The Story of James Simons - Renaissance Technologies & Medallion Fund

Jim Simons is a mathematician and cryptographer who realized that the complex math he used to break military codes could also explain patterns in the world of finance. James Simons has been described as "the world's smartest billionaire", amassing a fortune through the clever use of mathematics and computers. He has stepped down as the chairman of Renaissance Technologies, the most successful quant hedge fund in history this January. Simons has not overseen the day-to-day running of the $120 billion hedge fund for nearly a decade, but he had stayed on as chairman of the fund up until now.
Jim’s retirement marks the end of an era in finance. Simons’s career and the fund he launched proved that the finance textbooks which claim that markets are perfectly efficient were wrong.
Obviously, the trading strategies at Renaissance are secret, but let’s look at Simons career, and see what lessons we can learn.
The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman: amzn.to/2Mkw2sf
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[@PBoyle]

Thanks to our growing list of Patreon Sponsors and Channel Members for supporting the channel. www.patreon.com/PatrickBoyleOnFinance Marc De Mesel, Annie Chen, Nate Stapleton,Timothy Baird,Cab1260, WIlam, Robertas, Hernan Merino, Random Encounter, Nieuwsbrief Ikwil, Bee Positive Consulting, hyunjung Kim, John Cadena, Ian Tracey, A Smith, Callum McLean, Oscar, Simon Pena, Alexander E F, Cyrus Yari, Ed, Pavle Obradovic, Erik Van Ekelenburg, David O'Connor, Zak Patterson, Ki Ryu Chan, Pjotr Bekkering, Drew, Ivaylo Kunev, Alex, Robert W Proudfoot, EatEmAll, Michael Boensel, pooh shmoo, Robert Muller, Andre Michel, Ivan Iliev, Gopaljee Atulya, Milan Tomic, Mark Hooker, Artem Vasenin, P H, Mathews Sebonego, Sebastian, Michal Lacko, Yann M, VicMR, Peter Bočan, Michael Pierce, V Jordan, Steve Kinnear, Gil, HalfwitHam, Mark Brophy, Patrick T, David Urdenata, Juan Valdez, Bruce Roberts, Chad Norman, Bruce Roberts, Shamikh Rana, Friday Guy, Marc De Mesel, Augusto Ramos, Soy Boomer Doomer, Bob Slartabartfast, Robert Feiler, Camil Dbouk, Erik Montesinos, Matthew Loos, Az Indragiri, Aman Bali, Lautaro Parada, Pratap, Deborah Joseph, Robin Sung, Kurt Johnston, Dominik Auerbach, gurmeet Kaushal, John Hall, Dara Mo and Josef Goergen,

[@gurjotsingh5131]

Is there a reason as to why the Medallion fund doesn't increase its capital investment which is capped at 10 billion because they can achieve these monstrous returns at billions of dollars I'm sure there is enough liquidity in the market to where they could increase it to maybe even 30 billion or possibly more

[@IronMan-ch7de]

Befor I watch the video, I have to say there are no secret Trading strategys. Everybody is trading on public information! I think it was clever marketing getting him rich.

[@SomeOne-wc9pr]

Hello Patrick, I hope I am not annoying you too much, but could you explain to me or in a video how $GME could be shorted >120% if naked shortselling is illegal?

[@01boga]

@@SomeOne-wc9pr This

[@notsogood4321]

Have you considered a vid on the reddit wallstreet bets thing

[@helenachase78]

Patrick , you do biographies very, very well.

[@patrickchase5614]

OMG that clip of Bowie on Bing Crosby's Christmas special cracks me up every time, especially since you timed it to play when you said "moving with the times". Perfect.

[@stevinacanstevinacan9618]

This was interesting but I'd recommend instead of talking about "gains" I'd use the more technical term "tendies" and instead of "stocks" use "stonks" this will allow a broader audience to understand the material.

[@dogestranding5047]

Yes, permanently change stocks to stonks.

