The Man Who Solved the Market Quotes

“Simons shared a few life lessons with the school’s audience: “Work with the smartest people you can, hopefully smarter than you . . . be persistent, don’t give up easily. Be guided by beauty . . . it can be the way a company runs, or the way an experiment comes out, or the way a theorem comes out, but there’s a sense of beauty when something is working well, almost an aesthetic to it.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“We’re right 50.75 percent of the time . . . but we’re 100 percent right 50.75 percent of the time,” Mercer told a friend. “You can make billions that way.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Simons and his team are among the most secretive traders Wall Street has encountered, loath to drop even a hint of how they’d conquered financial markets, lest a competitor seize on any clue. Employees avoid media appearances and steer clear of industry conferences and most public gatherings. Simons once quoted Benjamin, the donkey in Animal Farm , to explain his attitude: “‘God gave me a tail to keep off the flies. But I’d rather have had no tail and no flies.’ That’s kind of the way I feel about publicity.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Scientists and mathematicians are trained to dig below the surface of the chaotic, natural world to search for unexpected simplicity, structure, and even beauty.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“The options also were a way of shifting enormous risk from Renaissance to the banks. Because the lenders technically owned the underlying securities in the basket-options transactions, the most Medallion could lose in the event of a sudden collapse was the premium it had paid for the options and the collateral held by the banks. That amounted to several hundred million dollars. By contrast, the banks faced billions of dollars of potential losses if Medallion were to experience deep troubles. In the words of a banker involved in the lending arrangement, the options allowed Medallion to “ring-fence” its stock portfolios, protecting other parts of the firm, including Laufer’s still-thriving futures trading, and ensuring Renaissance’s survival in the event something unforeseen took place. One staffer was so shocked by the terms of the financing that he shifted most of his life savings into Medallion, realizing the most he could lose was about 20 percent of his money.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Sixth”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Instead of beating up the bad teachers, we focus on celebrating the good ones,”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Any time you hear financial experts talking about how the market went up because of such and such—remember it’s all nonsense,” Brown later would say.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“The strategies were often based on the idea that prices tend to revert after an initial move higher or lower. Laufer would buy futures contracts if they opened at unusually low prices compared with their previous closing price, and sell if prices began the day much higher than their previous close. Simons made his own improvements to the evolving system, while insisting that the team work together and share credit.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Truth in life is broad and nuanced; you can make all kinds of arguments, such as whether a president or person is fantastic or awful,” he says. “That’s why I love math problems—they have clear answers.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“mass times its acceleration—is a differential equation because acceleration is a second derivative with respect to time. Equations involving derivatives with respect to time and space are examples of partial differential equations and can be used to describe elasticity, heat, and sound, among other things.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“1991,”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“It’s important to remember that market participants have always tended to pull back and do less trading during market crises, suggesting that any reluctance by quants to trade isn’t so very different from past approaches. If anything, markets have become more placid as quant investors have assumed dominant positions. Humans are prone to fear, greed, and outright panic, all of which tend to sow volatility in financial markets. Machines could make markets more stable, if they elbow out individuals governed by biases and emotions. And computer-driven decision-making in other fields, such as the airline industry, has generally led to fewer mistakes.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“If you trade a lot, you only need to be right 51 percent of the time,” Berlekamp argued to a colleague. “We need a smaller edge on each trade.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Their goal remained the same: scrutinize historic price information to discover sequences that might repeat, under the assumption that investors will exhibit similar behavior in the future.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Scientists and mathematicians need to interact, debate, and share ideas to generate ideal results.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Our job is to survive,” Simons said. “If we’re wrong, we can always add [positions] later.” Brown seemed shocked by what he was hearing.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“For all the unique data, computer firepower, special talent, and trading and risk-management expertise Renaissance has gathered, the firm only profits on barely more than 50 percent of its trades, a sign of how challenging it is to try to beat the market—and how foolish it is for most investors to try.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“When the Axcom team started testing the approach, they quickly began to see improved results. The firm began incorporating higher dimensional kernel regression approaches, which seemed to work best for trending models, or those predicting how long certain investments would keep moving in a trend.