How Jim Simons became the most successful investor of all time

The Man Who Solved The Market.  Gregory Zuckerman. Penguin Random House; 359 pages; $30

THE BEST investors’ strategies often sound simple. “Whether it’s socks or stocks, I like buying quality merchandise when it’s marked down,” says Warren Buffett. Betting big on the fallout from epoch-making events, like the fall of the Berlin Wall, is George Soros’s preferred tactic. Jim Simons, the founder of Renaissance Technologies, a hedge fund, spots patterns.

Mr Simons is less famous than Mr Soros or Mr Buffett, but no less successful. He founded Renaissance in 1982, aged 44, after a successful career in mathematics and code-breaking. Its flagship Medallion fund has earned $100bn in trading profits since 1988, mostly for its employees. The average annual return of 66% before fees makes Mr Simons one of the most successful investors of all time. He is now worth $21bn.

A new book, “The Man Who Solved the Market” by Gregory Zuckerman of the Wall Street Journal, asks how he did it. It is a compelling read. Mr Simons started investing in 1978 by looking for patterns in currencies. He had early successes with simple “reversion to the mean” strategies, buying when a currency fell far enough below its recent average. A decade later René Carmona, another mathematician,...



via The Economist: Finance and economics Business Feeds

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