Jim Simons showed us we can automate our trading

Is the goat algo Trader in the world rest in peace uh we're about to watch this interview here and hey San Francisco Google Fiber web pass is expanding in your area and we're so thanks for coming okay well happy to do it I think well we'll see in the end if if you have if you do it I I already have benefited tremendously from this my goal is to pull ideas out of this interview I'm an algorithmic Trader Uh my name is Mev I believe Co is a great equalizer and uh I had to start

automating my trading because I was trading emotionally and while in the game you get emotional so the only way to remove those emotions is to automate your trading this without even so I'm going to watch the goat Jim Simons is the best ever to ever do it rest in peace and initial talking to you about it because uh you'll see that I actually learned that you had a huge impact on my Life without knowing that you had until I began to research more about you uh before doing this you know by the way uh here's

the video if you want to just type that in a life in five parts math codes hunting Talent um just in case you don't want to hear my cringe comments and no we've talked a number of times and and over the years and I knew some things but but it was fascinating to learn more um you know I've also watched inter some interviews with you and I Want to try and do you know our discussion to be somewhat different um and I hope it will be covering some different things uh but I this is the

origins podcast and and I do want to go over your Origins and um I've noticed you say a number of times that you always like math that you always like math as a child but but I haven't heard you say why what was it about math that what was it about math that made me like it I don't have the famous the faintest Idea I just I just liked it I liked counting I liked uh doubling 2 4 816 all the way up to 1,28 whatever it is that was far enough for me but I

would do that often actually when mean later than when I was or you he's smok s again I mean when I was there they were interested in physics but you're saying when you were when you were talking to them they weren't interested in physics yes I I don't think there were that interested in Physics I mean uh singer and AA uh the index the index theem which is which is not physics maybe it could used in physics but the index theum was a a great a great result so it was chge Simons which was pure

mathematics and of course became uh uh you know that's before yeah that's how I first obviously knew of you as a uh before I knew about the Simon Foundation about your work in business um and and and you've talked eloquently I think very importantly About how you know I I learned it was it's it turned out to be very useful in gagee theories and trying to understand the topological properties of gauge theories and then eventually became a interest a whole new area of of of mathematical physics called churn Simon theories but um but the important

thing was that you had no notion at the time of developing it that would have any whatsoever right in physics absolutely no no none I didn't I didn't know any Physics or very little uh but I thought the math was H was beautiful it is I I got the that was when I was a chair at uh and I decided I wanted to learn really learn characteristic classes uh thoroughly so I set myself a a problem um you know as a combinatorial formula for the Oiler characteristic M edges minus you know yeah know forting some

of edges and faces and so on I wanted to come up with such a thing for What's called the signature of a four manif get Him get him and um it's a it's a nice these sounds are really loud I understand my bad but these are liquidations so this guy just lost $3.5 million and it's very important to hear this sound so you stop trading by hand please this guy did not trade by hand algorithmic only Traer construction but I wanted to see if I could make a combinatorial version of that and I started to

work work on it and uh I got Pretty far but then I got stuck on one term which did not yield to anything but it did turn out that it was a function that on a three manifold which uh had very interesting properties and um and and and that was uh the the roots of turn Simons were that three manifold example and um it it's uh it was really quite quite a wonderful thing this this uh this function uh it was it was a Conformal invariant of a Romanian manifold it was a conformal invariant it

was uh it was only defined modulo the integers so you know 08 and 1 point you know8 and 1 8 was the same so it was uh so it took values you could think of it taking values in a circle but uh anyway it was interested mod Z and uh I showed that U I went to calculate it for a three manifold sitting inside immersed anyway in for space and and I calculated the Answer and it came out to be zero zero Z came out to be zero and I thought wow uh then I calculated

it for three-dimensional projective space uh and it came out to be a half so then I realized okay so three-dimensional projector space cannot be conformally immersed in R4 and anyway I showed this stuff to churn and he he just said well we could do this in all dimensions and uh not just three and I was a little dubious But uh we started working together and he was right and uh so that that became CH Simons but it never entered my head that it would apply to physics yeah no it's I think that's I mean there

are wonderful examples like that that I think are incredibly important and by the way you know it enters physics in a number of areas but but in particular to try understand the prop gauge for the listeners who aren't experts gauge theories describe all the known forces Of nature really and the fields that that that we now think of as electricity and magnetism even gravity and um and um and trying to understand the mathematics of these is turns out what's what up 4 p777 bro called the topological Properties or the the the the properties that that

don't depend on on sort of you're leaving me for a Turbo Tax expert who Charges me less but gives me more sing it Adam detailed Natures of of of of the spaces are very important and telling and useful to understand uh processing physics called instantons and and so this this this classification of turn Simons and something the interal which is something called an has an index is is is uh is very important but but it was important as you say from a mathematician point of View because of its mathematical beauty without any knowledge at the

time of gauge theories or what it would work on and I want to I'll jump ahead because I was going to get I suspect we're not going to get to the end of everything I want to get anyway so I want to at least get some of these important questions nowadays there is a great oh over the last one sees in government in particular and and and this has been true since I guess I've been a a Professional scientist this push for Applied funding for Applied problems to solve you know to solve problems and and

less interest from the point of view of politicians and sometimes unfortunately from the point of view of of the public in fundamental curiosity driven research and the important and and what what people don't realize is that very few profound profoundly important applications have ever come out of people directly thinking about those Applications but rather came out of people like you working on something that was fascinating with no idea that later on it would have an application and and so I wonder if you could comment on that because I guess you have the the luxury in

