How A Math Professor Humiliated Hedge Fund Managers
Vložit
- čas přidán 9. 07. 2024
- Have Companies & The US Government Pay You!
app.silomarkets.com/launch
I'm sure you've heard the saying that you can't time the market and that time in the market always beats timing the market. And for most people, this is absolutely true and this is why over 90% of day traders lose money. Even pro hedge fund managers who spend their entire lives trying to outplay the market struggle to beat market returns. A math professor named Jim Simons though was not only able to outperform the market for 1 or 2 years, but for 43 years with an average annual return of 66% before fees. Jim Simons was originally a math professor who taught at MIT and Harvard, but he eventually decided to use his understanding of mathematical models to try modeling the market. He didn't instantly succeed, but over several years, Jim and his team were able to develop a system that could consistently outperform the market, and they've been doing it ever since. This video explains the life of Jim Simons and how he built the world's fastest-growing hedge fund: Medallion.
Earn Interest From The Government & Top Corporations:
(iOS App for US Residents)
www.silomarkets.com/waiting-l...
Free Weekly Newsletter With Insiders:
logicallyanswered.substack.com/
Socials:
/ hariharan.jayakumar
Discord Community:
/ discord
Timestamps:
0:00 - Beating The Market
1:17 - Pursuing Academia
2:51 - Machine Learning
4:50 - Niche Trading
7:19 - Taking Fund Private
9:20 - Legacy Of Medallion
Resources & Thumbnail Credits:
pastebin.com/xStR31rS
Disclaimer:
This video is not a solicitation or personal financial advice. All investing involves risk. Please do your own research.
www.silomarkets.com/disclosures
"Humiliated hedge funds" shows people who doesn't lead hedge funds
You’re right, I was just trying to show that $1 into Jim Simons would’ve outperformed $16 into everyone on the right.
@@LogicallyAnswered Well some of those folks are still going, barely getting started in fact.
Come on man
@@LogicallyAnswered people on the right are most tech ceos (some now ex). The thumbnail is misleading
Yeah this thumbnail is absolutely absurd, misleading and shows what's wrong with people's mindset. Instead of wanting to build great, successful businesses, everyone just wants to pile some money into trading and hope to get 10x or 20x, retire.
Jim Simons is one of the greatest mathematical minds of his generation and worked on leading edge research. He finished a PHD at an extremely young age at Cal. The man is a legit genius, of course he beat out a bunch of hedge fund managers lol
Still though, making 80%+ net return in 08 is pretty impressive. You gotta be a genius for this shit
But he didnt do the math with he work in his hedge fund
@@rajinfootonchuriquen source
@@georgebrooking3820 czcams.com/video/gjVDqfUhXOY/video.html 5:30 He explain his beginnings into hedge funding
@@rajinfootonchuriquen i also thought about it , typical mathematics steriotype 😑
Another reason they went private is because the AUM has to be a certain amount for the algorithm to actually work. This is also a reason why people still consider Warren Buffett to be the best investor due to the fact that he manages more capital than Jim ever has. And the more money you have to invest, the harder it is to get a large return.
Agree, big AUM made it cumbersome for them to move.
Pure brain power vs some processor doing the job
its harder because of liquidity issue
The algorithm might want to sell it's entire portfolio to make the biggest returns to make 200% returns, but that decision could affect the market when there's billions of dollars that it can control and it probably also faces legal charges.
But Buffett has a large portion of his AUM retained on cash. I bet Jim invest more money (by % of AUM) than Buffett these days and that make him the goat
As far as your question is concerned, that of, _“Which would one prefer - timing the market like Jim's strategy or playing the long game like Buffett ?”_ I'd prefer the latter 😅. And the reason why I'd prefer Buffett's strategy over Jim's is because it does accomodate all types of people. For instance, a large portion of Berkshire Hathaway's shareholders meetings is filled with basic business common sense and a transmission of wisdom passed over by people who have traversed the business world throughout decades. On the other hand however, Jim's strategy is very sophisticated and only a niche group of highly advanced academics (particularly those of Mathematics or Computer specialities) can approach. Buffett's strategies are hence more *'Universal'* !
True, plus it’s a lot less stressful I think
@@LogicallyAnswered , Indeed ! Buffett's strategy is far less stressful 😃. At times, his principles seem too simple that many can easily neglect or overlook ! 😅
I prefer Jim's method because patience is something I have not been bestowed with. I always feel the need to see returns as quickly as possible. The quicker, the better. Talking about efficiency. The only catch here is that as you have mentioned an aspiring quant must have a superior level of mathematical aptitude as well as computer programming. These qualifications are usually obtained through a PhD in Mathematics or in Physics and even a PhD in Computer Science.
