Returns close to 70 per cent a year: This may be the most genius Hedge Fund ever
Since its inception more than 30 years ago, Renaissance Technologies hedge fund has averaged 39 percent returns per year — mind you, after 5 percent management fee and 44 percent of profits.
Mathematician Jim Simons (82) started out in the world of investing at 40 and later build the most successful hedge fund the world has seen. In the book “The Man Who Solved the Market” you get perhaps the best insight into the company you will ever get. Simons gives few interviews.
When you see the returns, you ask yourself exactly one question: How does the man do it? There are no instructions in the book. Author Gregory Zuckermann nevertheless brings you close. So close that you can almost smell the countless cigarettes Simons smokes in the office. Instead of experienced Wall Street veterans, the mathematician hires scientists from various fields. They all collect vast amounts of historical data on stocks, currencies, commodities and so on, some of them centuries old, look for patterns in the market that ordinary people like us don’t see, create models.
Zuckermann describes the highs and lows on the way to the most successful hedge fund ever, not only introduces Simons, but also sheds light on other key figures at Ren Tech who play and have played important roles. A large part of the book is dedicated to Robert Mercer, for example, who massively supported the presidential election campaign of Donald Trump.
Right in just over 50 percent of investments
Renaissance keeps his positions short, on average two days, the book says. In addition, they are only right (make a profit) in just over 50 percent of investments. This shows very clearly how difficult it is to beat the market.
Zuckermann assumes in the book that Renaissance has made over 100 billion dollars in profits over the years. Many of the employees are millionaires, several of them even billionaires. According to Forbes, Simons is worth more than 21 billion dollars.
I have learned one thing above all: to stick to your models, even if it’s hard, even if the share price moves strongly. It’s all about perseverance.