Founders - #108 Jim Simons (Money Printer)

Episode Date: January 26, 2020

What I learned from reading The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution by Gregory Zuckerman ----Come see a live show with me and Patrick O'Shaughnessy from Invest Like The Best on October 19th in New York City. Get your tickets here! ----Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. ---The story of the greatest moneymaker of all time [0:01]Simons prefers to move in silence [1:40]Unknown Unknowns > Known Knowns / Wise people always know exactly why something won’t work. That is why I never employ an expert in full bloom. —Henry Ford [2:42]A one word summary of the book: PERSISTENCE [4:15]Simons’ early life / Only the arrogant are self-confident enough to push their creative ideas on others. —Nolan Bushnell [4:44]Advice from his father: Do what you like in life, not what you feel you should do. [6:16]Personality: Jim had a persistent and burning desire to be wealthy [7:20]A seed has been planted + Jim’s existential crisis [9:55]Lessons from codebreaking that Jim applies to his business later [14:08]Jim Simons at 29 years of age: Fired, father of 3 young children, no idea what his future holds [20:00]Jim Simons at 33 years of age: Genius and madness are next-door neighbors [21:44]Jim Simons at 40 years of age: Jim finally makes the jump. Only misfits understand misfits [22:55]Jim’s first trading style [28:00]We all go through times like this: DON’T QUIT! [29:15]Jim Simons at 44 years of age / Jim’s partner doesn’t see the point in developing automated trading system / Giant success followed by giants failures [34:30]Back to being filled with self-doubt [37:15]Our mind loves playing tricks on us [38:00]Jim Simons studied the past to gain an information advantage [41:00]Finally, the new strategy starts working! / Even with wild success people will tell you that you are wrong [46:55]Business is like nature, it doesn’t care if you arrive at the right answer from the wrong reasoning. [52:50]Emperors want empires [57:02]Life advice from an 82 year old Jim Simons [1:02:40]—“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

Simmons chose a different approach. A world-class mathematician and former code breaker, Simmons had a hunch that financial markets moved in orderly ways, just not in ways that could be detected with human intuition and insight. Simmons believed that collecting and analyzing data could provide an advantage and that automated trading was possible. Working from a ramshackle office in a Long Island strip mall, Simmons hired mathematicians, physicists, and computer scientists to amass reams of historic records and develop

algorithms to process it all. His team hunted for patterns hidden deep in the numbers that might reveal long-sought rules governing markets. After decades of struggle, his data-driven approach paid off. Other investors began to emulate Simmons' quantitative methods, inspiring a revolution that swept Wall Street, Silicon Valley, and everywhere else predictions are made. Since 1988, his company's signature fund has generated average annual returns of 66%. The firm has recorded trading gains of more than $100 billion. Simmons himself is worth $23 billion. Okay, so that's from the book that I read this week and the one I'm going to talk to

you about today, which is The Man Who Solved the Market, How Jim Simmons Launched the Quant Revolution, and it was written by Gregory Zuckerman. Okay, so I want to start with what I think is an important aspect of his personality. It's important for you to know that Jim did not want this book to be written. He has a huge aspect of his personality. He definitely prefers to move in silence. And so let me just read this excerpt to you. So Simmons and his team are among the most secretive traders Wall Street has ever encountered. Loath to drop even a hint of how they conquered financial markets, lest a competitor sees of any clue. Employees and Jim avoid media appearances and steer clear of industry conferences and most public gatherings.

And then Simmons is going to, he provides a great illustration of his opinion, quoting a character from the classic book Animal Farm. He says, Simmons once quoted Benjamin, the donkey in Animal Farm, to explain his attitude. God gave me a tail to keep off the flies, but I'd rather have no tail and no flies. And then Jim says, that's kind of the way I feel about publicity. So there's something that the author says in the very beginning of the book that I think holds true for a lot of the entrepreneurs that we study in this podcast. And he says, I was most fascinated by a striking paradox. Simmons and his team shouldn't have been the ones to master the market. Simmons never took a single finance class, didn't care very much for business, and until he turned 40,

only dabbled in trading. A decade later, he still hadn't made much headway. And so whenever I read things like that, my mind always goes back to this quote from the autobiography of Henry Ford, where Henry says, wise people always know exactly why something won't work. That is why I never employ an expert in full bloom. So what Henry is saying there and what the author is also saying is like experts have a lot of good ideas, but they also have a lot of ideas why things won't work. And the unknown unknowns in life will always outnumber the no-knowns. And the only way to discover true, like unique new knowledge is through trial and error.

