James Simons (1938, Newton, Massachusetts, US) is a mathematician, hedge fund manager and named by the Financial Times in 2006 as “the world’s smartest billionaire”.
His current net worth is $18 billion which makes him a member of the “propeller set.”
In 1964, James Simons worked with the National Security Agency as a code cracker. Between 1964 and 1968, he was on the research staff of the Communications Research Division of the Institute for Defense Analyses (IDA). In 2014, he was elected to the National Academy of Sciences of the USA.
But perhaps Simons is best known as the genius mathematician who cracked Wall Street.
Moreover, in the age of algorithmic bot trading, one can only speculate that his financial algorithm could very well be the “brain” of the central bank’s 24/7 bot trader guiding asset prices at pre programmed price levels. In 2006, Simons was named Financial Engineer of the Year by the International Association of Financial Engineers.
James Simons was born to a Jewish family. His father owned a shoe factory.
Simons earned a Bachelor of Science in mathematics from the Massachusetts Institute of Technology in 1958 and at the age of just 23, he was awarded a Ph.D. from the University of California, Berkeley.
From 1968 to 1978, James Simons was a mathematics professor and subsequent chair of the mathematics department at Stony Brook University.
In 1973 Simons was approached by IBM to attack the block cipher Lucifer, an early but direct precursor to the Data Encryption Standard (DES).
James Simons started trading in his late 30s and in 1982 Simons founded Renaissance Technologies, a private hedge fund based in New York City.
But the Renaissance Institutional Equities Fund (RIEF) has also attracted some controversy.
In May 2009 James Simons was questioned by investors on the dramatic performance gap of Renaissance Technologies’ portfolios. The Medallion Fund, which has been available exclusively to current and past employees and their families, surged 80% in 2008 in spite of hefty fees; the Renaissance Institutional Equities Fund (RIEF), owned by outsiders, lost money in both 2008 and 2009; RIEF declined 16% in 2008.
James Simons retired from the fund in 2009, he remains its non-executive chairman and adviser.
named by the Financial Times in 2006 as “the world’s smartest billionaire”.
James Simons is a quantitative investor. When he was asked about how he managed to create astonishing returns over two decades with surprisingly low volatility compared with other hedge funds he replied, “I did it by assembling a wonderful group of people”.
He started trading in his late 30s. “I made quite a lot of money out of pure luck, no mathematical model was involved.”
“But after looking at the data I realized there was some structure here. I hired a few mathematicians and we started making some models. The kind of thing we did at the Institute for Defense Analyses (IDA). You design an algorithm test it on a computer.”
“You look at a lot of data and try to simulate different predictive schemes.”
What data? “Everything is grist for the mill, except hem lines,” replied Simons.
So financial reports, historical data, in other words, technical and fundamental analysis)
“You are looking for anomalies…”, added Simons
You look at a lot of data and try to simulate different predictive schemes – James Simons
James Simons has not given many interviews. He tends to shun the limelight. However, he did give a rare interview which is available on Ted talk.
I made quite a lot of money out of pure luck, no mathematical model was involved – James Simons
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