May 28, 2021

Credit: Tetra Images / Getty Images

*This piece was originally published on February 7th, 2020*

Have you ever wanted to be rich? Really rich? Gregory Zuckerman, a special writer at The Wall Street Journal and author of “The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution,” shares the story of the mathematicians who cracked Wall Street’s code. Starting from humble beginnings in a strip mall on Long Island, NY, the hedge fund company that Simons started (where about 300 people work today) now pulls in more money in a year than companies like Hasbro and Hyatt Hotels, which have tens of thousands of employees.

Three Takeaways:

  • Jim Simons already had a promising career in the world of academia when he walked away to put together a team of “quants” (short for “quantitative investors”) who could predict the stock market through pattern recognition and computer models. Zuckerman says they were pioneers in working with big data and machine learning, collecting and processing decades worth of information well before others saw the logic of that approach.
  • Before Simons and his team came on the scene, predicting stocks largely followed the model of blockbuster investors like Peter Lynch and Warren Buffett, who tended to invest in products and companies that they understood. Buffett famously owns (and eats at) Dairy Queen, while Lynch purchased stock in the maker of L’eggs panty hose, on a recommendation from his wife. Simons’ team introduced a method that was purely based on data rather than on “narrative,” as Zuckerman puts it.
  • Renaissance Technologies, Simons’ hedge fund company, has made billions. And the quants who work there are incredibly rich. Notably, one of the company’s former co-CEOs, Robert Mercer, used his fortune to support Donald Trump’s 2016 presidential campaign. Zuckerman argues that President Trump would not have won the election if not for Mercer’s involvement.

More reading:

  • If you want to know more about Robert Mercer and his impact on politics, here’s a piece by Gregory Zuckerman that explains the details of just how his family became “power brokers” in Trump’s campaign.  
  • It’s not too late to get a cut of the pie. Here’s an article outlining how to become one of these quants who are raking in massive salaries every year. 
  • Using computers to predict the stock market is no longer limited to quants. Check out this Time article about how AI is conquering Wall Street.

Wall Street, Sci and Tech, stocks, investment, gregory zuckerman, Math

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