some sense of funding with your foundation potentially this but but in terms of the government and the pressures of the public to to say no we want you to solve this applied problem and and and you know if they if they' Wanted faster computers back then they would had faster pulleys and wheels until someone developed a transistor related to something totally independent well yes we we support primarily although in one area we have a study on autism uh which is applied yeah to find treatments and so on but the rest is uh is just basic

science and um and I love basic science and you're right my favorite story is I I Raby yeah so he invented or discovered Uh nuclear magnetic resonance M he won the Nobel Prize MH and you know what it is yeah whatever yeah people use it all the time now to see their bodies well exactly they won the Nobel Prize a few years later two guys came along I think they were German and realized you could analyze materials with this and they won the Nobel Prize and subsequently another two people one of Whom was at Stony

Brook realized that you could take pictures now they didn't want to call it nuclear magnetic reson they didn't want the word nuclear would fren yeah they it magnetic resonance magnetic resonance imaging Imaging yes and uh I don't think I iabi he probably wasn't alive by then but uh whatever dawned on him that uh there were machines implementing what he discovered all over the world thousands and thousands of machines that uh could Look at your shoulder or whatever you know it's I'll give you I'll add to that story for you a little bit because Rabbi was

one of the more influential physicists of his generation and had many great students and he influenced many people and one of the people who then took followed up on that field um was a wonderful physicist named ed Purcell who was at Harvard and actually by the way was one of the people who interviewed me for the Society of Fellows but he was an amazing man every time I talked to him I wanted to grow up and be a physicist he was an experimental physicist he won the Nobel priz specifically for magnetic resonance nuclear magnetic resonance

the details of which had followed up on Raby he and and block um who was at Stanford and when asked at the time Ed pcel was asked at the time when he won the Nobel Prize what the utility of this would be and he said he didn't necessarily think it Would have any widescale application it was a very important phenomenon in physics but I thought it was I RAB who discovered well I Reby I mean nothing is there it's all incremental right so R Raby did a tremendously important work in understanding the importance of magnetic

moments in atomic systems for which in the spectroscopy of of of uh of fundamental Atomic systems and and so his that's what he won the work for and then the people who'd actually used it In for nuclear magnetic resonance to to um to allow you to do a new kind of spectroscopy to follow up on the spectroscopy of rabi where where prel and bl and others but but I remember those guys specifically said at the time the Nobel Prize I remember Lee pcell said he never thought it would have an application and he and you

know I I know the name for I I never met him but I know that he was a Pity he was a wonderful man he actually wrote a great Introductory book in electromagnetism which is which was one of the best at the time but but he was a just a fascin like like singer and in my opinion the important thing about that I hope most senior scientists realize is that just conveying your fundamental excitement and imagine and interest is perhaps the best thing you can do for young people in a way that you know young

people are terrified by important people and people they look up to and just being willing To talk to them and convey your excitement is probably the most important thing you can do as a mentor and a teacher because I certainly know it for me that was a profoundly that you know just having people who would take me seriously enough to convey their excitement was a tremendous motivator I I agree yeah it U and and we're we're lucky to have such people they got them they got them they got them they got them look at this

dude they just got Somebody for 11 mil I I don't bet cuz I'm not going to bet bet here but I bet that was who they were looking for who are they though they them they them I think that's who they were looking for that $10 million order that $10 million leverage order right there they were looking for them they got them see who else they got $10.4 million that's crazy stuff bro that is a big liquidation there and you can see the volume spikes here I don't know what They're run or the rhythm is

yet dude you have to figure it out for yourself but they definitely got them let's see what happens here I'm just going to go ahead and put a Mark here of 10 point was that 10 million liquidation 10 m lick when I see a big lick like that I like to mark it down because I feel like things happened around these parts what are those things I can't tell you that dude I don't know I I just watch this stuff I study it and Liquidations are very interesting to me obviously that's why I have these

liquidations all on my screen you see a lot of blue which is long liquidations then you see a lot of pink blue pink blue pink everybody gets liquidated if you use leverage you get liquidated now Jim Simons I'm sure he used leverage but he used it in his algorithms he's not trading by hand pink blue pink blue doesn't matter if this price is going to a billion dollars if Bitcoin goes to a billion dollars Longs and shorts will all lose they will all get liquidated if they're using too much leverage and somebody asked me today

if they could use 500x leverage and no you can't even use 50x leverage bro and if you want to prove me wrong I'll see your dead body right here no offense much low all right so I just wanted to interject because I saw that big liquidation but I'll uh stop yapping now let's let the goat talk Because obviously we're gon to we're we're not going to have time to do everything and I'll even get to your business CER which has been not so bad but uh but um but I I I was fascinated to learn

