
It's probably a combination of non-parametric or semi-parametric modeling done on crack with techniques from signal processing and artificial intelligence thrown in, and he mentions liquid assets only in his video. That means fairly rigorous statistical arbitrage, because other hedge funds playing in that space (AQR, Citadel, GS Global Alpha) blew up spectacularly during the quantmare and '08 while I think Medallion scored near-record gains. Their models are good enough that they can be self-correcting under times of stress.
The strangest thing about RenTech is that RIEF and its sister (not Medallion) fund have not done as well. I really wonder how much Medallion is levered.
What a freaking legend. Awesome video. I will never be a quant but I really enjoy reading about RenTech and Simons.
The Q&A part is also fucking hilarious--the first question is so bad haha
the first guy to ask a question sounds like an absolute tool
there's asymmetric info...
first question was actually the smartest. rentech will blow up
They're into derivatives market making, and have insanely fast machines that beat most of the competition.
Great video. They hired one of my physics professors last year (fully tenured) - curious to know what their offer looked like for him to give up a life of above average income at approx. 15 hrs of work per week and ultimate job security. as far as I know, that guy was doing derivatives modeling with path integral methods on the side (not his area of research).
Frank Langella(Louis Zabel :WS2) wins the part in a bio film for James Simons hands down.
They were our largest customer at eSpeed when I was there several years ago so USTs, IRS Swaps, IRDs are definitely involved. They used to trade mind-boggling size and volume. Whether that was their principal trading or hedging I won't attempt to speculate. Also, if I remember correctly, they are CIA strict with visitations. You need something like 2 IDs, 2 employee contacts confirming your visit, etc, etc. Only ONE sales guy at our firm was allowed there and he was NEVER allowed on the trading floor. I believe they have a separate room to meet with people far away from the trading floor
This video was pretty good.
He's got the golden voice...
He is such a BA.
That's such a great talk. He seems to have a non-dogmatic approach to his business & life choices.
Jim Simons is the boss.
Spoke with Simons a few weeks ago at a small lecture he gave in LI. True legend.
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