Jim Simons is a mathematician and cryptographer who realized that the complex math he used to break codes could help explain financial patterns – and he made billions because of it in his notoriously secretive hedge fund firm called Renaissance Technologies.
He is famous not only for the duration of his success and the size of his results ... but also for the way he made his money (with much lower volatility and risk than his peers and competitors).
His flagship - the Medallion fund - has averaged a net return of 39.1% and has been closed to new investors since 1993. Even more impressive is that those results are on top of their 5% management fee and a 44% performance fee.
To put that into perspective, if you had invested $1,000 into the Medallion Fund in 1988 when it launched, your money would have grown to in excess of $23MM at the end of 2019.
His background is impressive. Simons taught at Harvard and MIT and worked with the NSA. Here is a video where he shares some thoughts in a 2015 TED talk interview. It's worth a watch.
via TED
Interesting stuff ... I hope you got something from it.
His success exists at the nexus of vast amounts of data, next-level technological infrastructure, and intellectual property built by various flavors of mathematicians. A good place to be in the coming world, and a reminder that if you don't know what your edge is, you don't have one.
Despite advanced math still being a mystery to many, most rely on it more than ever ... for example, look at what we're seeing with the growth of machine learning and AI.
The Heartbeat of AI is Still Human
Today, the best algorithms are autonomous. They don't rely on inventors to derive novel insights from the ingested datasets. They take whatever data they can get their hands on, process it, and extract decision signals. Some don't even form hypotheses, they simply look for correlations - the data is an abstraction to be solved in the purest sense.
You don't have to understand why the models do what they do - simply, what it's doing, and that you trust it's construction.
Regardless of how autonomous the systems get, humans are still vital.
Simons built a team of mathematicians whose motivation was doing exciting mathematics and science (rather than hired guns who could be lured away by money).
That doesn't mean money wasn't a motivator, but it hits on something important.
The heart of good math and good AI will always benefit from the quality of the humans around it. You still have to champion integrity, culture, and purpose.
Better Math as a Competitive Advantage
We stayed ahead of the pack by finding other approaches and shorter-term approaches to some extent ... but the real thing was to gather a tremendous amount of data – Jim Simons
If you've been to our office, or heard me speak, you know how important I believe those ideas are to continuing prosperity.
Constant innovation on a massive scope and scale creates more ways to win.
Onwards!
What's In The Box?
The current sociopolitical climate has me thinking about the consequences of labeling things, creating boxes, and simplifying ideas into news-ready headlines.
With more news sources than ever and less attention span than ever, you see ideas packaged into the attention-grabbing parts. The focus isn’t on education on issues anymore, but getting the click, making you stay on their page longer, sending you to a new article completely unrelated to the reason you clicked to the page.
Complex issues are simplified not even into their most basic forms – but instead into their most divisive forms because there's no money in the middle.
via Quote Investigator.
The amplified voices are those on the fringe of the average constituents' beliefs because those are the ones who are often the most outspoken.
Issues that should be bipartisan have been made "us" versus "them," or "liberal" versus "conservative," or "right" versus "wrong."
via BrainyQuotes.
In psychology, heuristics are mental models whose purpose is to help you make decisions easier. They’re a starting point to save mental bandwidth, allowing you to spend more brain cycles on the important stuff.
That’s a great use of "boxes" and "simplification" … but shouldn't preclude deeper thought on important issues.
In an ideal world, we would all have the bandwidth to view each individual case of an issue as a whole issue within itself. Most things in this world are various shades of grey, and when you change your vantage point, you can change your answer.
I recognize that’s not realistic.
Instead, I encourage you to remember to continue to think and learn ... even about things you already know. Confirmation Bias is one of the more common forms of cognitive biases. Here is an infographic that lists 50 common cognitive biases. Click to explore further.
via VisualCapitalist.
Important issues deserve extra research. New insights happen in between the boundaries of what we know and what we don't. Knowledge comes from truly understanding the border between what you are certain and uncertain about.
I challenge you to look beyond the headlines, slogans, and talking points you like most. Look for dissenting opinions and understand what’s driving their dissent. Are they really blind or dumb (or are their value-systems just weighted differently)?
Not everything needs to be boxed. Not everything needs to be simple.
Applying This Lesson
I love learning a lesson in one space and applying it to other spaces. It’s one of the cool things about AI. An algorithm can learn rules in the construction space that may help in the medicine or trading space. Everything’s a lesson if you let it be.
In that vein, the lesson on labeling also applies to yourself and your business.
Many things are true because we believe them to be, but when we let go of the past beliefs, the impossible becomes possible, and the invisible visible.
The past doesn’t define the future, and your personality isn’t necessarily permanent.
We are our choices ... and you can make choices today that change who you are (and what you or your business is capable of) tomorrow.
Hope that helps – Onwards!
Posted at 05:39 PM in Business, Current Affairs, Ideas, Market Commentary, Personal Development, Science, Trading Tools | Permalink | Comments (0)
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