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His whole RenTech story was fascinating. Effectively an outsider in finance who gathered a bunch of other outsiders (aka big mathematicians), and decided to st

His whole RenTech story was fascinating. Effectively an outsider in finance who gathered a bunch of other outsiders (aka big mathematicians), and decided to start a hedge fund that takes zero interest in the actual companies and trades solely on math. Which makes sense, since none of the main people involved in its creation had any corporate or finance experience, but tons of math experience and knowledge. This is oversimplifying it like crazy, but I recommend anyone to anyone with even a passing curiosity for this look up the details (or read “The Man Who Solved The Market”, which is documenting the beginnings and growth of RenTech, as well as that of Simons; very enjoyable read).

tombert 2y ago
Yep, not argument here at all, RenTech is a super fascinating outlier in finance. It's kind of inspiring. I don't know a ton about finance or trading algorithms, but I know a fair bit (I think) about math and CS, and because of RenTech I've formulating my own trading strategies (just paper trades). Thus far all I've been able to do is lose all my pretend money by trying to play options, but it's still fun to try. Will I be successful and make billions? Almost certainly not, but it's an excuse to play with different types of math that I don't play with very often, but RenTech proved that you can beat the market by taking advantage mathematics.
- danielmarkbruce 2y ago
  There are some interesting interviews around rentech. It starts to feel like they made a lot of money out of being extremely thorough, by doing a lot of reasonably simple (at least by the standards of math phds) things extremely well.
1024core 2y ago
IIRC his fund averaged around 30% gains per year, every year, over 30 years. (I'm going from memory here, too lazy to look it up). That is just such an unbelievable performance number.
- datadrivenangel 2y ago
  Aren't there some shenanigans with those numbers around their larger funds not doing as well? It's easy to make a few high margin dollars, hard to make a lot of high margin dollars.
  - makestuff 2y ago
    They limited the fund size so employees frequently got distributions from the fund instead of just rolling over their investments. However, the distributions were still in the millions of dollars. They also got into some tax trouble with uncle sam and had to pay 7b in back taxes (https://www.wsj.com/articles/james-simons-robert-mercer-others-at-renaissance-to-pay-7-billion-to-settle-tax-probe-11630617328 https://www.wsj.com/articles/james-simons-robert-mercer-othe...)
  - danielmarkbruce 2y ago
    depends on your definition of "few". Rentech made a "few" for very large "few".
    - paulpauper 2y ago
      lol . Only made tens of billion. What a failure.
- agumonkey 2y ago
  I'd still wish to have details on this (I too heard of similar numbers for his fund before), because in my newb eyes .. such returns would mean they could absorb a huge chunk of the planet liquidity.
  - oldpersonintx 2y ago
    [dead]
  - tomp 2y ago
    No, because such returns aren't scalable. According to industry rumors, RenTech is somewhere between $10-20bn AUM (assets under management, i.e. the capital used for trading), and the profit that they make, they can't reinvest, they have to take it out as profit.
_vaporwave_ 2y ago
“The Man Who Solved The Market” is fascinating because it spans almost the entire history quantitative finance (through the lens of RenTech) dating back to the 1970s. Simmons was one of the first to realize the advantage of collecting and analyzing vast sums of data to identify patterns in financial markets. They were digitizing magnetic tapes and collecting more data than they could even process given technical limitations of the time.
- benreesman 2y ago
  I can second this book recommendation. Remarkable candor in such a secretive field.
gcanko 2y ago
When I read "The Man Who Solved The Market”, I blown away with the story of Robert Mercer who arguably paved the way for Brexit and the election of Donald Trump. I wonder how different the world would be if Simmons didn't exist, the butterfly effect can sometimes have some massive unintended consequences.
real0mar 2y ago
Does the book cover anything about how the fund actually works? It's understandable that they'd want to keep a tight lid on it, but I'm so curious
- paulpauper 2y ago
  no. One can infer it involves analyzing data, but for obvious reasons the ingredients for possibly reconstructing it are omitted.
- mgfist 2y ago
  The book covers some earlier aspects of the strategy. And I think the "spirit" of the strategies exists today, though tangibly very different and not actionable.
- richrichie 2y ago
  I believe they were doing ML based trading. Their edge was data collection, cleaning and standardisation and the ability to trade a lot at very cheap borrowing cost. This was way before computers became a thing in trading or ML became a thing.
- chronic640201 2y ago
  > Does the book cover anything about how the fund actually works? Basically, no.