[@thefrankperspective4247]

Hahahaha

[@7orqu3]

Came here because of Brady at Numberphile. He did an hour long interview with him. Absolutely incredible.

[@chrish.942]

"Skipping the firs year of mathematics..." Okay "...at MIT" :-O

[@entropica]

Well, he isn't just the run-of-the-mill mathematician that applies some maths to non-math problems. He did REAL, PURE mathematics on a world class level. The so-called Chern-Simons 3-form was later even recognized to be applicable to string theory by Edward Witten, and he called it Chern-Simons theory accordingly. All this is something COMPLETELY different from the applied math that is used at Renaissance, and on a much more sophisticated intellectual level.

[@denisdoci23]

It’s so hard to find a genuinely great financial channel on platform filled with swindlers and charlatans. You deserve way more subscribers. Can anyone recommend similar channels to Patrick’s ?

[@mushrifsaidin]

The Plain Bagel is a good channel similar to Patrick's

[@Andres186000]

There's an nyu finance professor who also makes videos here on KZbin

[@alex_6527]

Professor Aswath Damodaran

[@denisdoci23]

@@alex_6527 Thanks!

[@Andres186000]

@@niobull2206 get reported

[@caiusKeys]

All the so-called financial "experts" portray themselves as James Simons, but only 0.01% have the smarts of James, and even fewer have the success.

[@paullangton-rogers2390]

Indeed. People need to be extremely wary of so-called financial experts and gurus. Most are outright fraudsters. If an investment fund or investment advisor says they can achieve consistent high annual returns, they're lying. Nobody can promise that. Even Warrent Buffet and the real professions with 50+ years actice and successful fund management wouldn't make such claims and have had bad years in the past where their fund and clients lost money.

[@TypicalKid100]

This was fantastic. A very enigmatic group, quietly moving markets out in the boonies of Long Island. Always been curious about this group, crazy this group had so much inner turmoil vs. the impression of a bunch of PhD math nerds quanting out and playing chess.

[@Arigator2]

Whenever I hear that someone is beating the market I assume it's a ponzi scheme.

[@ytlover7924]

1.45 "You can teach someone how to do a job but, you cant teach them, to be smart" true

[@linnovate360]

Patrick, you truly are an excellent educator. From the tone of your voice, to the rhythm of concise facts. I am continually learning, and lucky to have come across your channel. Thanks, for what you do.

[@saitaro]

I am happy to find this channel. Sir, do not stop.

[@susymay7831]

Medallion is now capped at ten billion with only employee and founder money allowed. Medallion has the legendary and smaller secret sauce trades but... Renaissance Technologies has other funds (making larger trades) that are open to outsiders but they do not, after fees, beat reasonable benchmarks and one even folded.

[@insighthoops3484]

Love the book "Thinking Fast and Slow" that's next to you! Fantastic read.

[@jordiecomm4423]

Wow, this guy explained himself very clearly that I didn't even have to pause the video, congrats and very interesting !!!

[@peachjwp]

Virtually no one beats the market consistently. And if they can, their information will be more expensive than you could afford to pay.

[@MrEo89]

I highly recommend the book on Mr. Simons, “The Man Who Solved the Markets.” By Greg Zuckerman.

[@MrEo89]

And, of course, you present the book at the end of the video... 🤦🏻‍♂️should’ve waited 😅

[@klam77]

does it explain Simon's use of hidden markov model or such?

[@shaunwee1773]

@@klam77 nope. Its more of a biography, but drops phrases like higher dimensional kernel regression. Rather a good read but dont expect to any secrets of simons

[@klam77]

@@shaunwee1773 thanks!

[@bachpham6862]

@@klam77 His model is trade secrets, but the book does drop hints on how he did it.

[@blakebrothers]

Fascinating! Just ordered the book and thanks for the history lesson!