I knew you you done the the the the time at the institute for advents analysis and I knew then you had become chair at at at Stonybrook and I was interested in that transition and I did hear you somewhere talking about the story related to Vietnam that you got Basically fired by by Ida for protesting the Vietnam war is that not true well yes it's true Maxwell Taylor you remember that sure yeah he headed not only Ida but there were various other kinds of units in this institute for defense analyses and he wrote a a

cover story in the New York Times about how well we were doing in Vietnam and we have to stay the course and blah blah blah and I thought the Vietnam War was the Stupidest thing we were ever done uh so I wrote a letter to the editor saying not everyone who works for General Taylor agrees with his views and uh and here are My Views and uh so they published a letter and U I thought there might be repercussions but there weren't any but then a few months later a guy came around he told me

he was a Stringer for a Newsweek uh magazine and he was doing a story on people who work for the defense department which I indirectly Did who were opposed to the war and he said I'm having a hard time finding people can I interview you well I was 29 years old no one had asked to interview me so I said sure you can interview so um he said 'well how are you approaching this and I saidwell here we're supposed to do at least half our time on their stuff but you could do half your time

on your stuff so until the war is over I'm going to only work on my stuff and when it's over I'll only Work on their stuff until it evens out do you want to become a software engineer well if you don't know where to start I'm Jacob I'm a professional software engineer based here in New York City and let me introduce you to code academy they're a platform dedicated to kickstarting your career in Tech and getting you closer and closer to that first developer role so think of code which was not completely true but it

was kind of true and then I went to see my Local boss which was the only intelligent thing I had done that day and told him I gave this interview he said what did you say I said well I said half and half and so on so he says I gotta call Taylor so he went into his office he called Taylor he came out in five minutes and said you're fired wow I said I'm fired I said I you can't fire me my title is permanent member yo ryar where's a 500x four piece Cen on

Some sketchy exchanges hey dude if you want 500 500x leverage I'll uh I'll take that trade for you you know I'll give you the 500x leverage liquid hu real quick I'm I'm extremely confident even Ry bear will get liquidated with 500x leverage so if anybody wants that 500 Leverage come to me dude because I will gladly just give you 500x leverage and um let you get licked Because you will get licked sorry bro it's the rules of the game he said well do you know of a difference between a permanent member and a temporary member

no I said he said a temporary member has a contract so but I wasn't worried at all because I had recently finished the work on minimal varieties and that paper 50 years from then is still cited sure it it had almost 1900 citations wow and for a math paper that's a lot that's A lot yeah and so it was really a very good paper I was very proud of it and I knew but I could get an academic job yeah I wasn't worried about supporting my three children now now let me ask you this question

it's a hypothetical one but because I I want that's a great segue because I we'll talk about moving back into Academia and it's nice to had that security knowing in the background that maybe that I don't know that didn't weigh on your decision let let me just Ask the question would you would you have done it again if You' known the consequences of of of what you said or would you held back well that's a good question uh I probably would have preferred not to get fired so in that sense but as I said I

it didn't worry me very much it didn't worry me very much because I knew I could get a decent academic job it might not pay as much as Ida uh and I I had some offers but then Stonybrook came along and asked if I Wanted to chair their department and that sounded kind of exciting oh yeah we'll get we'll get there because again I can relate because I did the almost the exact same thing at almost the exact same age but but but I want before you get there I do I read a quote from

you or I heard a quote from you somewhere saying it's everyone should be fired once yes okay everyone should have that experience as long as you don't make a Habit of it okay that's what I said okay but let me let's par that for a second because I actually also think it's kind of a useful thing for people to do and maybe it was just a fun remark but but uh but I it can be very useful so I well maybe it was just an off-hand remark but I'd ask you to elaborate on that what

what's the utility about being fired because I think they're it's useful to suddenly be in one way or another forced to be doing to do something else but Well I don't know I I uh I just blurted that out okay I didn't know if there was more to it than that and I I couldn't I couldn't ask but butk it's a great remark it's a great remark yeah um and maybe that's why I heard it um it's a good sound bite uh the you went you moved to Sony Brook and how old were you like

40 or no only 30 okay so you're much younger you know I moved to become chair of a department I was I taught Yale and I moved I at that point I was 38 but I moved to become chairman of the department which was had had a reasonable history but was at a sort of a low point at Case Western Reserve in Cleveland and um the physics department yeah the physics department and Yale no I was in the physics department at Yale and then I moved to become I left that become chair of a much

uh smaller Department in some sense at at Case Western Reserve it's a university of Cleveland yeah and and um a good school It's a good school and the department had had a distinguished history Michaelson was its first Professor Michaelson and um but um and I ended up having that same position he did but but uh it was invigorating and people there were a number of reasons I chose I was kind of young and people said why do you want to move into Administration but I had this opportunity to have 12 new faculty positions to hire

to build a department to create something new very Attractive to me so get everybody that's using leverage out of here dude you got to get them out before things can move either way either way up or down I don't care but all I know for a fact is market makers are going to liquidate everybody the only thing about trading uh four pie says is is is you have no exit leverage so most 10 Bill plus net worth much more likely with a tech I wanted to ask you about that about your experience and What attracted

You to be a chair because if you're young people say avoid Administration you know don't do it well I just thought it would be fun uh the pay was pretty good and uh the the department was weakish so I knew there could be Improvement and uh I just thought it would be fun and it turned out I was a very y Sonia if that's a question get the [ __ ] out of here if that's a question if that's how you state a question get up out of here Bro your net worth like I'm obligated

to answer your non-question question in such a short form get him out of here dude these developers kill me bro they be walking around like Moon owes him everything your net worth at least you didn't put a period at the end good recruiter I love recruiting me too you like it yeah it's really fun to find great people and lure them to your operation so um so I did two things in in those few years years uh I started What would became turn Simons but uh I also the first year I hired 10 people the

second year I hired 10 people wow and at the fire ref few your child needs these three key factors to get into an Ivy League or top 25 University and it's not having a good GPA or SAT score let me explain 90% didn't have tenure and uh we built a very very good Department especially in differential J but we had also hired a guy named Jim Axe who was uh I don't know if you remember that name yes he had won the coal prize and he was an algebraist and uh he was the most famous

