How to invest like Jim Simons: Squeeze from the best with New Gen

Jim Simons is a leading mathematician and investor who this year appeared on the Forbes list of U.S. billionaires, ranking 48th, and with a net worth of $29 billion.

His success has been key in Wall Street’s transition to systematic models and an algorithmic approach, with almost all transactions being processed in this way.

Simons’ investment strategy is based on identifying and finding patterns in the market, i.e. movements that repeat over time, so that they become predictable. Once they are identified, their level of reliability is tested through algorithms in so-called backtesting.

To build such a model, Simons and James Ax, another brilliant mathematician, compiled data from the historical records of the World Bank and the Federal Reserve since the 1700s, thus succeeding in unveiling the underlying logic of the operations. However, keep in mind that the models are dynamic, so it must be adjusted as the market changes.

A bit of history

The entrepreneur, born on April 25, 1938 in Brookline, earned a B.S. degree in mathematics from the Massachusetts Institute of Technology (MIT) in 1958 and a Ph.D. in the same field from the University of California, Berkeley in 1961.

Simons worked with the National Security Agency during the Vietnam War as a code breaker and research staff member at the Institute for Defense Analyses until 1968.

Later, he was a professor at MIT and Harvard University, then became chairman of the mathematics department at Stony Brook University.

In 1978 Simons founded a hedge fund called Monemetrics, which allowed him to realize that pattern recognition could be applied to trading in the financial markets and he incorporated quantitative analysis into his investment strategy. For this reason he is known as the “Quant King“.

By 1982, he founded Renaissance Technologies, a prestigious quantitative trading hedge fund firm that manages about $55 billion.

Renaissance is famous for its Medallion Fund, a $10 billion black box strategy that is only open to owners and employees of the company. Despite retiring in 2010, Simons still plays an important role in the company and benefits from its funds.

Today and after his retirement, the tycoon has donated $2.7 billion to philanthropic causes. His foundation supports, among other things, autism research.