That's how humans learn. And so I wouldn't, even if you have a belief that something, that you can do something or that something's possible and other people aren't telling you automatically, oh, it's impossible. The only way to see if those other people are right is to actually try.

I mean, that's exactly what Jim does. That's a testament to this entire book. Okay, so I want to start talking about his early life. I'm going to really focus on his personality because what the author was just saying there, like that's a bizarre occurrence, a bizarre situation to happen where he dabbled, he barely dabbled in trading, didn't dedicate his full attention to it until he was over 40, then struggled for more than a decade before actually being proven that his thesis was correct. Like what kind of person is able to persist that length of time? And I think that's, if you had to summarize, if you have to summarize this book, that's a good word to summarize it.

It's persistence. The entire book is a story of just Jim constantly running into a problem, doubting himself, but carrying on anyways, figuring out a solution. Then he has some success. Then he runs into another problem. And this just happens over and over and over again. So that's really how I think of the life of Jim Simmons is really a life of persistence. So let's go to his early life.

And it says, the 14-year-old was trying to earn some spending money working at a garden supply store near his home. It wasn't going well. The young man found himself so lost in thought that he had misplaced the sheep manure, planting seeds, and most everything else. Weeks later, the couple who owned the store asked Jimmy about his long-term plans. I want to study mathematics at MIT. They burst out laughing.

Now, this is the interesting part. The skepticism didn't bother Jimmy. The teenager was filled with unnatural confidence and an unusual determination to accomplish something special. There's a great quote by Nolan Bushnell. He's the founder of Atari and the founder of Chuck E. Cheese, and he was also the mentor of Steve Jobs. Steve Jobs worked for Nolan when he was 19 years old, when Steve was 19, that is.

And he said in his book, I think it's called Finding the Next Steve Jobs, the one he wrote. I did a podcast on it. But he says, only the arrogant are self-confident enough to push their creative ideas on others. Remember, as we go through this book today, Jim's idea was unique and new. And he definitely was, I don't know if it was, I mean, we see signs of it at 14 years old, but he definitely had high levels of self-confidence high levels of arrogance and I think Nolan's in regards to Jim and a lot of other people. I think Nolan's quote is actually true

Now we're gonna see some advice Jim got from his father early in life, and I just think this is fantastic advice for everybody Because his father's name is Maddie Maddie lived a life he didn't really want to live and he's realizing that and he's he's teaching his son not to do as i did so he says later in life maddie told his son he wished he hadn't forgone a promising and exciting career to do what was expected of him interesting to note if you ever look at like when older people are you know close to closer to death than we are hopefully um they're looking back on their lives usually the one of the biggest regrets is that right there that i li that i i

didn't live my life i lived a life other people expect what other people expected of me that's something you just definitely don't want to do he says and this is jim talking about the lesson he got from his father the lesson was do what you like in life, not what you feel you should, what you feel, what you feel you should do. Simmons says it's something I never forgot. Uh, what Jimmy liked to do more than anything else was think often about mathematics. Um, another aspect of his personality that will, that kind of, um, shed some light on like like why, how is it possible that he was able to persist through all the struggles that he encounters throughout his life? And he says, it's nice to be very rich. I observed that even before he was rich. Simmons says, I had no interest in business,

which is not to say I had no interest in money. So whatim is saying there he had a he had a persistent and burning desire to be wealthy so i'm going to tell you a little bit more about his confidence before i get there i think this is a good idea and it's how he uh it just says he really like to think especially about mathematics but also how he used his mind to solve problems so he says, Okay, so I don't know if I do it for hours, but I do this as well Like if I have a if I can't figure something out if i'm frustrated by something Sometimes I you know, you just throw more time and effort at it and then you're not making any progress So I will do this. I'll close my eyes. I'll make sure there's no noise There's no light and I won't try to control anything. I will just literally let my mind go wherever it wants to go

And I you have it actually works you have like you're giving yourself time it's almost like a like your mind is like a computer in that sense where you have to give it time to like cycle through all the information and to actually make the computations to solve the problem and So Jim continues he says I realized I might not be spectacular or the best but I could do something good I just had that confidence So at this point in the book, Jim's about 18 or 19. He meets his first wife. And really what this is an indication of,

before I read it to you, this is an indication when you hear what his future mother-in-law says about him, that Jim had a very strong personality. And what the book goes into great detail is you know he's got a lot of brilliant people that work with him over you know several decades in his life and he he's the one responsible for managing all these brilliant people so I don't think you

could do that without a strong personality so it says his wife is his first wife's name was Barbara says Barbara was too young to wed her mother insisted she also worried about a potential power imbalance between Barbara and her self-assured fiance. Years later, he's going to wipe the floor with you, she warned Barbara. Okay, so, so far we have this super smart, super driven, super confident person with a strong personality, hell-bent on doing something great with his life.