guy we had you heard from Cornell or something you L him away from a from he was a Corno and I Leed him away from there and uh but uh then we hired a lot of very very good people and the department became uh you know a very good very good Department yeah and that's a great that's a very satisfying thing let me let let me ask You another personal question I guess because it because it was my experience and I don't know if it was yours when you're a young academic trying to make your

way up and of course you sort of Left for a while so maybe this is different you really always think about yourself and how to and how to you know and your own problems your own academic problems the things you want to do the research thing you want to do and uh it's not really an altruistic field in That sense and when I became chair it was not only a thrill to be able to recruit good people and to and to and to recognize Talent which which which in retrospect is a very satisfying thing to

know that you've helped a young person that's talented but I also found it very surprising I like that BR don't listen to anybody just go wild no one will tell you succession Secrets cooperate with me Oh how fulfilling it was for me to help other people do what do what they wanted to do well and and and I don't know if you had that experience to be able to to find that you're actually helping other people build a career and be excellent is that with did you find that uh well I found it more when

I went into business I I was going to I was going to ask that only because I realized that one of the I'm jumping ahead because I thought Maybe that that experience might have primed you because one of as far as I can tell and unlike most of the interviews with you which I assume are largely about your incredible success in Quant as a Quant but um is that one of your one of the reasons you were so successful it seems to me if I trying to steal this is being able to bring in really

talented people and let them run and with their talent yes and let them run uh uh you have to have good taste in Selecting people and uh but then you don't sit on them you you let them do their thing and uh that's uh that's very satisfying and again when I went into business um that was even more important in a certain sense and uh I hired some terrific people there and let them as you say do your thing but do you think your experience as chair helped Prime you for that or not I mean

the sense of hiring faulty and saying okay we think you're good now do good things It did I mean I learned how to manage people which is very difficult and something you don't learn as an academic as a rule right and uh so I left that's why you can't compete with me 4 py Brook that's why that message is right there dude that message is right there too boring all this is too bro this is all too Bor this is all Finance bro this is all boring bro after eight years and um and that's when

I went into business and uh but I had learned to manage people And uh and I I was I was good at that I I uh well recognizing talent and encouraging them to do the best thing is is great at managing people if you can do if that's what you can I mean sometimes unfortunately there's the minutia of other things that get in the way but that's the heart of a good yeah it's and and it's and it it obviously worked for you you and fortunately you you actually were able to build look let me

let me put this well let me there as Far as I can tell again I've tried to to think about your life having been studying it lately three factors probably important but one I I learned one was that you you you had sold this company that had started uh way back when in Colombia and so you had a cushion you had a you weren't you had a monetary cushion you weren't quitting your job in some sense with worrying about feeding the family I did and in fact Uh it uh that business was sold and uh

for quite a lot of money and uh my friends said from Columbia okay now we have all this money uh we want you to help invest it I didn't know anything about investing but I said okay I I'll do that and I found a guy a mathematician who had gone into the Commodities business mhm and uh I went and talked to him to see what he was doing and he seemed to really know what he was doing so I said Okay we're going to give you X dollar you can have 10% of the profits and

uh we want you to uh make some money for us and I said but if if you lose too much you have to stop and he said what's too much I said well if you're down 30% you have to stop but as I was walking out the door I said and if you make a tremendous amount of money you have to stop said how much is that I said if you multiply our uh the fund uh by a factor Of 10 a after your fees then you have to stop wow and well he couldn't argue

with that but the remarkable thing was that after a few steps he that he took that didn't work he get into something and made a fortune in nine months nine months later he had multiplied our money by a factor of 10 wow and uh much of that was in a permuda trust that had been set up for me by uh the Father-in-law of one of the two boys because he was very appreciative that I'd gotten this business going in the first place he sounds like he's talking about Moon's Inner Circle Jim did exit a business

bro got to have cash to trade dude he owned half the business and he uh he it took $100,000 and put it in a Bermuda trust for my family oh and so that $100,000 was invested with Charlie and that became a million so now I'm so U uh so I don't know how we can into that but uh no well the the the fact that um um that that well yeah I I got into it by saying I knew you you'd had a little you'd had a cushion financially which would which allow which makes it

a little easier to switch to to quit Academia I think obviously the but the other thing was that you had um so that was certainly a help there's no doubt about it and it might have been a harder decision if you were if you Were going paycheck to paycheck um but but but also you also had a cushion of intellectual Excellence you were able to build on the investment you'd made in humanity as far as I can see you brought in let's see someone you knew a very important person from The Institute of Defense analysis

who'd been' been involved in creating an import very important algorithm which led to speak speech recognitions right um B is his name or something or yeah and then also AE your great hire from from uh so you you you were able to say oh I've got these really good people I already know they're really good and and and I can bring them in that must have been important it was it was important and um at a certain we were doing fundamental trading M uh initially and that worked out okay wait a minute if you ever

tried asking questions to chat GPT for research no I should go we had 10 minutes left 10 minutes or so is it yeah 10 or 15 minutes yeah yeah maybe maybe 15 minutes thank you um I don't know where I was oh yo I was curious about this because y'all got some slang that's definitely like the same slang that I hear in the US and you know I was thinking about this are we all just kind of converging like I know we're worldwide like 4 P he lives in Greece and he just said to me

he just said to Me not gonna lie gang this interview boring as [ __ ] and I'm just like what you sound like you from the states or something but are we just all converging to have all the same slang now yeah and especially in text maybe he sounded different when he said it but like when I think about that when like you said that and it's like you know how are you not from the US is it we're just all converging the same slang and stuff Because we're all watching the same type of videos

