The Madoff documentary on Netflix versus the returns of The Medallion Fund

[Maverick2608]

Jim Simons is the person within the financial industry that I respect the most.

In the Madoff documentary it is stated multiple times that the returns Madoff delivered were impossible to achieve in the real world. A whistle blower notified the SEC as early as around 2001 and actively pointed to a ponzi scheme as a plausible explanation because he believed the returns were impossible to achieve.

But isn't the returns of the The Medallion Fund much more impressive both in terms size and stability?

(I of course do not suggest The Medallion Fund is a ponzi. It is only open for employees and their families. That fact alone rules out a ponzi.)

 

[newwurldmn]

Jim Simons is the person within the financial industry that I respect the most.

In the Madoff documentary it is stated multiple times that the returns Madoff delivered were impossible to achieve in the real world. A whistle blower notified the SEC as early as around 2001 and actively pointed to a ponzi scheme as a plausible explanation because he believed the returns were impossible to achieve.

But isn't the returns of the The Medallion Fund much more impressive both in terms size and stability?

(I of course do not suggest The Medallion Fund is a ponzi. It is only open for employees and their families. That fact alone rules out a ponzi.)

impossible to generate those returns just being long the market via “stock picking” (a collar is just a little less long the market).

 

[Pekelo]

Madoff's results didn't fluctuate, it was constantly 10-11%, no matter what the market conditions were. Also the stated trading strategy made that impossible.

I bet Medallion's results fluctuate way more.

 

[Maverick2608]

impossible to generate those returns just being long the market via “stock picking” (a collar is just a little less long the market).

But Madoff had every incentive to keep his "strategy" secret, so even though he did mention using bull spreads, surely he did not rule out using short selling, derivate hedging etc.

I guess the whistle blower must have had access to the fabricated reports of individual trades and those seemed unlikely to achieve in the real world. The employees of Renaissance Technologies of course also have access to the individual trades, because they themselves come up with the strategies and make the algos that do the trading and they know of course that it is real.

 

[Maverick2608]

Madoff's results didn't fluctuate, it was constantly 10-11%, no matter what the market conditions were. Also the stated trading strategy made that impossible.

I bet Medallion's results fluctuate way more.

Yes, they fluctuate more, but no negative return years and overall much more impressive than Madoff's track record.

https://www.cornell-capital.com/blog/2020/02/medallion-fund-the-ultimate-counterexample.html

 

[formikatrading]

Yes -- and given the $ he supposedly managed, being able to do that using options was another red flag, especially given that no one in the options industry had ever acknowledged doing trades with him.

Madoff's results didn't fluctuate, it was constantly 10-11%, no matter what the market conditions were. Also the stated trading strategy made that impossible.

I bet Medallion's results fluctuate way more.

 

[TheDawn]

But Madoff had every incentive to keep his "strategy" secret, so even though he did mention using bull spreads, surely he did not rule out using short selling, derivate hedging etc.

I guess the whistle blower must have had access to the fabricated reports of individual trades and those seemed unlikely to achieve in the real world. The employees of Renaissance Technologies of course also have access to the individual trades, because they themselves come up with the strategies and make the algos that do the trading and they know of course that it is real.

No all the whistleblower Harry Markopolos did, after not being able to replicate Madoff's strategy mathematically, was to ask the guys at the CBOE to see if they have ever seen any volume of OEX options trades that Madoff claimed was part of his strategy and they all had even knowledge of Madoff's asset management business. And plus the non-variability of the returns at 25% throughout the years, that's how he concluded Madoff was running a Ponzi scheme. It's all in the book "No One Would Listen". Fascinating read!!

 

[newwurldmn]

Read the whistle blower report. It’s really interesting. Madoff claimed he was stock picking and hedging with collars. It was ludicrous.

Medallion does completely different things - market neutral and low latency type trading. They also engage in various arbitrages and even some shady tax dodges.

But Madoff had every incentive to keep his "strategy" secret, so even though he did mention using bull spreads, surely he did not rule out using short selling, derivate hedging etc.

I guess the whistle blower must have had access to the fabricated reports of individual trades and those seemed unlikely to achieve in the real world. The employees of Renaissance Technologies of course also have access to the individual trades, because they themselves come up with the strategies and make the algos that do the trading and they know of course that it is real.

 

[Maverick2608]

No all the whistleblower Harry Markopolos did, after not being able to replicate Madoff's strategy mathematically, was to ask the guys at the CBOE to see if they have ever seen any volume of OEX options trades that Madoff claimed was part of his strategy and they all had even knowledge of Madoff's asset management business. And plus the non-variability of the returns at 25% throughout the years, that's how he concluded Madoff was running a Ponzi scheme. It's all in the book "No One Would Listen". Fascinating read!!

I got the impression from the documentary that he delivered a stable 9-11% percent return.

 

[Maverick2608]

Read the whistle blower report. It’s really interesting. Madoff claimed he was stock picking and hedging with collars. It was ludicrous.

Medallion does completely different things - market neutral and low latency type trading. They also engage in various arbitrages and even some shady tax dodges.

Yes, I just found out about the IRS case. A little bit depressing that even the number 25 on the Forbes' list cannot understand the tax code.

"In September 2021, it was announced that Simons and his colleagues would pay billions of dollars in back taxes, interest and penalties to resolve the dispute, one of the biggest in IRS history."