So that's a really important part to understand Jim Simmons as a person and understand how he was able to do what he was able to do. So at this point in the story, he's already in college, and this is when he first gets introduced to the idea of trading because at the time he was just focused on pure mathematics. He thought his life, he was just going to be an academic. That's what he thought his life was going to be. So it says, he began getting up early to drive to San Francisco so he could be at Merrill Lynch's office at 730 in the morning,

in time for the opening of trading in Chicago. For hours, he would stand and watch prices flash on a big board, making trades while trying to keep up with the action. It was kind of a rush, Simmons recalls. When Barbara became pregnant, there were too many balls for Simmons to juggle. Reluctantly, he put a stop to his trading, but a seed had been planted. Okay, so right around this time in his life, he's doing some really good work in mathematics, and he wins a prestigious three-year teaching position at MIT. So he starts doing that, but almost immediately, he experiences an existential crisis. And this is going to happen a lot in his life, which makes it even more remarkable that he was able to persist through all this.

So he says, Simmons began to question his future. The next few decades seemed laid out for him all too neatly. Research, teaching research teaching more research and still more teaching simmons loved mathematics but he also needed a new adventure he seemed to thrive on overcoming odds and defying skepticism and he didn't see obstacles on the horizon at just 23 years old simmons was experiencing an existential crisis is it? Am I going to do this my whole life? There has to be more. His jovial exterior masked mounting pressures. So the reason I wanted to pull that out is because Jim's experiencing that in his life. I've experienced that in my life. You've probably experienced it in your life. Everybody experiences that. It's important to

understand that the experiences that we're having are not unique. That humans in the past had them, the humans currently have them, and the humans in the future will have them. What matters is the ability to understand that and realize, hey, most people, when they feel like this, they quit. They give up. That's what most humans do. They don't write books about those people. The fact is the few people that are able to push themselves to just keep focusing, not on how they feel now, but what they need to do in the future and what they need to do today. I think that's the best piece of advice you get from the life of Jim Simmons. It's inevitable. There is no life where you're going to feel

comfortable all the time. You're happy all the time. You're going to run into problems, especially if you're trying to do something unique and great. The point is just focus on today and then focus on the next thing. Just keep going forward. Do not let your mind beat you. All right, so it says this is the very next page and gives you a description of what he's trying to do. He's teaching. He's doing all this stuff, but he also has multiple jobs because he still has this desire to be rich. It says Simmons was hustling for money, but it wasn't simply to pay off his debts.

He hungered for true wealth. Simmons saw how wealth can grant independence and influence. Jim understood at an early age that money is power, his first wife says. He didn't want people to have power over him. So this is what I always talk about. What is the point? What drives most entrepreneurs?

And I use the word entrepreneur as anybody that wants to master their craft. And my opinion on this is like, yeah, we all wanna make a lot of money, but I think it's more like seeing money as a means to buyer independence. And so in that sense, like I think control motivates most entrepreneurial type personalities

than money does. He says his earlier career doubts resurfaced. Simmons wondered if another kind of job might bring more fulfillment and excitement and perhaps some wealth. The mounting pressures finally got to Simmons. He decided to make a break. So he's 23 years old here. It is going to be 17 years from this point till he actually does what he wants to do, which is build wealth through trading. Now, he jumps out of academia and he starts working for a very secretive intelligence group that works. They're essentially subcontractors for the National Security Agency. And the reason I'm bringing up this part of his life is because he learned so many valuable lessons here that he'll use about a decade, decade and a half, maybe even close to 20