and stuff and Tik Tok and whatnot it's really interesting to see like hey not going to lie gang and it's it's like you're not even you're not even from where I'm from I feel like that's that's a saying that I don't know it's it's crazy to me it's crazy I'm from the UK and it's almost the same everywhere now yeah it's like everybody uses the same slang now I guess we're all watching the same videos and it's Kind of cool it's really cool actually like like we're all like we can all communicate so much better

even if we uh are from different places in the world and um yeah beautiful thing beautiful thing I love the internet bro it was fundamental trading but finally we get into uh making models and uh they worked better and uh it was ever since it was it was model making and uh and your experience in algorithms well obviously algorithms became very Important as did um machine learning I mean which which were you directly exposed to machine learning or is that something that you brought in by your colleagues uh machine learning didn't exist in those days

as a notion uhuh I think machine learning has only been around for about 10 years or uh 15 years uh no we didn't uh we didn't do machine learning but the the idea of of of in some sense in in some sense looking at having A vast Storehouse of data that you can analyze and look for patterns yes uh what became a central feature obviously of what of what that's that's what we did we had a tremendous amount of data historical data tick data even the tick we had here we go a ton of that

and the way it worked is is a guy would think oh well maybe uh this would be a predictive signal and he cook up something and then we could test it hey he been saying cook up since way before we have Jim been Cooking in a pot boy Jim been cooking way before we even heard like cook and now we say cook all the time that's crazy dude back test it for the previous 10 years to see this does this really work and and uh uh if it was statistically significant it would go into the

uh it would go into the business so U that's the way that's the way it work and it probably still works that way it still Works that way it's called black box right but but and I'm intrigued by that because in some sense I've I've done a lot of discussions with people in the past and and written about AI but um the idea that that that basically patterns can be discerned that you might not discern yourself but by by looking at data enough uh and that's how Tesla can look and find you know in principle

hopefully that someone's not a pedestrian but a but a stoplight um is Is you is it a black box can come up with saying this is what you should do but it never tells you why you should do it absolutely and and and it's frustrating for people and I understand early on you it was a natural tendency for you guys not to believe it to say look we have an intuition why should we trust this machine telling us to do X when there's no rational reason that we can think of doing it I didn't worry

about that I didn't if it if it worked It worked and uh but we had very strong uh uh uh conditions uh requirements yeah the uh the uh what you call the signal versus this versus the noise I guessed Yo whenn Face Reveal Enrique I got to only fans you can just join that and they have to have enough statistical significance uh to put them into the system and they're tested all the time sometimes the signal disappears after a While so you take it out of the system uh but um you know uh it's it's

just a continuing growing thing well in retrospect of course it seems imminently sensible by the way I've had three four of my PhD students from ale one year went to work as quants in in Wall Street uh because they you know the mathematics was not that different than what they were doing and the and the pay was a lot better none of none of them came to Renaissance I you know the interesting Question is no I don't think so they were being hired by you know and I don't know if any of them eventually came

to Renaissance they were being hired by the big the big management for you know all the big man and things that were hiring people like crazy places like that yeah I know but anyway they you know the funny thing is I I later I heard I remember a year after three of them were in uh in Wall Street they were they met and they were sitting there at and they Were at work and they and then they would end up talking about gauge theories and and then someone said hold on hey wait wait that's not

what we do anymore but but but but what I wanted to ask you about is this interesting it's fascinating that that you had the capability to say you didn't worry about whether it it defied intuition cuz many people I think would not be able to do that and I was going to ask you a a side question there's no doubt that as Machine learning gets better medical Diagnostics will be ultimately rationally taken over I think by Machine learning but looking at vast amounts of data and and and making uh clinical recommendations the basis of it

but but the question that's interesting is will people be willing to take so if a black box says do this but doesn't give you the biochemical reason or the or the rational reasoning whether people will be willing to take medical instructions From a black box basically that is a very good question it never occurred to me and I think uh the medical community it would be very difficult for them to implement some treatment which they didn't understand at all yeah why it should work um even if it's the best treatment yeah well exactly I mean

uh for example acupuncture some people believe in acupuncture but there's no analysis that says oh this is Why acupuncture should work we should all do acupuncture so most people stay away from it this is your brain when you're struggling to focus this is your brain this is your brain when you're in the zone even though it might work in some cases I don't know it might I I haven't seen evidence of it but I know that people you know swear by but then people swear by a lot of things for which there's no evidence and

it's a it's a human characteristic um okay well I thought I I'm glad we we got to that question because I think it's interesting I mean the the difference is I think why it'll be much harder is that if you're wrong in your algorithm you lose some money if you're wrong in your in in in your uh clinical recommendation you may lose a life and one seems a little more U difficult than the other I think corre and and uh and maybe easier it's easier to take losing money than than the life let me since

we don't have Much time there's a few there's a few other areas I wanted to hit and I'll just pick on one of them you know I'm I'm a great admire of many things you've done and not just the math but the the things you've chosen to do in your life and that's how by the way we first met I think was when I lectured at the world Science Festival probably early on I I I remember you and and your wife came to a number of the lectures we had number of good we support that

organization yeah I Know you do and and we've chatted with it and um and and as I've built other organizations I've hoping some I've hoped at some point the Simon Foundation would fund that but that's not the reason we're doing that the the the the thing I want I want to talk about is one of the things Simon Foundation funds is the flat IR Institute of computational scientists and which of course in some sense I can see why you personally would think that's incredibly important Because it's been important in many ways in your own I