@@No_BS_policy Well then my good sir, do you have PhD on Math or Physics?
Jim's strategy basically shows you how complex the world actually is. Fascinating but tedious. On the other hand, it would be super interesting to know all the nuances of that model (atleast for me).
Wow, this man is genius. He actually applied concepts of maths, stats and machine learning rather than just sitting in a room writing a book or teaching at a university.
Yep
Lucky* is a better word..buffet>>>>
You could argue the other way that he used his talent on making obscene amounts of money for himself instead of using it for the good of society, i.e. research and teaching.
I know this is a little late but there is a plethora of PhDs who, despite having written a book or two and taught at university, are also as successful as Jim Simons in creating a massive absolute return hedge fund. See Merton, Scholes, Black, Markowitz, Sharpe, etc.
@@LogicallyAnswered How do you manage to reply to every single comment?
Medallion in a nutshell : me and homies get rich with sheer brainpower
It's a good thing to that there are honest rich people like Jim out there.
Yeah the money really shines on him. Basically he's the definition of a Rich man.
Would be good if they did something with that money and not just hort it for fun.
These mega rich suck out the lifeblood bod the general economy
Honest people are never rich😂🤦🏿♀️
It's not what it looks like 😂
@Valzac Entertainment all top guys in any field do that....
Overcharge + Underpay = Profit
There is no honesty in profit just stupid people that accept BS!
In the quant world, it not just Medallion's absolute returns or consistency that people find amazing, its the capital they do it on. Medallion is actually very volatile day to day, but consistent over months and years bc they are quite high frequency. I'm told Medallion's Sharpe is ~2.5 on daily data, which is high but not stellar - some top high frequency algo shops do a Sharpe of 5-10+. The difference is capital. Most high freq traders operate on $5-100m of net assets (i.e. ex. leverage). The thing about Medallion is it does a Sharpe of 2.5 (~50-100% p.a. gross return on low monthly volatility) on $5-10bn of invested equity capital, which is unheard of..
Right. At that scale you can't do HFT and you need several days to get in and out of positions. You have to win entirely on having a smart algorithm, not on having a faster one.
Well, Jim is a legend. He hires the brightest people in the world. Only Phd's and such. He deserves all the credit he can get.
He sure is a legend!
Kinda sad though that the brighest minds in the world doesnt use their brilliance for something better. Like solving climate change.
@@tpeterson9140 why wont you do it yourself though. As if being smart, compels you to solve all of the shit that dumber people create.
Then how come his institutional offerings RIEF, RIDA and RIDGE all absolutely shit the bed in 2020 vs SPX. Kinda fishy that all the good returns are internalized through Medallion, no?
@@jonathanmauringjr6795 They are free to pursue whatever career they want I just wish there was more money to be made doing something good for the world to attract top talent like these guys.
This is not correct. It's his medallion fund that produced average returns of 66% after fees. Also the Medallion fund is capped at $10B, most of its other funds have actually underperformed in recent years.
Because Jim Simons strategy is not that great :-)
@@millenniummanagement577 than how did he get a 65 percent return over 43 years
@@youngatnaruto Because strategy was not good that's why he made 62% a year for over 43 years.
If strategy good he should have made 600% a year 🙂
If you want to see Good results, Let me know, I will show you.
Drawdown low than 5%.
Risk not more than 0.10% on each trade of account capital amount.
Leverage used 1 : 5
Return more than 20% every month 🙂
Compounding every month 20% for 1 year.
You are smart you will know the profits for 1 year 🙂
@@millenniummanagement577 I mean in comparison to the Index funds SP500/ Nasdaq100 they are the two most profitable Index and yet at their highest they have returned 40 percent
@@youngatnaruto when you trade big amount, you need to win big money as well, someone have to trade and lose you to win 🙂
They do trade lot of instruments in this market.
Jim Simons system was not that powerful that can make a lot of money.
Otherwise they have traded all instruments and make lot of money.
Well, companies in inflationary environments not only have to keep up with the inflation but beat it to make any profit to survive. To this end they employ several methods such as shrinking products or using less packaging to make the profits one year while keeping the print price the same and the next year they might increase the print if they can't shrink anymore but cloak it by changing the offered size of the product to be larger but changing the price disproportionately to the size increase. Consumers who do not pay attention are none the wiser in the process.
Interesting Hari, thanks a ton for the video, you are an inspiration.
Thanks for watching man!
@@LogicallyAnswered Hey man where does your name come from? It’s actually a quite meaningful word in my culture but I guess you are from the west right?