years from the time we're in the story. So it says, Simmons quit Harvard University to join an intelligence group helping to fight the ongoing Cold War with the Soviet Union. It was an elite research organization that hired mathematicians from top universities to assist the National Security Agency. So the reason I think this is important, because what I'm about to read you right now, he copies this idea for his fund. But again, this doesn't take place for another 15 to 20 years in the future of his life. So it says, Simmons was struck by the unique way talented researchers were recruited and managed in his unit. Staff members, most of whom had doctorates, were hired for their brainpower, creativity, and ambition

rather than any specific expertise or background. He does this exact same thing when he hires people for his fund. He doesn't hire people on Wall Street. He hires people for their brainpower, creativity, and ambition. The assumption was that researchers would find problems to work on and they would be clever enough to solve them. And it was while working at this company, or I guess this organization, he comes up with the idea that he would eventually use,

he just has to wait for the technology to catch up, and it wasn't there at the time. So this is what I mean. This is also Jim Simmons at 28. Even as Simmons and his colleagues were uncovering Soviet secrets, Simmons was nurturing one of his own. Computing power was becoming more advanced, but security firms were slow to embrace the new technology, continuing to rely on card sorting methods for accounting and other areas simmons decided to start a company to electronically trade and research stocks a concept with the potential to revolutionize the industry now the problem was he never got the company off the ground because he couldn't raise any money and he didn't have any money of his own so he just kept working at it's called ida is the

organization he's working for now um they eventually, Simmons and some of his colleagues, they publish this paper. And I'm going to read to you what the paper is about. And the note I left myself on this page was, this sounds a lot like what he does at Renaissance Technologies. So it says, the group, I'm going to skip over their names. There's a lot of characters in this book. If you ever read any books by Michael Lewis,

this book is kind of remind you of that. So much so that at the beginning of the book, there's like, they publish a cast of characters. I knew I was in trouble right away because I'm terrible at remembering names. So I'm going to skip over the names because that confuses myself. And it'll probably confuse you. So it's not really important who he's working with. Just know there's a group that Simmons has, I mean, he's exhibiting behavior he does all the time. he is able to corral really bright people and for some reason they like they not submit that's right well they submit to his management he he like kind of runs things he has that kind of personality so it says uh the group published an internal classified paper for the

ida called probabilistic models for the Prediction of Stock Market Behavior that proposed a method of trading that researchers claim could generate annual gains of at least 50%. Simmons and his colleagues ignored the basic information most investors focus on, such as earnings, dividends, and corporate news, what the codebreakers termed the fundamental economic statistics of the market. Instead, they proposed searching for a small number of macroscopic variables capable of predicting the market's short-term behavior. Here's what was really unique. The paper didn't try to identify or predict these states using economic theory or any other conventional methods,

nor did the researchers seek to address why the market entered certain states. This is extremely hard for humans to do because humans learn by stories, right? Jim is avoiding that. And humans, not only is this desire to learn by stories so, I think, avoiding that. And humans, not only is this desire to learn by stories so, I think, ingrained into our nature, that even when we don't know why something's happening, we'll create a reason, a narrative, even if that narrative is not accurate. He says, for the majority of investors, this was an unheard of approach, but gamblers would have understood it well. Poker players surmise the mood of their opponents by judging their behavior and adjusting their strategies accordingly. Players don't need to know why their opponent is glum or exuberant to profit from those moods.

They just have to identify the moods themselves. Simmons and the codebreakers proposed a similar approach to predicting stock markets. This is something I always repeat to people. In life, it's just a good idea to stay as close as possible to the money. And in this case, we see gamblers doing that. People where they are judged on their P&L immediately usually derive insights that that theorists or people that are not practitioners do not. And so that's why I think it's just good life advice to stay close to the money. You'll obtain information through trial and error

and through experience that others just won't. Back to his personality. And I think part of the reason why so many smart people were willing to follow him, he was a really great listener. And so it talks about one of his colleagues that he's working with at IDA. He says he was a terrific listener. It was one thing to have good ideas.

It's another to recognize when others do. If there was a pony in your pile of horse manure, he would find it. Remember earlier it said when Jim was quoting Animal Farm about his lack of desire for publicity. He wasn't always like that. He actually gets fired from the IDA because there's a lot of protests at the time. And once they find out that this organization exists and that they work for the National Security Agency, just like you could see something like this happening present day, but this is 60 years ago. They start protesting and there's picketing and all this other stuff

that's happening. And so Simmons is like, hey, I'm against the war. We're not building missiles here. We're just trying to crack like, like this is a mathematical problem, right? So he writes this, this letter, like this op-ed in a newspaper. And once it's published, he's fired immediately. So I think this experience caught, like he learned, oh wait, you know, like not all publicity is good publicity. Like it could have negative effects. And it's a very terrifying part of his life. He's 29 years old.

So listen to this. Simmons had three young children. He had little idea what he was going to do next, but getting fired so abruptly convinced him that he needed to gain some control over his future. He just wasn't quite sure how. This is Jim Simmons on talent. Simmons developed a unique perspective on talent. He valued killers, those with a, and this is how he describes what a killer is, those with a single-minded focus who wouldn't quit. That sounds a lot like him. It really does. And he talks about like, there's a lot of smart people, but some of them don't have any, like, they don't have any original ideas in their head. He says,

some academics were super smart, yet they weren't original thinkers. So he eventually winds up at Stony Brook. He's going to build their math department. He goes back to academia, essentially, but he's not happy. So this is Jim Simmons at 33 years old. And this is a reminder that genius and madness are next door neighbors. Simmons decided to take a sabbatical year so he could undergo primal therapy. The approach involves screaming or otherwise articulating repressed pain primally as a newborn emerging from the womb. Simmons, who sometimes woke up screaming at night, was intrigued by the approach. So again, I have to say like the reason, the benefit of reading this book is because it's a book about struggle and

persistence. And I think the ability to persist through struggle is applicable to every single thing in your life. And I think seeing somebody else do that over a multi-decade period and eventually succeed is extremely inspiring. I will tell you later, if you do decide to read the book, where to stop at. It's divided in two parts. And I would say 95% of my notes, and if you could see the book I have in my hand, you can see this by the post-it notes sticking out. But like 95%, maybe 98% of the notes I took were in part one. Part two is just weird. I don't even know why it's included in the book.

All right, so this is, I'm going to skip ahead seven years. This is Jim at 40, and he finally makes the jump. And he says, Simmons reduced his obligation to Stony Brook to spend half his time trading currencies. By 1977, Simmons was convinced the currency markets were ripe for profit. It seemed to Simmons that a new volatile era had begun. In 1978, Simmons left academia to start his own investment firm focused on currency trading. So this is the company that eventually turns into Renaissance Technologies. And then here's the problem.

And then the other note, so the note of myself is at 40, he finally makes a jump. And then keep this other idea in your mind as I read the rest of the section to you. Only misfits understand misfits. That's why it's so important if you happen to be a curious and driven person to be exposing yourself to these, I feel biographies is the best vehicle for this because you realize that everybody that doesn't really fit in. And if you are driven and curious, you don't fit into the rest of humanity. They might, I think all of humanity is curious. They're not all driven.

Right. And so it's very important to expose yourself to, to other people like you. So you realize, Hey, everybody, like there's other people have gone through this i can do this as well um and if you look to you know you're you're in many cases your immediate surroundings you're not going to find people that have that have the same personality traits or the same ideas or want the same things in life and we're going to see this here you know jim was obsessed he had this idea to do something great a burning desire to achieve wealth and yet he took him to his 40 to do this. And then when he finally does it, he gets an unbelievable amount of criticism. And I'm going to talk a lot about that today. He says, Simmons' father told him he was making a big mistake giving up a tenured position. Now think about that. His dad's like, bad move. You have a steady job.

Jim doesn't want a steady job. He wants wealth. And think about what would have happened if Jim listened to his dad here. He made $23 billion following his own intuition. Misfits only understand misfits. His dad wasn't. His dad didn't understand it. Most people want that. Or maybe if they, I don't even know if they want that. Most people will accept that. Hey, I got a steady paycheck. I'm fine. If you really want to do something different, like you're going to have to overcome people telling you that you're wrong. All right. Uh, math. And then he gets it from his peers to mathematicians were even more shocked. The idea that he might leave to play the market full time was confounding.

Academics were convinced he was squandering rare talent and then this is one of his um his his colleagues we looked down on him like he had been corrupted and he had sold his soul to the devil now here's the problem though simmons had never completely fit into the world of academia and he says i always felt like something of an outsider, no matter what I was doing. And so his friend says, he, meaning Jim, really wanted to do unusual things, things others didn't think possible. Simmons would find it harder than he expected. So I'm going to give you a description of his first office,

and it's a reminder to all of us that big things start small. Simmons sat in a storefront office in the back of a dreary strip mall. He was next to a woman's clothing boutique, two doors down from a pizza joint and across from the tiny one-story Stony Brook train station. His space was built for a retail establishment. It had beige wallpaper, a single computer terminal, and spotty phone service. From his window, Simmons could barely see the aptly named Sheep Pasture Road, an indication of how quickly he had gone from broadly admired to entirely obscure. This is not going to deter him though. And this is another example of the Nolan Bushnell quote that I just said. The only the arrogant are self-confident enough to press their creative ideas on others. And what I mean by arrogance is i don't like disbelief when you have if you have a profound belief in yourself

a lot of times like it's beneficial to get along with other humans if you hide it but don't let them extinguish it um and by arrogance like my definition of arrogance is different than other people's i don't believe in like people that are super self-confident i don't call them arrogance what i consider arrogant is like people think they know everything that they, they, they get to a point where they think they can stop learning from other people. I think that is arrogance. I don't think high levels of self-confidence is arrogance, you know, but you can never get to a level of arrogance where it's like, oh, I've mastered this. I figured it. I figured it out. I don't, I can stop learning now that no, that never happens.

So he says until then Simmons had dabbled in investing, but he hadn't demonstrated any special talent. Somehow, Simmons was bursting with self-confidence. This is like he's using this fuel. It's pushing him. This is a positive thing. It's only negative to most of society, most other humans. But for entrepreneurs, anybody who wants to do something different,

it's like rocket fuel. He says, and this is the inner monologue he's having, it looks like there's some structure here, Simmons thought. He just had to find it. Simmons decided to treat financial markets like any other chaotic system. There must be some way to model this, he thought. So he comes up, you've got to start somewhere, right? So this is his first idea for a trading style. And what's so remarkable about the story is like,

he comes up with a lot of good ideas. They work for a good amount of time. He'll make a good amount of money and then they break. And that's where he's like, oh crap, I have this problem. Most people quit. They pack it up. They go home. Simmons persisted.

He says, and now he's working with this other person. It doesn't matter. Simmons hoped he and blank could make big money relying on a trading style that combined mathematical models complicated charts and a heavy dose of human intuition um so they wind up raising about they start with a little less than four million dollars but they experience uh high levels of early success and they're doing they're doing this in currency. He says he and Simmons kept buying British pounds and the currency kept soaring. They followed that move with accurate predictions for the Japanese yen, the West German douche mark

and Swiss franc gains that grew the fund by tens of millions of dollars. Simmons was having a blast exploring his lifelong passion for financial speculation while trying to solve markets, perhaps the greatest challenge he had encountered. The fun would not last. So they start trading bonds as well. They're doing all this other stuff. The important part is that it's going to blow up in their face. It says Simmons' shift to bond trading had gone awry.

Clients kept calling, but now they were asking why they were losing so much money rather than extending congratulations. Simmons seemed to take the downturn hard, growing more anxious as the losses increased. I'm going to explain more about his state of mind here. The important part to remember about this section is we all go through this. Don't quit. Simmons seemed to take the downturn hard, growing more anxious as the losses increased. Sometimes I look at this and I feel like I'm just some guy who doesn't really know what he's doing, Simmons said. His colleague was startled. Until that moment, Simmons' self-confidence seemed boundless. Simmons told his colleague about Lord Jim, which centers on failure and redemption.

Simmons had been fascinated with Jim, a character who had a high opinion of himself and yearned for glory, sounds like him, right? But failed miserably in a test of courage, condemning himself to a life filled with shame. Simmons is doing the exact same thing we're doing, understanding and learning from these stories so we can seek inspiration that we can use in our own lives. It's very, very important. It gets him through these tough times.

And the important part to remember here, too, is like he has to go through these tough times to arrive at the at the innovation that actually gives him these crazy outsized results. He could not have had the important part here. He could not have the success he had without first going through the failure. That applies to everybody. All right, so he's going to emerge from the funk, and he comes up with a new goal. In the following days, Simmons emerged from his funk more determined than ever to build a high-tech trading system guided by algorithms rather than human judgment. He shared a new goal, building a sophisticated trading system fully dependent on preset algorithms that might even be automated.