am as proud of the flat iron Institute as I am for anything else I ever did I'm really proud of it it's it's terrific you know that answered my question I was going to ask you my last question was what you're most proud of so well are you more proud of that as as CH Simons or man or or or or or the uh um minimal uh minimal well minimal varieties yeah uh well I'm pretty proud of that churn Simons well yes because I Uh came up with its roots the beginning and then with churn

of course we expanded it a great deal but I thought what I came to him was with was was very good so I'm pretty proud of that well you'll love to be proud of I mean I you don't have to rank them I mean I'm glad to see that that the flat iron Institute up there but I want to ask you a question it funds it supports computational biology computational astrophysics computational quantum Mechanics computational mathematics not quantum mechanics quantum physics oh quantum physics thank you computational mathematics and computational Neuroscience if you had okay just let

me ask there's no reason this is just a guess speculative which of those areas you think is going to pay off the most and we'll we'll do another interview in 50 years and see well um they're all paying off I I I can't Really tell uh the astrophysics unit has published the most papers uh but um that's not necessarily A measure yeah that was run by David spurgle who's now the head of the foundation the head of the foundation who I've written papers with by the way yes yeah when I was at jior fellow he

was a graduate student at Harvard I see well um so I don't know which unit is uh going to pay off the most but but they Interact with each other and in particular computational mathematics which was relatively a new unit um is great because it's like glue it it uh they help all the other units some of the post dos there are joint with uh quantum physics or astrophysics or something so U that's headed by Leslie greengard whom you've doubt undoubtedly heard of and he started the the thing it was called skadar Simon Center for

data analysis And uh that was worked out so well it was it was tilted to the bi biological side because uh Leslie also has an MD but it really went well and then we thought well maybe we'll start astrophysics and um uh spurgle gave a a u a workshop organized a workshop to see if it was a good idea to do this astrophysics that that that would have been the second unit which and I took him aside after the thing and said I'll I'll do this if you head it and uh he said well I

got to think about that F but after couple of months he agreed to head it and uh did a great job and then we have we we have great leadership in each of the units at absolutely stupendous leadership it's important it's totally important and so we have and with good taste so there's very many good people there well I think that's you have many skills but one of which has clearly been knowing talent and and And nurturing it which I think has been obviously very important for you in every area of your career look I

know you have to go I have one last question because I don't want to keep you actually I would love to talk for another hour or two but I really enjoyed this I hope you have but um speaking of the support of the of the flat iron Institute and the S found there is now a trend in some sense to almost return to the Renaissance times Of patrons as governments cut back and are in support of research because of of economic uh uh uh concerns or demands one is finding more and more extremely wealthy individuals

like yourself and you know uh Yuri Milner in in supporting some things and and and and and others that they're we're getting almost to the time of patrons again where it it it's seems to be that the opportunities for supporting especially foundational research is now coming directly from Individuals of great wealth and not from the government which which was really only fairly recent government supportive research has only been since the second world war in the United States the big science I'm wondering what your take is on that and its future and is it a good

thing or a bad thing look it can't be a bad thing for someone uh to uh patronize science that can't be bad it can't be bad I agree but uh I think it's really important that The government does more Schumer has a bill that would uh boost uh science considerably we'll see if bill passes and uh but I think it's great that there are patrons science um fact we have there's an organization called the science philanthropy Alliance which is uh consist of people who would like to support science philanthropists so um I think that's great

but U I also think that uh the government ought to do more and Chinese doing much more yeah when It's seeing much more in China and Asia you know when we're seeing it in Singapore and in Korea and that was a great concern of course in watching United States having its support of fundamental research decreasing and the only bad I agree with you it can't be bad the only bad thing could be if governments say oh look they're doing it now we don't have to do it and that would be that would be the yes

the bad thing that would be a bad thing Folks at Google Fiber web pass spend a lot of time thinking about but we're yeah and so one we are that is the message I want to give is that we shouldn't we shouldn't use this we should benefit from it and the demonstration and I think if anything use it as a demonstration that that individuals like yourself can spur really important results with merely a few billion dollars spend at the time and it used to be a billion dollars was A lot of money but but but

and but but and so governments can do a lot with very little but we have all benefited uh from your career as a sign as a mathematician an intellectual scientist and and then as a as a supporter of Science and not just I say this not just as a scientist but someone whose whole being has been been built around trying to improve people's understanding of Science and the scientific Enterprise and so I particularly appreciate what You've done and so it's been a great it's it's always been the times we've talked it's been a pleasure but

this has been a real thrill for me and I I really thank you for the time you've taken I I enjoy it I I enjoyed it you're a good questioner and a very interesting guy yourself well You' done a lot of interesting things I'm sure well I hope thanks a lot and I hope we have a chance to to do this maybe once again online and I certainly hope um to to do it Offline maybe next time in New [Music] York all right that was a good video but I actually pulled up a couple more

our secret is just to stay ahead of everybody to hire the best possible people and the research goes on all the time all the time we're doing research trying to find new predictive signals predictive signals uh for example that's a big example so a signal is well you know what a signal is tells you what's a Predictive signal is a signal that tells you what's what's G to happen some probability right greater than probability greater than a half and the more of these signals that you have and independent they're not correlated with each other if

