Why isn't Jim Simons richer than Warren Buffett?
- Thread starter pinetboltz
- Start date
Simons did not started his company until mid 40s, after his works on Chern-Simon theory as a mathematician.
obviously buffett's strategies are going to scale much better than simons'. not to mention, his strategy will always stand the test of time. no matter how much the markets become automated and dominated by AI, algorithms, quantum computing, etc., OVER THE LONG RUN, price will move to reflect fundamental value (inb4 someone retorts with bitcoin)
assume this was not true and that due to all these new technologies, we now have a market that has no rhyme or reason to it. prices are so off their fundamentals, not just for a short time but for extended periods of time (years). there would be absolute chaos in the markets and it will only be a matter of time before regulations are placed to temper these chaotic forces.
with jim simons, it's not so clear. we already know his strategies don't scale well (relative to buffett's). the famed medallion fund has capacity limits which is why they closed it off to outside investors. some of his non-medallion funds haven't done so well in 2018.
but most importantly, the quant investing/trading space is only becoming more crowded and technologies are continuously advancing. it's a goddamn arms-race. it's been well-known that previously existing alpha has continuously degraded in this space as more quants chase similar inefficiencies and there is no guarantee that Rentech will continue to be on the forefront when newer technologies start to mark their place in the markets such as AI and quantum computing, which SAC's steven cohen seems to think is going to make a big difference and is actively pursuing, based on a recent interview
you also cannot assume that Rentech will always have a monopoly on hiring the best talent. in fact, i'm not even sure that's true today. b/c their salaries (680k+) will never be enough when one can make hundreds of millions going alone.
if buffett and simons both started at $80 billion today and someone put a gun to my head asking whose net worth was going to be bigger 20 years from now, hands-down i'm picking buffett no question.
if the starting capital amount was $1 million, then obviously i would pick simons.
assume this was not true and that due to all these new technologies, we now have a market that has no rhyme or reason to it. prices are so off their fundamentals, not just for a short time but for extended periods of time (years). there would be absolute chaos in the markets and it will only be a matter of time before regulations are placed to temper these chaotic forces.
with jim simons, it's not so clear. we already know his strategies don't scale well (relative to buffett's). the famed medallion fund has capacity limits which is why they closed it off to outside investors. some of his non-medallion funds haven't done so well in 2018.
but most importantly, the quant investing/trading space is only becoming more crowded and technologies are continuously advancing. it's a goddamn arms-race. it's been well-known that previously existing alpha has continuously degraded in this space as more quants chase similar inefficiencies and there is no guarantee that Rentech will continue to be on the forefront when newer technologies start to mark their place in the markets such as AI and quantum computing, which SAC's steven cohen seems to think is going to make a big difference and is actively pursuing, based on a recent interview
you also cannot assume that Rentech will always have a monopoly on hiring the best talent. in fact, i'm not even sure that's true today. b/c their salaries (680k+) will never be enough when one can make hundreds of millions going alone.
if buffett and simons both started at $80 billion today and someone put a gun to my head asking whose net worth was going to be bigger 20 years from now, hands-down i'm picking buffett no question.
if the starting capital amount was $1 million, then obviously i would pick simons.
Simons is just a clever frontman who gets all the credit.
It was Elwyn Berlekamp who came with an ideas..Because only after they brought him on from Axcom things changed and Rentech started making money.
Medallion's results will not get depleted over time,it's only wishful thinking of naysayers.
In 20 years Uncle Buffett will be 105 years old. You sure you want to bet on someone that old?
Buffett has been doing this longer.
Also... the crushing Medallion Fund founded by Simons can only hold a small amount of money: for years 6 billion, recently upped to 10 billion.
There simply have not been enough edges to deploy capital into with their methods.