@@MAC-vi7fy tell me you are Indian without telling me you are an Indian 😇
@@MAC-vi7fy he is Hindu. Indian origin
@@kannadainfo9645 wow. How do you know?
Jim simmons is literally one of the worlds greatest mathematicians,ofcourse he beat the markets
I guarantee his memory wasn’t bad, he was probably thinking about things more exciting to him
Maybe
Pretty sure I have actually seen an interview with him where he explicitly says that, or at least that when he finished sweeping, he would just continue sweeping the bare floor or throw some dirt back on it, because it was easier to think about math when sweeping.
Makes me think of Einstein, someone whose head wouldn't store unnecessary information to the point if asked his phone number he'd look it up in a phone book, and his wife painted his house door red so he'd stop missing his house and walking past
@@josephcoulter6244 Yeah, it can be easier to think math when you do something routine, it basically keep you in that flow state of thinking. Sweeping or take a long shit also works.
@@hikashia.halfiah3582 why Sheldon got a job at the Cheesecake Factory
Their signature hedge fund is market neutral. That means they don't time the market. They hold as many long positions as they hold short positions. What they bet on is patterns/signals in markets. In fact, they famously also got quite nervous when the market sold off and scrambled to respond.
Right. They do make more money during downturn year because they make money from volatility, and downturn years see more volatility
Heghe funds is literally a happy sticker on just a chaotic system and algorithm.
By the way, good to know about hughe funds more .
Great video hari 👍🏻
And the pun is “stock” itself 😂
Hahaha 😂
@@LogicallyAnswered 😂
I don’t think you know what a hedge fund is, or what their goal is.
Renaissance technology might have the largest ratio of working millionaires in the world
Some of them must be billionaires at this point
Yeah probably
My strategy has always been to buy high and sell low.. 5 out of 11 times it works 100% of the time 💪
@Henzo88 Reserve a parking spot next to yours, I'm on my way! 🤣🙈
Jim is an inspiration to me. I embarked on a similar journey employing ML techniques to “solve” the market. I have only cracked it a little, achieving limited success in a small section of the markets. That by itself was a monumental effort over 3 years having to fail many hypothesis’ and relearning again.
I was torn between Supervised and Unsupervised learning but ended up discovering more sense resulting from Supervised Random Forest Classification and Regression. But without implementing unsupervised models I am certainly missing out on factors that move markets.
Renaissance Tech is the real deal and I only hope to achieve a fraction of their success.
Good luck man!
@@LogicallyAnswered Thanks dude! I’d rather have luck any time and win the lottery than to slog away at this haha.
The main problem that we have as retail investors writing models is that we do not have access to all the data Renaissance have amassed over the years that made their models so good
keep up the good work man kudos to you
@@reinhardwilmer I would certainly agree to it.
When the thumbnail is full of tech CEOs instead of hedge fund managers LOL
Well, tech CEOs have far greater life time returns than hedge fund managers hahaha
I love this story but can´t help but feel like I´m being kept out of the best birthday party in the neighbourhood. 66% a year??!!! absolutely crazy
respect the man who did the same thing for his whole life,hes really good at it
What's the music that plays for the first 7 minutes of the video?
I hope we all get some massive break through in business etc
I mean we all deserve better than "some", but life dosent run that way :(
Well makes sense when probability is part of math
Yep
To achieve greatness, you need to start working towards it. Investing remains the smartest way to prepare for the unexpected. Been into this for 6yrs and I'm extremely pleased with the returns. The good news is
- it's not too late to start.
My first investment with expert Mrs Mitchell O'Brian gave me the assurance that made me invest without the fear of losing I got six of my friend involved with her already 💯
Make a note to Mrs Mitchell O'Brian on Whats"App regarding your interest on investing in bitcoin.
+1901
235-
5381
I’m bad at timing the marked but somehow totally nailed the 2020 “crash”. 🤭
For me having net worth of $1B and $10B is not going to be different. So, the winner is low stress/high return of a private investment fund, that is what matter to me.
Accurate
Not when you’re buying buildings at MIT and telling them what to research and who to do it.
Thank you :) if it's said that the market reflects future predictions of a company's value that's reasonable, but let's not forget that the share that you'd be buying from the market would be the current share of the company.
Salute For This Professor
Oh I was waiting for his story he truly has a gift totally my favorite hedge fund manager
Hope you enjoyed Elvis!
you can think of investors or traders like different animals in the jungle, each has their own skills, so when a tiger and cheetah attack their prey then what does it matter if their belly is full?
