The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

by Gregory Zuckerman

In trading, as in mathematics, it’s rare to achieve breakthroughs in midlife.

Mercer was unusually gifted. He was also odd and socially awkward. Every day for lunch, Mercer ate either a tuna or peanut-butter-and-jelly sandwich packed in a used brown paper bag. Around the office, Mercer constantly hummed or whistled, usually classical tunes, wearing a look of detached amusement.

“The lesson was: Do what you like in life, not what you feel you ‘should’ do,” Simons says. “It’s something I never forgot.”

“It’s nice to be very rich. I observed that,” Simons later said. “I had no interest in business, which is not to say I had no interest in money.”2

Overconfident during the second semester of his freshman year, Simons registered for a graduate course in abstract algebra. It was an outright disaster. Simons was unable to keep up with his classmates and couldn’t understand the point of the assignments and course topics.

When Simons studied with students like Barry Mazur—who graduated in two years and later would win top mathematics awards and teach at Harvard University—Simons concluded he wasn’t quite at their level. He was close, though. And Simons realized he had a unique approach, mulling problems until he arrived at original solutions. Friends sometimes noticed him lying down, eyes closed, for hours at a time. He was a ponderer with imagination and “good taste,” or the instinct to attack the kinds of problems that might lead to true breakthroughs.

Simons made progress on a PhD dissertation focused on differential geometry—the study of curved, multidimensional spaces using methods from calculus, topology, and linear algebra.

Simons was hustling for money, but it wasn’t simply to pay off his debts. He hungered for true wealth. Simons liked to buy nice things, but he wasn’t extravagant. Nor did he feel pressure from Barbara, who still sometimes wore items of clothing from her high school days. Other motivations seemed to be driving Simons. Friends and others suspected he wanted to have some kind of impact on the world. Simons saw how wealth can grant independence and influence.

Differential equations—which are used in physics, biology, finance, sociology, and many other fields—describe the derivatives of mathematical quantities, or their relative rates of change.

Mathematicians who focus on theoretical questions often immerse themselves in their work—walking, sleeping, even dreaming about problems for years on end.

He told one Stony Brook professor, Hershel Farkas, that he valued “killers,” those with a single-minded focus who wouldn’t quit on a math problem until arriving at a solution.

Simons told another colleague that some academics were “super smart” yet weren’t original thinkers worthy of a position at the university.

A decade later, theoretical physicist Edward Witten and others would discover that Chern-Simons theory had applications to a range of areas in physics, including condensed matter, string theory, and supergravity. It even became crucial to methods used by Microsoft and others in their attempts to develop quantum computers capable of solving problems vexing modern computers, such as drug development and artificial intelligence. By 2019, tens of thousands of citations in academic papers—approximately three a day—referenced Chern-Simons theory, cementing Simons’s position in the upper echelon of mathematics and physics.

He thought using models to trade was an idea that held promise.

Mathematicians generally have a complicated relationship with money; they appreciate the value of wealth, but many see the pursuit of lucre as a lowly distraction from their noble calling. Academics wouldn’t say it to Simons directly, but some were convinced he was squandering rare talent.

Simons had never completely fit into the world of academia, though. He loved geometry and appreciated the beauty of mathematics, but his passion for money, curiosity about the business world, and need for new adventures set him apart.

Simons decided to treat financial markets like any other chaotic system. Just as physicists pore over vast quantities of data and build elegant models to identify laws in nature, Simons would build mathematical models to identify order in financial markets.