I bet his super-secret blackbox is something sooooooooooo incredibly simple anybody could undertsand it if they looked at it; and his scary high-level math concepts are a way of protecting it. However, I could always be wrong
"The firm relies on a system to make thousands of rapid-fire, short-term trades daily to take advantage of small, fleeting anomalies in various markets." This is strange - because on each trade they cannot trade too many contracts because of liquidity. And they should also lose on some. So how much can they really make per day ? If they manage - lets say 6 bln and they make 20 % then that would be 1.2 bln per year or 100 Mio per month or approx 5 mio per day. Thats a lot of money to make every day on short term trades where you cant really trade too much a quantity.
... also i know two guys in the german bund market who trade huge volume every day and they make maybe 5-10 mio a year.
Disclaimer: the following is pure speculation there is a saying that the biggest lie that the Devil is selling the world is that he doesn't exist. whether literaly or mythological, u get the point. the same philosphy is currently used to governs the stupid masses and control society today. same applies with very, very intellegent people. A truly successful person has nothing to hide. R-tech website vanished along time ago. http://web.archive.org/web/20030602194219/www.rentec.com/about_us.htm other relevant thoughts: Jim Simmons is Jewish. I'm not against any group of people, but it just happens that a very small group of people are very very clever. from what I've read, most of those Phd's at R-tech have little input to trading. they actually continue study in their area of research - physics, maths, chemistry, astrophysics, hard-core sciences - very much like a small university. have a picture tour of their HQ in NY: http://web.archive.org/web/20030207075124/www.rentec.com/tour.htm Jim simmons sits on the board of a number of companies around NY. he is well-informed, at times a 'Renaissance' of Steven A Cohen. Lets face it, if you have a working formula, would you go out and scream it at the world? Simmons talks on how successful their quantiative approach has been has attracted thousands of hedge funds in this area. hundreds have failed and closed down. take it from another angle: if trading edge was significantly quantiative, computational power, then IBM, the japanese, or even the indians would dominate financial markets today. I do no dispute quantiative trading is not possible, IT CERTAINTLY is. however, trading systems fit on data, no vice versa, they do not make markets, they follow market agents having followed previous trends. IN PURE ENGLISH: quantiative trading with large gains is almost impossible with BILLIONS of dollars (esp. leveraged). When i was younger, it never occured to my head a priest could be gay or molest children. I could've never imagined president of countries to be corrupt. I never expected old men to lie. today, the least I expect or anyone would even bother to question is a hedge fund manager who has won a maths award and "EMPLOYES" OVER 20 Phds. well done.
go to sec.gov company filings. type renaissance technologies. You will have access to long positions and some puts in their equity fund, which is what most of the fund is composed of. Its possible that financial and commodity futures are used to hedge or gain extra cash. There isnt enough liquidity anywhere for people to make big returns on intraday short term trading. I am referring to SAC, Moore, Citadel, D.E Shaw, Kingdon, and Renaissance. Its obvious that they make their money from overnite positions, some even held for years. Sure they may opt for instant zero cost execution and use vwap or something more sophisticated to enter and exit trades, but thats the extent of their "daytrading"
I unknowingly saw their offices today. Apparently, they are around the corner from my neighborhood. It was only after reading this thread that I connected the complex to the person(s) and busines. I turned down several interviewing opportunities years ago when I knew nothing about the world of investing. Their offices have expanded considerably. Having known several of these physics/math PhD quant types (two of which I work with), I found that the majority are extremely competent in and rehashing and in some cases formulating theories. However, as we both know, the real world is rarely ideal. Ideal models are great for working out textbook examples. The real world has away of introducing a considerable amount of noise to the variables. Not to undermine Simons and his group, surely they are top notch mathematicians and clearly have the "put up" to prove it. However, playing the distribution/prediction game (ie. fat tails and vegas like probabilities) is not as rewarding as playing the anticipation game. Were I Simon, I would get PhD's with Discrete Logic and Computability foundations. A basic engineering level stats will suffice the math that's involved...
I was told by as reliable source they also employ astro-physicists, astronomers, Sanskrit, Babylonian and ancient Persian scholars. Why? Their principal strategy is based on ancient astrology as revealed in ancient texts. However, these texts are revised and modified to account for advances in modern astronomy. Further, they have less stringent requirements than the current as to what actually constitutes a planet. Therefore, their astrological âuniverseâ so to speak, is greatly expanded beyond the ancient and modern. They also use an Assyrian calendar as a basis for time measurement. Makes you think. Grant.
Ever see a market where the moves were counter-intuitive? You are playing "their" game. They control the market and YOU are merely an unarmed competitor unmatched and simply at their mercy. When your mother says, "they say the market is going up and you ask, who is 'they'?" they are the "they". YOU are incapable of playing against these guys in their arena. Do not play against them. At this rate, Simons, Cohen, Shaw will have all the money in the world in short order. The playing field is uneven to say the least in many ways mostly in terms of skill and resources.
http://www.olsen.ch/olseninvest.html?id=6 this is another famous quant -- but as you can see from the equityline this looks more like a strategy similar to options writing. They make 70 - 90 % of time and then one day will blow out because of 1-3 % So even this smart guy diversified away now from managing money into data , software development etc. Renaissance wants to raise now 100 bln. Hmmm. When Enron happened nobody would have ever thought something is wrong. Maybe Simons needs the 100 bln now to feed "something else" - bad thoughts --
Since I manage a hedge fund I'm allowed to question fellow hedgies, heh. That being said, I obviously would never disclose the methodologies we use to trade, but I can say that they are all incredibly simple (albiet mathematically based, but very simple to understand if you've finished Grade 6) and very powerful (up 37% YTD on a hair under $1/4B)