‘The Man Who Solved the Market’

 

Gregory Zuckerman, Portfolio/Penguin, 359 pages, $30. Jim Simons, a former code-breaker for the U.S. government and a brilliant mathematician, founded the most successful investment firm the world has ever seen. As Gregory Zuckerman notes in “The Man Who Solved the Market,” even Warren Buffett’s track record — 20.5% annualized returns since 1965 — doesn’t approach Simons’s average 39% gains over a three-decade span. And that’s after his company has taken a 5% management fee and 44% of the profits. The question has always been how Simons does it. We know that his firm, Renaissance Technologies, helped pioneer quantitative investing, relying on complex computer programs rather than human judgment, to make trading decisions. But we don’t know much else. The 81-year-old Simons can be engaging in person. But on the subject of his investing success, he is secretive to the point of paranoia. Employees sign ironclad nondisclosure agreements and are told to avoid media appearances and industry conferences. Zuckerman, a writer for the Wall Street Journal, said he became fixated with cracking the Simons code. And though he doesn’t entirely succeed, he divulges much more than anyone has before. More important, despite the tendency to dot his book with such daunting phrases as “combinatorial game theory” and “stochastic equations,” he tells a surprisingly captivating story. It turns out that a firm like Renaissance, filled with nerdy academics trying to solve the market’s secrets, is way more interesting than your typical greed-is-good hedge fund.