they're highly correlated it's it's really just one sign but um the more you have the better and uh we have I won't even say the number and I'm not sure what it is but it's a very large number of Predictive signals and they keep uh being developed and sometimes these signals lose their power yes and uh you have to discard them uh other people have caught on or whatever in the earliest days of my trading uh I traded Commodities and commodities had a tendency to Trend a pretty strong tendency to Trend so that was a

good way to make money you would just well it was up last week it's likely to be up next week or so on uh but people gradually Caught on to trending so after uh several years or maybe 10 years after I started in the business it the trending in Commodities had completely disappeared uh stocks never trended particularly so there was no real trending stocks but was and so so that's an example of of a signal that just disappeared people we don't we're keep discovering new signals other people uh might find some of those as well

and that Might the effect of that might be that the signal kind of goes away because too many people are using it but um so we have a smart people and they keep coming up with new signals so that's and we stayed you know we stayed with ahead watch that later um that's Jim Simons is a hedge fund manager and a mathematician he is a quantitative investor and the founder of the hedge fund Renaissance Technologies with $55 billion in assets under Management Mr Simon's primary models were on pattern recognition he contributed to the development of

strength Theory by providing a theoretical framework to combine geometry and topology with Quantum field Theory here attenion Simon quotes to achieve success in business and trading one it's supply and demand if gold is discovered then it gets harder to make money mining gold because everyone's competing with You two we have three criteria if it's publicly traded liquid and amable to modeling we trade it three the things we are doing will not go away we may have bad years we may have a terrible year sometimes but the principles we've discovered are valid four in this business

it's easy to confuse luck with brains five I wasn't the fastest guy in the world I wouldn't have done well in an Olympiad or a math contest but I like to Ponder and pondering things just sort of thinking about it and thinking about it turns out to be a pretty good approach six the system is always leaking and we keep having to add water to keep it ahead of the game seven past performance is the best predictor of success eight patterns of price movement are not random however they're close enough to random so that getting

some excess some Edge out of it is not easy And not so obvious thank God God probably doesn't care thank whoever nine we searched through historical data looking for anomalous patterns that we would not expect to occur at random 10 when you've done your best there isn't a great deal to apologize for but not having anything to apologize for and not feeling bad are two different things certainly I nice let's watch this one story this is a Stony Book Stony Brook I think this is where he taught it [Applause] [Music] Dr Chan ning Yang a

Nobel laurate in physics is the Albert Einstein professor ameritus in physics at Stony Brook University and the founding director of the CN yangang Institute for theoretical physics at Stonybrook his good friend Dr James Harris Simons is a renowned mathematician investment adviser and Philanthropist the former chair of the math department Stony Brook he heads Renaissance Technologies an investment fund that trades billions of dollars in markets around the world he and his wife Marilyn recently donated $60 million to Stony Brook to create the Simon Center for geometry and physics and gentlemen it's a great pleasure to be

able to speak to both of you uh I was quite comforted yesterday to learn that each of you at certain points in your Relationship were unable to understand what the other one was talking about I found that a very comforting situation now that physics and math are back together again is everybody caught up with each other Dr Simons well I still generally speaking don't understand to hack a lot of physics uh so I don't know I think a lot of mathematicians have certainly caught up to some extent uh people who are interested in these particular

areas which do that uh so Metal or something so geometrically you I would say uh stimulation and inspiration and and his writings involved a lot of magnetic forces used to be thought of expect nothing to happen intuitively you expect nothing to happen and in fact something happens a a coherent beam of electron you know all what the the frequencies line uh appli to um I think at the same time that Frank and I was were talking I expect there were others who were having the Same kinds of discussions I don't think we were unique in

getting this going put together otherwise uh the whole of physics in this uh Center next year maybe I'm not sure perhaps if they do not uh get more funding problems okay well I ran to the rescue of Rick but I don't think I'm going to run to the rescue of CERN so they're going to have to figure that one out for themselves you ran to the rescu he want Nation yeah I did but uh but CERN is of a high Enough energy and Franklin obviously say much more about that I but that at the edge

of those energy levels certain conjectures I think Super symmetry is is uh is one uh might be verified so certain things in modern physics particular in string theory might have some experimental justification uh as a result of experiments there Frank you must be able to say m uh yeah we are all looking forward to what will come out of uh the what is Called the rhc has a shape to it it's not flat it has it has a shape and that uh the there's more bending in the presence of more mass and less bending to

work on very high level secret obviously codes try to help all kinds of good things happen was it about that war that you didn't like is it any war or just that one no it's not any War I think I would have been in favor of uh our fighting the second world war and so on uh it's usually the example that Everyone agrees is a Justified War um it I didn't think that there was such a big threat from the Communists over there I thought we were losing an awful lot of people I thought we

were taking our eyes off the ball that uh in America it just seemed like a like a waste and uh very destructive and you could could feel [Music] the you what these boys have to say about them what do you think of quants Jim Simon's Medallion fund has done 39% Net of fees for three decades which proves that it works will you consider hiring a Quant lieutenant in Berkshire to work alongside with Ted or Todd well I'll say no to the second part not with Charlie had first part well that's rather interesting the the the

leading Quant fund did fabulously on the short-term trading they found little algorithms that worked to make them they had predictive value and as long as they kept working they just kept doing it as Long as the money kept coming in when they got to using the same system just to finding some little algorithm and trying to do it mechanically for long-term stock predictions the record was not nearly as good and in the short-term stuff they found that if they tried to do it too much they destroyed their own Advantage so there was a limit on