tombert 2y ago

Yep, not argument here at all, RenTech is a super fascinating outlier in finance. It's kind of inspiring. I don't know a ton about finance or trading algorithms, but I know a fair bit (I think) about math and CS, and because of RenTech I've formulating my own trading strategies (just paper trades). Thus far all I've been able to do is lose all my pretend money by trying to play options, but it's still fun to try. Will I be successful and make billions? Almost certainly not, but it's an excuse to play with different types of math that I don't play with very often, but RenTech proved that you can beat the market by taking advantage mathematics.

danielmarkbruce 2y ago
There are some interesting interviews around rentech. It starts to feel like they made a lot of money out of being extremely thorough, by doing a lot of reasonably simple (at least by the standards of math phds) things extremely well.

1024core 2y ago

IIRC his fund averaged around 30% gains per year, every year, over 30 years. (I'm going from memory here, too lazy to look it up). That is just such an unbelievable performance number.

datadrivenangel 2y ago
Aren't there some shenanigans with those numbers around their larger funds not doing as well? It's easy to make a few high margin dollars, hard to make a lot of high margin dollars.
- makestuff 2y ago
  They limited the fund size so employees frequently got distributions from the fund instead of just rolling over their investments. However, the distributions were still in the millions of dollars. They also got into some tax trouble with uncle sam and had to pay 7b in back taxes (https://www.wsj.com/articles/james-simons-robert-mercer-others-at-renaissance-to-pay-7-billion-to-settle-tax-probe-11630617328 https://www.wsj.com/articles/james-simons-robert-mercer-othe...)
- danielmarkbruce 2y ago
  depends on your definition of "few". Rentech made a "few" for very large "few".
  - paulpauper 2y ago
    lol . Only made tens of billion. What a failure.
agumonkey 2y ago
I'd still wish to have details on this (I too heard of similar numbers for his fund before), because in my newb eyes .. such returns would mean they could absorb a huge chunk of the planet liquidity.
- oldpersonintx 2y ago
  [dead]
- tomp 2y ago
  No, because such returns aren't scalable. According to industry rumors, RenTech is somewhere between $10-20bn AUM (assets under management, i.e. the capital used for trading), and the profit that they make, they can't reinvest, they have to take it out as profit.

_vaporwave_ 2y ago

“The Man Who Solved The Market” is fascinating because it spans almost the entire history quantitative finance (through the lens of RenTech) dating back to the 1970s. Simmons was one of the first to realize the advantage of collecting and analyzing vast sums of data to identify patterns in financial markets. They were digitizing magnetic tapes and collecting more data than they could even process given technical limitations of the time.

benreesman 2y ago
I can second this book recommendation. Remarkable candor in such a secretive field.

gcanko 2y ago

When I read "The Man Who Solved The Market”, I blown away with the story of Robert Mercer who arguably paved the way for Brexit and the election of Donald Trump. I wonder how different the world would be if Simmons didn't exist, the butterfly effect can sometimes have some massive unintended consequences.

real0mar 2y ago

Does the book cover anything about how the fund actually works? It's understandable that they'd want to keep a tight lid on it, but I'm so curious

paulpauper 2y ago
no. One can infer it involves analyzing data, but for obvious reasons the ingredients for possibly reconstructing it are omitted.
mgfist 2y ago
The book covers some earlier aspects of the strategy. And I think the "spirit" of the strategies exists today, though tangibly very different and not actionable.
richrichie 2y ago
I believe they were doing ML based trading. Their edge was data collection, cleaning and standardisation and the ability to trade a lot at very cheap borrowing cost. This was way before computers became a thing in trading or ML became a thing.
chronic640201 2y ago
> Does the book cover anything about how the fund actually works? Basically, no.