Thread by @SantangelReview

1/Jim Simons rarely does interviews that end up in the public domain, but a new one was just posted. Highlights below:

2/ When asked why financial markets are such a fertile ground for math and sciences: “think of a stock – it’s a time series. It has a value every day, it goes up, it goes down… You can analyze a time series mathematically. Especially if you have hundreds or thousands of these.”

3/ Simons never hired people from the investment industry, saying “you can teach a physicist finance, but you can’t teach a finance person physics.”

4/Explaining the data that Renaissance uses in their analysis: “it’s pretty much just the time series of the prices of the stocks. We also trade commodities, in fact that’s what we started. It was hard to get a good system for stocks, but finally we did. And that changed a lot.”

5/I don’t know what data [other] people collected, but it’s out there to the public. There’s no reason you can’t collect tick data.”

6/Most useful areas of mathematics for finance is “a good question, but there isn’t a very good answer… machine learning is coming along and I believe that will be useful. As these various fields grow or change, you never know whether some of those changes would be helpful.”

7/He agrees there will always be a place for fundamental investing. "It’s perfectly reasonable to study a company deeply and analyze their management… but we don’t do that at all. That kind of investing – Warren Buffett kind of investing – I think will always have a place.”

8/Simons has five principles. One: Be guided by beauty – “just as a great theorem can be very beautiful, a very very well company that’s really working on all things very very efficiently, that can be beautiful.”

9/Two: “Surround yourself by the smartest and best people you possibly can have and let them do that thing, don’t sit on top of them. If they’re smarter than you, all the better.” Three: “Don’t run with the pack. If everyone is trying to solve the same problem… don’t do that.”

10/ Four: “Don’t give up easily. Stick with it. Stick with it not forever, but really give it a chance to get where you’re going.” The final principle is “hope for good luck. That’s the most important principle.”

11/When discussing Renaissance’s hiring / interview process: “they’re interviewed, and if they’re scientists… they’re put through their paces. They’re asked to solve some problems right on the board and stuff like that. I’m not so keen on that method, although I was the boss.”

12/ “Once in a while I overrode. In particular one case – they said, no this guy is too slow. [I said] I like him, I’m going to call his thesis advisor.” The advisor said “he’s terrific. He solved the hardest problem I had.” Simons hired him “and he’s been extremely good.”

13/“So how fast you are on your feet is not necessarily an indication of how well you do or how smart you are. But we’re pretty good at hiring people, very good actually.”

14/Explaining Renaissance’s structure: “There are groups and group leaders in somewhat different areas. But everybody knows what everybody else is doing. So once a week, there’s a meeting of all the scientists and they tell each other what they’re up to.”

15/“Frequently, someone has a new predictive signal and he presents it. And it’s discussed, then if people have their doubts – they always have their doubts – there’s a small meeting and it’s tested out thoroughly. And sometimes it just doesn’t make it. Other times it does.”

16/“But the important thing is everybody knows what everyone else is doing. And they can help the other person, even if it’s from a different group. Other places that I know of have groups, but they each have their own little system... I don’t think that’s a good way to work.”

17/When asked about the use of computers at Renaissance, “we have a very large computer facility and we have a number of people on the staff who are computer people. It’s extremely important. We have a lot of computers and we are building more at this moment.”

18/ Lastly, Jim Simons is writing a memoir titled “Mathematics, Common Sense and Good Luck”

19/ Here is the link to watch the full video (highly recommended!)