[@annajones9701]

How he chose to buy a stock - simple - flicked a coin and head buys. In seriousness that is why many quant hedge funds prefer taking on a maths/physics PhD with no experience. They can train the finance element easy but is hard for a finance PhD to understand some complex maths needed.

[@dariusashouri2439]

you dont need PHD and this amount of complexity to make money in stock market. read about John C. Bogle and finish the headache

[@annajones9701]

@@dariusashouri2439 that is for average Joe investing. Not a professional trader at a firm

[@dariusashouri2439]

Im not going argue with you about PHD , but you mean professional gambler at a firm that gamble with people’s money yes? Just correct your sentence. Regard to phd listen to warren buffet and charlie munger. I have no idea whats Joe investing. Im out of time GL

[@superdingo9741]

@@annajones9701 The "professional trader" buys from or sells to another "professional trader". So in average earnings of all the "professional traders" are the same as of the whole market (minus fees). You don't need to have PhD in math to understand that.

[@annajones9701]

@@superdingo9741 professional traders screw the retail guys over. Institutional, quants, retail guys. ..

[@barkingshark6413]

Thanks Patrick, always look forward to another video from you.

[@JayBigDadyCy]

What's kind of wild is that a team of mathematicians failed for years, yet I know a few people who barely graduated highschool that were brilliant traders right off the bat. Markets are strange like that. This was a great video and I'm glad you covered the fact that it wasn't peaches and cream all the time for these guys. They struggled and failed for a long time. They fought amongst each other as well.

[@Telencephelon]

You are also a brilliant trader. And to celebrate your success you are here now with us on youtube and commenting. For everyone else I hope you can differentiate yourself, a meantball with 200+ cognitive biases, and a sentient super-intelligence like a corporation with checks and balancess

[@J0risNL]

"but they did" followed by that cheeky smile, cracks me up every time 18:37

[@GreenSmoke352]

This is a great man and as always a great video. Thank you for the knowledge!

[@kevinvest9693]

Pat, your dry sense of humor and great financial information is truly S-teir! Your channel is a real 💎.

[@JaseBrand]

Thanks Patrick you’re the best KZbin channel by far in this industry

[@MRKINGCOLLINS]

You are a legend Mr Boyle! Keep up the good work!

[@DannRecio]

I love his work and insight

[@bojanbatalovic7186]

Academically delivered as always. Thank you!

[@ereztison]

Many thanks Patrick, love this kind of videos.

[@user-zb7vb1hy6w]

Thank you for another informative video on the world of finance.

[@coscorrodrift]

Fantastic video, super clear explanation and especially, a story well told in a way that isn't exaggerated or clickbaity

[@Salah-qu4cs]

Profiting off cocky dentists' money. I love this fund even more now haha

[@netrabhatta]

Thank you Patrick for the great content.

[@peacebywisdom]

Wonderful presentation. Thank you!

[@lopezb]

Really an excellent video, Patrick! I just saw it again, 2 years later.

[@tinolino58]

I see the briliance in Patricks brain.. no ähhh uhhh and things like that while he explains a complex subject. Great series of videos!

[@davidmadle5007]

As always great value many thanks for this

[@Dat_Dude_Danny1]

Excellent video, mate! Thanks for posting.

[@perschonca]

Love these kinds of videos. Thanks!

[@saveenergy8702]

Came here after my brother suggested. Grateful 🙏

[@titanstrading]

This is the best bio of him that I've seen, thank you!!!

[@pduran880]

Great story and you did a great job telling it

[@CristianHernandez-er4zn]

Great Story, thanks for sharing.

[@kylejf9059]

Flashback humour - "Dentist's". Jack Schwager would be an excellent interview for Simmons. His story sounds like so many others, yet on a much longer timescale of overcoming adversity in trading and learning from mistakes. Seems like an almost commonality at times, most of these guys get put onto their knees at times before becoming extremely competent traders. Look forward to next week's video.