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Elsewhere, statisticians were using similar approaches—called kernel methods—to analyze patterns in data sets. Back on Long Island, Henry Laufer was working on similar machine-learning tactics in his own research and was set to share it with Simons and others. Carmona wasn’t aware of this work. He was simply proposing using sophisticated algorithms to give Ax and Straus the framework to identify patterns in current prices that seemed similar to those in the past.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“One day, Carmona had an idea. Axcom had been employing various approaches to using their pricing data to trade, including relying on breakout signals. They also used simple linear regressions, a basic forecasting tool relied upon by many investors that analyzes the relationships between two sets of data or variables under the assumption those relationships will remain linear. Plot crude-oil prices on the x-axis and the price of gasoline on the y-axis, place a straight regression line through the points on the graph, extend that line, and you usually can do a pretty good job predicting prices at the pump for a given level of oil price.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“His early research wasn’t especially original. Ax identified slight upward trends in a number of investments and tested if their average price over the previous ten, fifteen, twenty, or fifty days was predictive of future moves. It was similar to the work of other traders, often called trenders, who examine moving averages and jump on market trends, riding them until they peter out. Ax’s predictive models had potential, but they were quite crude. The trove of data Simons and others had collected proved of little use, mostly because it was riddled with errors and faulty prices. Also, Ax’s trading system wasn’t in any way automated—his trades were made by phone, twice a day, in the morning and at the end of the trading day.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Monemetrics would invest a bit of money for Simons, testing strategies in a variety of markets. If the tactics looked profitable, Simons would place the same trades in Limroy, which was much bigger and would invest for outsiders as well as for Simons. Baum would share in the 25 percent cut the firm claimed from all its trading profits.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“anomalous patterns in historic pricing data; make sure the anomalies were statistically significant, consistent over time, and nonrandom; and see if the identified pricing behavior could be explained in a reasonable way.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“It sounded like someone had got to him,” Cooper says. “Even a smart guy can get the details right but the big picture wrong.”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“CHAPTER EIGHT”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Three years later, at the age of sixty-nine,”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“members, explaining”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“Baum”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

“When a young employee gasped at his blue language, Simons flashed a grin. “I know—that is an impressive rate!” A few times a week, Marilyn came by to visit, usually with their baby, Nicholas. Other times, Barbara checked in on her ex-husband. Other employees’ spouses and children also wandered around the office. Each afternoon, the team met for tea in the library, where Simons, Baum, and others discussed the latest news and debated the direction of the economy. Simons also hosted staffers on his yacht, The Lord Jim, docked in nearby Port Jefferson. Most days, Simons sat in his office, wearing jeans and a golf shirt, staring at his computer screen, developing new trades—reading the news and predicting where markets were going, like most everyone else. When he was especially engrossed in thought, Simons would hold a cigarette in one hand and chew on his cheek. Baum, in a smaller, nearby office, trading his own account, favored raggedy sweaters, wrinkled trousers, and worn Hush Puppies shoes. To compensate for his worsening eyesight, he hunched close to his computer, trying to ignore the smoke wafting through the office from Simons’s cigarettes. Their traditional trading approach was going so well that, when the boutique next door closed, Simons rented the space and punched through the adjoining wall. The new space was filled with offices for new hires, including an economist and others who provided expert intelligence and made their own trades, helping to boost returns. At the same time, Simons was developing a new passion: backing promising technology companies, including an electronic dictionary company called Franklin Electronic Publishers, which developed the first hand-held computer. In 1982, Simons changed Monemetrics’ name to Renaissance Technologies Corporation, reflecting his developing interest in these upstart companies. Simons came to see himself as a venture capitalist as much as a trader. He spent much of the week working in an office in New York City, where he interacted with his hedge fund’s investors while also dealing with his tech companies. Simons also took time to care for his children, one of whom needed extra attention. Paul, Simons’s second child with Barbara, had been born with a rare hereditary condition called ectodermal dysplasia. Paul’s skin, hair, and sweat glands didn’t develop properly, he was short for his age, and his teeth were few and misshapen. To cope with the resulting insecurities, Paul asked his parents to buy him stylish and popular clothing in the hopes of fitting in with his grade-school peers. Paul’s challenges weighed on Simons, who sometimes drove Paul to Trenton, New Jersey, where a pediatric dentist made cosmetic improvements to Paul’s teeth. Later, a New York dentist fitted Paul with a complete set of implants, improving his self-esteem. Baum was fine with Simons working from the New York office, dealing with his outside investments, and tending to family matters. Baum didn’t need much help. He was making so much money trading various currencies using intuition and instinct that pursuing a systematic, “quantitative” style of trading seemed a waste of”
― Gregory Zuckerman, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution