The Man Who Solved The Market
Gregory Zuckerman
5 people recommended it in 3 threads, 2019–2022.
What people on Hacker News said
The Man Who Solved The Market - everyone interested in finance needs to read this and it’s precursor More Money Than God. The Bogleheads and their index fund ilk are often correct when they say “money managers all lose to an index after fees”. Beating the market is nigh on impossible for all but a few. Most of those few work at Renaissance Technologies.
Their Medallion Fund has made 36% after fees every single year since 1989. The fund does its best in market crash years. Closed to outside investors. A story of mathematicians essentially building models that can predict the future reliably. Utterly fascinating, the most successful money printer ever built.
Even in the early 1990s, Simons had basically checked out of the fund and was mainly doing venture stuff. He clearly made some good hires pre-1990s (I can't remember but the data guy clearly seemed to give them a huge edge over the competition, they clearly had data that no-one had) but it was that sequence of hires after this point that really elevated things: Peter Brown, Nick Patterson, Robert Mercer, etc.
Also, I think it highlights that quant investing starts out being very scalable but stops scaling quite quickly (and most similar firms hire people that, on paper, are very smart and get nowhere...so RenTech is the best example of scalability).
I’ve found RenTech to be fascinating over the years and highly recommend the book on it “Man who solved the market”
Two big takeaways for his success - 1) He was pretty early, and quite contrarian, in betting on computer and quant strategies and thus took the “low hanging fruit” early on (def wasn’t low hanging back then when no one knew or believed in computer trades strategies)
And a bonus one - despite being a math genius, he basically was failing till he brought on others. He hired the right people (ie those interested in math not finance), created the right environment, took care of logistics, and pushed on a key insight (model to trade). He couldn’t have done it by himself.
Yeah in the Zuckerman book they mention an employee who worked on getting and cleaning data for decades, far before data science techniques were common in finance. I could see RenTech having good quality data going back decades being a serious advantage.
Where it comes up
- Jim Simons proved the textbooks wrong, almost 2021 · 3 recommendations
- Ask HN: Which books you have read till now that were worth investing time in? 2022 · 1 recommendation
- Ask HN: Books you plan to read in 2020? 2019 · 1 recommendation