Jim Simmons and the art of looking at unusual places

Jim Simmons passed away recently leaving behind his pioneering contribution in the application of mathematics to the world of hedge funds and investing. Apart from his contribution to Euclidean topology and encryption, Jim heralded application of advanced quantitative methods in trading by analyzing vast sets of unrelated data using some of the sharpest brains from speech recognition, number theory and quantum physics.

There is an interesting story about Jim. He invited his fellow mathematician Leonard Baum who till then had no idea about the world of trading and high finance to his office in the summer of 77. Baum's expertise was in short term predictions of chaotic environments using predictive algorithms. Jim gave him the problem to work out inefficiencies in trading in order to speculate in currencies. Baum got so immersed in solving the problem that he ditched his academic career to work full time at the firm. Over the time Jim accumulated an eclectic group of students, PhDs and researchers in abstract sciences to work on his proprietary models.

Jims Medallion, the signature fund which is now closed to outside investors, eventually earned over $100 billion in trading profits since its inception in 1988. This translates to a staggering 66.1% average gross annual return and a 39.1% average net of fees between1988 – 2018.

The man truly beat the wall street.