[@user-oz9yj5to7m]

This is the best if not the only one good promo of the Zukerman book.The author himself made bitter impression in WSJ article and his TV interviews of clueless media buzz

[@keirdoubas]

Brilliant synopsis, i've alwayed wanted to know a bit more about James Simons and Renaissance technologies. Thank you Patrick.

[@paullangton-rogers2390]

Thank you for continuing to provide first class content Patrick, and sharing your brilliant teachings and personal insights. As a newcomer to the world of investing I've learned and am learning so much to explore my own ideas.

[@marcus-johannesvermin5202]

Subscribed. Great content, great video Patrick .... Thanks mate!!!

[@erikvanekelenburg9309]

Great job as always Patrick

[@swastiknayak4978]

please keep making these videos we love it 👍

[@trevorisle5462]

Great video! Tons of info and interesting too! 👍

[@davianoinglesias5030]

Fantastic biography, I love this page for 3 things things 1. Facts 2. Dry humour 3. clarity .I'm currently working on a Cognitive Psychology algorithm/formula that I intend to use in Speculating the markets. I hope it works one day and probably my biography will be as famous ,,a book titled 'The Man who solved Behavioral Trading' would be a great title😂😂

[@ExplainedExplanation]

Cheers Patrick fantastic video

[@andreas3578]

as always, thanks for the good content.

[@TheRealLazyBear]

will wait next Saturday for the next video, this is brilliant.

[@clyderichardson6475]

Great production of interesting material as usual Patrick. When I complete “The Smartest Guys in the Room” I will get the book you recommended. I also enjoyed “When Genius Failed was also a great book.

[@clyderichardson6475]

Fat fingers.

[@martonvirraszto4774]

Patrick, another fantastic video! Really enjoyed it. Some day, you could do a video on the historic short squeeze that happened on GME in the recent days. Institutions vs retail battle. Would love to hear your take on this squeeze and possibly similar ones that are memorable from history. Thank you!

[@PBoyle]

Just put a video up yesterday on that.

[@martonvirraszto4774]

@@PBoyle And I have already seen that in the morning ;) Thank you! Really enjoying the show!

[@rodolfoblasser3329]

Thanks Patrick!

[@SJ-vc2tz]

Very nice story, if I may I'd recommend a bit more visual storytelling since it's a video. For example a picture of the 'Murphy bed' (is that correct?) was really good. Good luck with the channel!

[@dennismorris7573]

Fascinating.

[@thomasfung3205]

Excellent video!!!

[@vernefits1953]

Excellent video. Well rounded

[@vernefits1953]

excellent video

[@sametcankaya3706]

Great video again . Loves from Turkey

[@surething119]

you are an inspiring man

[@youtubestolemyusername3419]

I want to be a member of your channel. I love the content. I learn way more from you than from people that just suggest this and that and say how great it is. I want to support it but then I have to give youtube all my personal info and I don't want that.

[@mikestanmore2614]

Oh, now there's a black box I'd like to get a look at! (I know, I know, I'm not Robinson Crusoe!) Thanks again for another interesting bio, Patrick.

[@mbugard]

Love the Bowie analogy.

[@sofjanmustopoh7232]

That’s an awesome presentation

[@ss032010310103]

Thank you!

[@Jayslollipop]

Robert Mercer made his Medallion Fund work.

[@jeffw8218]

Be born a genius in mathematics. Got it.

[@blakejech6846]

Before listening to this, my guess is his medallion fund front runs his other funds, helping drive his premier fund through the roof.

[@goldenratio183]

Great videos thank you!

[@jonc67uk]

Good bio. How about doing Robert Mercer? That would be interesting.

[@800acceptnoimitation]

Interesting video. I wasn't familiar with this fund.

[@patrickt873]

Good video. Well done

[@SnappCheck]

Hey Patrick, could you make a video explaining whats exactly going on the GME stock right now? The relation between the retail investors and institutional one? And maybe how it will affect the future of investing?

