Gregory Zuckerman reveals how an obscure mathematician from State University of New York at Stony Brook, Jim Simons, used his unique data analysis techniques to become a billionaire. Of course, Simons’ activities are shrouded in secret. Employees had to sign non-disclosure agreements. But Gregory Zuckerman found enough sources to at least provide an outline of Simons’s activities and approach to the Stock Market.
Jim Simons didn’t really know much about the Stock Market. But he knew a lot about mathematics and he believed that enough data would provide “patterns” that investors could act on to predict Market moves–up or down. Zuckerman chronicles the years of frustration and failures as Simon and his team tried to apply mathematics to Stock Market historical data. It was only with the arrival of powerful computers that Simon and his mathematical analysis started to produce results.
In the past 10 years, Jim Simons and his hedge fund out-performed most mutual funds and indexes. Many of Simons’s secrets found their way into other hedge funds. Does this mean the Stock Market is “fixed”? No, but it means trying to “beat” the Market by yourself is a fool’s errand. My advice is to buy an S&P Index Fund and rest easy. Are you in the Stock Market? GRADE: A