When you invest, you’re buying a day you don’t have to work
Asset that can make you rich
Bitcoin
Stocks
Real estate
@@jasminerhodes5462 You’re right sir, it’s obvious a lot of people remain poor due to ignorance, it’s better to take risks and make sacrifices than to remain poor
@@robertmegan1780 It’s not ignorance but due to some unprofessional broker in the market
Bitcoin is the most profitable investment online if only you trade with the help of a professional expert
I’m from Spain I have been an investor in the crypto market for over 2 years now
Really great
Smartness put in right track 👌🏻
The thumbnail already makes this an interesting thing because none of them are fund managers
Why is the sound quality so bad in the start. You know with editing software you can change volume to steoreo.
When this video will get it subtitle? By the way English isn't my 1st language
To be honest, no one know what is included into renaissance technology algo.
With trading algorithms, it is about being different, because if everyone copies your algorithm, it won't work anymore as the strategy is traded into diminishing profitability. Best to keep it secret while his algorithm remains one of the best.
Algorithm is not a really good way to know
Great content dude
0:19 what about the risk adjusted Returns?
Well, that’s one reason why universities are worth funding and worth going to: they produce people like Jim Simons. This is an extreme example though. Most people will get a more modest return. Nonetheless, the same kind of good will still get done for you, just to a lesser extent.
lol
I love how there’s one hedge fund manager in your thumbnail
Since I took the time to be critical of your video about piracy, maybe it's only fair that I be vocal about thinking that this video was great. Loved it. Jim Simons is super interesting.
I have heard about him. I knew he applied maths to predict the market. Thanks. KeepSmiling 😊🌺
really great contents thank you very much! :)
Thanks for watching Alireza!
Excellent video with good insight made me to subscribe to this
Thank you Abhiram!
I don’t get what the hell the thumbnail is trying to convey. LMAO
Jim Simmons at any given time is pure embodiment of 💎 genius and no one can take away of being one of Inspiring Human Beings on this planet however I would pick the latter coz I suck at Mathematics...
The 66% annual returns (39% after fees) which we compare with the 10% S&P500 return seems misleading, let me explain:
The 66% annual is not compounded, it's just a normal average because the fund is capped at $10 billions so they have to disburse profit annually.
Now I did some calculations: If the fund is making 66% annual (39% after fees) on $10B corpus, distributing the profit annually and if the profit is reinvested in the index, then the Invester will get a CAGR of roughly 15.24% for a 30-year period (which is still great but nowhere compared to 39% or 66% which we see everywhere)
Hedge funds are to HEDGE positions, not to out perform
so after reading the book...
did Simons write even a single algorithm at RT? It seems like he didnt write a single line for Medallion, ever?
From beating the stock room in the grocery store to beating the stock market
Hahaha, he didn’t beat the stock room though
@@LogicallyAnsweredif you’re talking technically
Either strategy works, the key is having good data.
4:10 where is this video from
Storyblocks
Thanks
Compared to his riches, he is the most modest individual I have encountered both online and in person.
Hedge fund managers but the thumbnail is of CEOs.
The professor looks like Gregg Popovich🤔
For real!
Big respect to this guy.
Long term still gives you better returns.
But you need to have patience.
That's why Buffett always>>>>Jim
@@parimtm True.
Math prof took the economy class while the managers flew their business jets. A real humiliation
I like this strategy of moving the funds to private.
Return of 66% definitely doesn't look like a scam
I know, definitely something up with that
Suggestion: You should always enable caption auto or manual
I needed it this time : /
Sorry man, I always input the script, but CZcams only matches them about half the time.
Well, RenTech owned 20 million Tesla shares at the end of 2019. Recently, they increased its Tesla holdings from about 204,000 shares to 814,000 shares. They would have been up by many billions of dollars if they just held onto it. So, who knows which is the better strategy? He made it a closed fund because of pressure from share holders? That seems odd.... Has Warren Buffett ever had an issue with pressure from shareholders? Doesn't he just do his thing regardless? Though, maybe BRK-A effectively a closed fund because its share price is so high?
2:10 - 1958 there was no bachelor-master-system, or am i wrong?
Is there a ETF that follows his fund?
Simons didn't create the massive gains by investing long term as the conclusion of the video suggests. He built up the fortune almost exclusively through day trading executed by his algorithm(s).
In fact, when Renaissance capital tried to break value investing (basically going long) in a similar way, they performed worse than S&P500 (marginally so) and by extension much worse than Buffet or others doing value investing.
I've heard Eric Weinstein mention jim & I was interested so I'm excited that you have made a video on him this should be really interesting subject wide & very well produced as the rest of your videos
Thanks Luke!