[@boldbaatardashdorj9389]

Thanks!

[@AI7KTD]

What you're describing on his hiring practices and the collaborative environment is very similar to Google's hiring and culture.

[@zammy92]

Lots of questions about whether these returns are genuine given his public fund has been underperforming significantly cf. to his medallion fund. Although, I would not necessarily agree with this view

[@jamesy3851]

Funny timing! I just started reading "The Man Who Solved The Market" last night. Love your videos!

[@shephusted2714]

his efforts are so far past competitors the results are unique - he did something different #models

[@desislavpetrov3780]

Hi Patrick, great video(s)! Enjoyed it, and appreciated it as usual. I have a question. What are your predictions for MBIA after the news came out , Credit Swisse have to pay them 690M(I believe Monday), on the court decision that came out 20.01.2021. Any SP in mind? I am in, obviously, however I never came across such s scenario for a company as this one, and am a bit lost as to what is to be expected SP wise. Thank you in advance!

[@mipmipmipmipmip]

15:39 note, IBM marketing would want you to believe otherwise, but DeepBlue was a highly specialised one-off system, even up to a hardware level. The knowledge to work on such a specialised high performance system will certainly have helped in quantitive finance though, (significantly) more so than working on IBM's general products.

[@JP-xv8uq]

Love the history recap, but one concept you kinda went over or skimped on was the methods for collecting. You mention how hard it was to collect data during those times which is why it was popular to trade off the news rather than trade quantitavely.

[@mipmipmipmipmip]

Certainly! An issue would be to have predictive models converge to anything useful based on flaky data (and with early 1980s compute power)

[@DerperDaDerpa]

Simons is the David Bowie of finance!🤣👍🍻

[@henrytep8884]

YOU GOTTA DO GAMESTOP PLEASE!!

[@conorq377]

video setup is nice, maybe raise the camera

[@01boga]

Make a video about gamestop shortselling cause this is gonna be legendary dude

[@PBoyle]

It is uploading right now.

[@berkaygazikara]

Patrick thank you it is a great video. Human relationships, ups&downs are interesting but what did he do actually? Which statistic methods they used, what are the models they used, practical examples?.... Maybe in your next video you can mention these topics

[@j.a.2770]

visuals! good narrative but we need a bit of variety from looking at our good lad Patrick.

[@Ahmed_el_Ankaoui]

Who the heck gives this a thumbs down?!?

[@ag5605]

I really appreciate Patrick

[@rebusd]

needed this to detox after all that FTX hype and implosion

[@grumbla1]

Great Video Patrick. Could you make a video about Robert Mercer? I heard he became the Kingmaker of Donald Trump. What is your opinion on the tangles between politics and hedge funds? Or artificial intelligence / machine learning?

[@Professor_Snake]

Do one on David shaw.

[@Longtack55]

Thanks Patrick. I'm pleased that they were clever enough to be using some of the methods I use :-) (such as splitting up into parcels/tranches so as not to disturb the market unfavourably.)

[@jordiecomm4423]

Explain you self xd

[@Raptors19tdot]

Renaissance Technology is like Neo in The Matrix. Which proofs that if ur gd at physics, & stats plus great emotional control, u can get so Rich! Hmm.....I wonder how Patrick plays poker? It'll be entertaining to see how he thinks in a live mathematical game of poker against other fund managers.

[@rationalinvestor5513]

Patrick, First of all I would like to say a big thank you for providing so useful Information. I have a question regarding this video. James Simons managed to beat the market for an extended period of time using statistical concepts and quantitative analysis. Do you think that this can be achieved again given the current market conditions? In other words, investing in the stock market has been a trend after the 2008 F.C. As a result, the number of retail investors has increased exponentially. Having that said, is it still possible to predict future results based on past events working with such a massive data set? If that's the case, do you think that this might go against the efficient market theory? Thanks again, GM

[@RozPanthiras]

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[@RozPanthiras]

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