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The Man Who Brought Theoretical Physics to Wall Street

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Thecut.com 
Photo: Jason DeCrow/AP

There are a vanishingly small number of people whose existence changed Wall Street. One of them was Jim Simons, a former academic mathematician who brought trading closer to the world of theoretical physics — and then exploded the possibilities of how people could make, and lose, money. If he wasn’t history’s greatest trader, he was among a handful who could ever make that claim. On Friday, the Simons Foundation announced that he had died at the age of 86 in New York City.

Simons grew up as the son of a Boston shoe factory executive, but his own career started at Harvard and the Massachusetts Institute of Technology, where he taught and studied mathematics and geometry. He’d eventually work as a Cold War-era codebreaker, but would leave government over his opposition to Vietnam. In 1978, he founded Renaissance Technologies, his hedge fund, out of a Long Island strip mall. His theory, new at the time, was that there were patterns in the ways that stocks and commodities moved — and that computers could be used to predict those patterns, to extraordinary effect. “I want models that will make money while I sleep,” Simons once told a friend, according to the Wall Street Journal. “A pure system without humans interfering.”

Amazingly, he did it. Renaissance made about $100 billion in gains between 1988 and 2018 — an astonishing average of 66 percent a year, according to the WSJ. Its Medallion fund, which has only been open to employees, minted several billionaires. Renaissance was largely made up of other mathematicians like him, as well as physicists and other scientists. While that’s fairly commonplace among sophisticated hedge funds today, it truly revolutionized how money could be made in trading. Simons would go on to be a major philanthropist and a donor to the Democratic party, donating more than $100 million since 2005, Bloomberg reported.

On Friday, after his death was announced, some of Wall Street’s biggest names mourned his death.

Simons’ was part of a class of finance titans who transformed Wall Street in latter part of the last century, but whose ranks are now thinning. Others in that group who have recently passed away  include John C. Bogle, who popularized passive investing; Charlie Munger, who helped Warren Buffett build Berkshire Hathaway; and hedge-fund godfather Julian Robertson.