0:55 So actually, considering I am sure this guy had more than $100 to invest, he should be a quintillionaire, and have a net worth of far more than 23 billion dollars, imo...
True , but 23 billion is also more than him and his family could ever spend for hundreds of years 😭. Don’t think it matters that much my guy
perfect example why all the get rich quick schemes are easy to identify. If some one has a Formular for the market, they will try to keep it private and just print money.
The common thing between me and Jim is that, i like maths just like he does, im a day trader just like his interest. The difference is im just 1/4th of his age and hopefully follow create my own path just like he did bcoz even i trade on a ghost pattern.
Oh boy, I wouldn't wanna feed a 80's Computer any data...RIP
Imma be real this is the exact same idea I had like a few weeks ago, using neural net to time trades with silver
This is good and all, but all of you people watching this video dont forget that during the covid, renissance has incured huge losses too, and a lot of investors have withdrawn their money.
Because even with all the statistics, mathematics and computational power, they couldn't predict the crash happening due to covid.
Because what a human can predict and come to conclusions is not even near possible for an AI or Mathematical model during abnormal conditions.
I wish he'd open it up to those with middle class and less incomes
Best formula to crush everyone is to counter my moves 💪🏼👌
And yet, orther funds at Renaissance Technologies had their worst performance in 2020 losing more than 20%.
Ever heard of covid?
Those aren't the same as the medallion fund though. They are "normal" investment funds that use the Renaissance brand, are open to the public, and don't do anything special or unusual
To answer your question near the end, if you’re young and can still take risks. Than yes, go for it and try to mirror his investment strategy. Otherwise, play it slower and less riskyyy.
I wish I could work there
It looks like it was just an overpowered level 100 player playing against a level 50 group.
So we just need to add a line to Peter Lynch famous statement Don't time the market as most people loose more then they gain but you can time if and only if you are a mathematical genius.
Hahaha well said
I wish all of us could be a part of Renaissance Technologies
GET A PHD IN MATH HE WILL HIRE U
jb.ok
If the algorithm only benefits a few then no matter how good it is, it is for the elite few. It doesn't benefit anyone besides Jim and his circle of employees and friends. He could have use his smarts to benefit more people. But then again, why should he?
Mrs Clarissa is legit and her method works like magic I keep on earning every single week with her new strategy
Wow I' m just shock someone mentioned expert Mrs Clarissa thought I' m the only one trading with her
She helped me recover what I lost trying to trade my self
Mrs Clarissa is obviously the best, I invested $3,000 and she made profit of $28,000 for me just in 15 days
Who's this professional everyone is talking about I always see her post on top comment on every CZcams video I watched
I think I'm interested how can I get in touch with Mrs Clarissa
Seeking for her contact details.
In the thumbnail there was literally no hedge fund
Another success story to learn from.
It doesn’t make any sense to look at the gross returns without any fees or taxes. Such strategies expensive to roll out, and the average don’t even break even.
I’ve seen his face before I recognize it he’s one of those billionaire geniuses
Also the lobbying. The fund and its members are some of the most prolific supporters of both parties.
Good video.
Timing the market is a get rich quick scheme. And if we know anything about get rich quick schemes, it's that they tend to only work for the people who invented the scheme.
As a millennial, I definitely feel that it was easier to game the market before the 2000's. Anyone who knew any math or programming could get a job as long as they could breathe oxygen in the 1960's/70, that said this is an impressive story of a modern man in a time of fools.
"Who knew any math". You think that back in the day learning math was easier than now where you can literally look up everything within seconds? You are just looking for excuses
66% average annual return..... How does Jim Simmons not own the world
He was using von Wagner machine learning models btw.
Very few people can become like him .first you need to pro in maths than you need to put couple of decaies to solve market.
The thumbnail offends me as it literally doesnt make sense only ray dalio has hedge fund among them but video was good. And simmons fund cant manage 500billion like berkshire Hathaway.
I see what you mean. I just wanted to illustrate how massive Jim’s gains were. $1 into him would’ve outperformed $16 into the people on the right.
@@LogicallyAnswered bruh what, when did musk, gates bezos, zuckerberg, jobs become fund managers. what a dumb thumbnail.
They aren’t fund managers, but their companies have way better track histories than hedge funds. For example, amazon has averaged over 30% annual return since going public. Also, most people don’t really know anyone in Wall Street other than warren Buffett and ray dalio. That’s why I used the more recognizable billionaires.
Awesome
Max was here
Qualifications of a Hedge Fund Manager: Silver spoon. Academic: Years and years of convincing people you're not a moron. I wonder why this happened?