the amount they could make but they were very very smart yes they got very rich very very smart very smart and very Rich and and very high grade by the way yeah s but uh we're not we're not trying to make money trading shocks I mean we don't think know how to do it I mean it doesn't if we knew how to make a lot more money tradings we probably be trading STS too but but we don't know how to do it and we really don't trust anybody else to do it for us that's simple

different type of approach to the market which is fine by that there Wasa who achieved much hard we manage funds Whose trading is determined by mathematical formulas we operate only in highly liquid publicly traded Securities meaning we don't trade in credit default swaps or collateralized debt obligations or some of those alphabet soup things that George was just referring to our trading models actually tend to be contrarian often buying stocks recently out of favor and selling those recently in favor that's actually a good tip dude It's a good tip so B sorry um Jim Simons says

his alos are typically contrary to Market sentiment buying those out of favor favor and selling the in favor build Al go based off of that bro Returns then Warren Buffett Jim Simmons Simons get his name right Jim Simmons relies on quantitative analysis to decide the trade I don't know if I can watch this video back in 1982 quantitive analysis was not a thing the oh I'm a genius the next day I'd walk in my way oh I'm a genius is I'd walk in one day everything was going my way oh I'm a genius the next

day I'd walk in everything was against me oh I'm A dope it was a very stomach wrenching business whereas with a system that you can develop okay you have a system you you do what the computer says to do you have made a historical study of the system that you're using and it worked with a very high probability the system was going to work and uh so I I was much more satisfied with that approach and uh and we hired scientists and so on to build these systems and improve them I got of mathematics I

was in my late 30s Had a little money I started trading and it went very well I made quite a lot of money out with pck I mean I think it was P it certainly wasn't mathematical modeling but in looking at the data after a while I realized hey there looks like there's some structure here but the the real thing was to gather a tremendous amount of data and uh gradually these models got better and better and better and better you have to in a business like this just keep making Things better keep improving the

system because other parts of it are going to wear out at after a while people will catch on to this or they'll catch on to that so you just have to like in any business in any business you just have to make things better and better and better because that's what everyone else is trying to do uh investment operations are 100% cuz this is 100% Model D it's not 90% or 80% some people have models and for uh you know for advice so what Does the model say oh yeah let's go oh I don't forget

that I don't want to pay attention to that so uh but you know uh Renaissance is 100% model driven no trade is ever made because someone walks into the trading room and says hey let's buy IBM as a sure winner or anything like that uh you know we got too much uh Google we got to show it got nobody does that it may be that we had too much Google but nonetheless uh he might have been right but uh it's just what the Model says and that religious sticking to the model is the only way

you can run such a business because you cannot simulate that guy who walked in and said hey let's Google's too high let's sell it how can you simulate that you don't know what might have happened but you can simulate a you can come up with a model or a new predictor and you can simulate it in the past and see how did it do so uh you have to stick to it we have a Renaissance a colloquium every Week somean comes and gives a talk the scientist and it's open to the public and um one

day an astronomer young astronomer came in a friend of his already worked at Renaissance and and this guy came and and he gave a very good talk he gave a very good talk and I took him aside afterwards and say you know your friend is here and uh you would like working here you would like working here we would like to have you work here and he said well it sounds Very appealing but I'm right now I'm in a project that I science project that I really want to complete before I think about doing anything

else so he won the Nobel Prize he won the Nobel Prize he was one of the two teams that learned that the Universe instead of decelerating was actually accelerating and it was it was big news and so I think he made the right decision you know most people would rather have a Nobel Prize so uh so he's the only Scientist of Nobel Prize quality that we almost got and and I don't think anyone else in the firm is probably that good although some of them have been terrific I I uh some of them I don't

know they don't give Nobel prizes in mathematics but U but they do in physics of course and we have a lot of people who are physicists experimental physicists do well astronomers do well uh they look at a lot of data and analyze it and and that's what we do analyze data we just Hired smart people my my algorithm has always been you get smart people together uh you give them a lot of freedom create an atmosphere where everyone talks to everyone else they're not hiding in a corner with their own little thing they talk to

everybody else and you provide the best uh infrastructure the best computers and so on that people can work with and make everyone Partners so that was the model that we used in in in Renaissance and we Would bring in smart folks and uh they didn't know anything about Finance uh but they learn don't give up I mean now sometimes it discretion is the better part of Val and you can just say the hell with it but uh and go on to something else and and that's a decision that we've all made it one time or

another but uh persistence has a lot of value and something that's really worthwhile can take a lot of time to come to fruition and you ought to have Patience uh if you believe in something to uh to stick with [Music] it okay okay well Jim Simons is obviously fire um I don't think he's going to tell us everything of course um and this is old right so everybody else has studied it but I think it's inspiring that's why I watch these videos dude I just get fired up every Time I I watch any gy slimon

stuff so I'm GNA keep watching and I'mma keep searching for new ideas every day and just keep following the goats seems like he is the goat so if he's the goat then you know follow the goats and then become your own goat cuz someday you know if we keep attacking the same thing and focus bro I don't see why we can't get there too you know I know he was trading like Managing like a billion billion 6 billion doll or something and I mean I personally don't need to trade that much but it's inspiring because

this is a this is a dude that has red blood you know he's got red blood and I got red blood you know and I don't know dude rest in peace Jim dang it's sad we lost him but he left a great legacy and it's inspiring dude I'm excited by this I Hope you are too and if not that's cool but I go live every single day and I show you everything even when I'm just studying so you get to see it all much love to you I'll catch you when I catch you all right

dude