(Free) Jim Simons Speech At MIT And An Open Question To Our Audience How The Heck No One Has Figured Out How They Do ItJacob Wolinsky
This is a short post and its open to non subcribers since its just a long question- Renissance Jim Simons gives a rare interview at MIT earlier this week I embedded the video below and also here is a link - I am not a quant guy so I admit i am not the ideal person to ask this but i don't understand how did this fund generate returns? And its not just small returns but ridiculously massive returns for year after year and no one has any idea - I assume its legit and have no reason to assume its not - so i am not questioning authenticity but i just have never seen anything like this before. Think about per Wikipedia "From 1994 through mid-2014 it averaged a 71.8% annual return." 72% a YEAR that means you double your money EVERY 12 months - if you even earned half of that you would be by far one of the best investors ever even 1/4 of 72% a year would stand out as a top track record, this 72% is an out of this world return that no one can even come close to year after year.
I will give an example before Bridgewater's Ray Dalio went on a big speaking tour for his book over past few years the hedge fund was super secretive (and still is for the most part).
But they provide some information and people have ideas on how to replicate their returns within a decent margin of error they have many people who copy their all weather strategies - they also provide info and have hundreds of investors receiving their materials- but Renissance how has no one been able to find out anything for so long - even the media with great sources in hedge funds (and I am not referring to myself but Bloomberg with a massive budget and top talent) cannot get any info on the fund at all after so many years - but every other fund no matter how closed we can get some info to understand basics and competitors none have been able to find out anything? Forget about licensing it as that would be illegal since its patented stuff, but to use for yourself to generate returns no one can stop that really and whether legal or not - how has no one been able to do that even remotely as computers and tech has gotten so much better year after year for one of the biggest hedge funds which means even more people see their info - the hedge fund has auditors, attorneys, accountants, IRS, SEC which Simons talks about in the speech etc all working with them also they cannot be buying super illiquid under the radar assets because of their size- would be curious if anyone has an answer for me (usuing information obtained in a legal matter).
Listen to speech below and see if that helps answer this!
Excuse my informal writing abve
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