Does Jim Simon's have some secret formula for his trading computers' that is worth millions? Do all quants use similar formula's? Does Renaissance Technologies have 1 formula that makes them billions? enlighten me
James Simons of Renaissance Technologies: Finance's Mad Scientist
The 3.3 billion dollar Medallion fund has amassed 35.6 percent annually since its inception in 1988. Cumulative returns? 2,478.6 percent
James Simons is an award-winning mathematician.
He is the winner of the American Mathematics Oswald Veblen Prize in Geometry. He surrounds himself with equally intellectually gifted individuals. One-third of his employees hold PhDs. They don't hire people from business schools. They hire scientists.
What does he contribute his success to? Luck. Is that really it? Hardly
from the Institutional Investor The Secret World of Jim Simons
Like all quantitative money managers, Renaissance aims to find small market anomalies and inefficiencies that can support profitable trading on billions of dollars of capital. Though all quant shops are alike in their dedication to models -- Let the best algorithm win! -- Renaissance's approach differs from the "convergence trading" popularized by John Meriwether's Long-Term Capital Management and similar arbitrage shops. Convergence traders price financial instruments based on complex mathematical models, find two different instruments that are cheap and expensive on a relative basis and then buy one and sell the other, betting that the prices will, at some point, have to return to their proper level. The Renaissance approach requires that trades pay off in a limited, specified time frame. And Renaissance traders never override the models.
On the intellect of RenTech founders from certified user @syntheticshit
If you read More Money Than God, the two current guys that run RenTech made groundbreaking research in machine translation. In short, artificial intelligence guys would teach computers to learn French like a 7th-grader; grammar rules, exceptions, dictionary, etc....they said screw it, what we're going to do is feed it a Canadian government document that had been translated in both English and French. And then they had it scan it over and over and over again for correlations and rough translations..