I didn't want to have to worry about the market every minute. I want models that will make money while I sleep, he said. The technology for a fully automated system wasn't there yet. He suspected he need reams of historic data so his computers could search for persistent and repeating price patterns across a large swath of time. So he brought stacks of books from the World Bank and elsewhere, along with reels of magnetic tape from various commodity exchanges, each packed with commodity, bond, and currency prices going back decades. So I need to, I don't think I've mentioned this, but he doesn't start trading stocks. So he's much, this is like years in the future. He's, he's building systems to trade bonds,

commodities, and currencies. That's what he's doing. So I just need to tell you that now, in case I forget to tell you in the future uh this was ancient stuff that almost no one cared about i feel the same way when i find a book that's like 50 years old or 75 years old and you have this this person that i didn't even know exists and this built this wonderfully fabulous business i feel like i told you this idea where i really don't think about this as a podcast i think about this as a service and it's i it's like the same way archaeologists dig for like uh you know, bones or signs of past animal and human life. I feel like I'm doing the same thing, but I'm doing it for ideas. Idea archaeology.

So he says, this was ancient stuff that almost no one cared about. But Simmons had a hunch it might prove valuable. Simmons had a staffer travel to lower Manhattan to visit the Federal Reserve Office to painstakingly record interest rate histories and other information not yet available electronically. So there's other examples I'm not going to read you in the book but he does this for his entire career. He's constantly searching through historical records to develop an information advantage and he feeds these historical records into the automated system he has and that's how he builds

the machine that essentially prints money that he's going to eventually build. All right. So he does this. It works out for a little bit. I'm going to skip over a lot of that. And then the inevitables happen. He takes just one step forward and two steps back, two steps forward, one step back. And he has this process over and over again. And it says soon he and his colleagues had lost confidence in their system. And then this is what happens. This is the thought that Jim is having. This is in 1980. We are 10, 12 years before he finally gets the automated system he wants, and about 20 years, so he becomes fabulously, fabulously wealthy. This is the thought he's having, maybe a computerized trading model wasn't the way to go after all.

And the note I left myself is, listen, there's no formula. Life is complex and success is not a straight line. Imagine if he gave up here. I think a lot of people from externally, they would understand. It doesn't mean he would stop trading maybe decides he can handle you know ups and downs by trading on intuition or whatever the case is but if he quit here like this book wouldn't exist we wouldn't even be talking about him his life would be drastically different the point is like there's

no formula everybody's going to go through this over and over again Persistence, that's what this book is about And this is, Jim's 44 years old 44 And he's not giving up Alright So He doesn't know if the technology's there They try to do a mixture of Essentially more traditional methods

Mixed with a little bit of Data mining and technology, okay And it starts to work. So it's like, okay, maybe this is a better system. The traditional trading approach was going well. At the same time, Simmons was developing a new passion. And this is what we're going to see. He's losing his focus here.

He starts backing promising technology companies. In 1982, Simmons changed the name of his firm to Renaissance Technologies, reflecting his developing interest in these upstart technology companies. This is a crazy sentence because he's known as a trader, right? Simmons came to see himself as a venture capitalist as much as a trader. And what makes this story so fascinating to me is that he can have wild, wild success doing these things, but they're wild, wild success for short periods of time. So unless you have the extreme discipline that most humans don't have,

it's like, okay, I made $40 million in two years. I'm going to bank it and that's it. I'm going to go find something to do. Most people don't like, oh, I made 40 million. Okay. I'm going to make 80 million. And then in their quest to go from 40 to 80 million, they lose it all. This is what we're going to see here. So this is his partner, Baum. Why do I need to develop those models he asked it's so much easier making millions in the market than finding mathematical proof uh this is his partner he says if i don't have a reason for doing something i leave things as they are and do nothing he was explaining his trading tactics this is uh jim's partner's daughter describing what how his dad trades or how her dad trades dad's theory was to buy low and hold on forever.

The strategy enabled them to ride out the market turbulence and rack up more than $43 million in profits between 1979 and March 1982. All right, that's fantastic. Uh-oh, what happens on the very next page? In the spring of 1984, the losses kept growing. This cannot continue, they yelled. When the value of Baum's investment position had plummeted 40%, it triggered an automatic clause in his agreement with Simmons,

forcing Simmons to sell all of Baum's holdings and unwind their trading affiliation. So this happens a lot. The one constant in the book is Simmons pushing everything forward. But the people he does this with, including partners, he goes through, I don't know, half a dozen, half a dozen partners. And he has to do that because he keeps learning from these situations and then tweaking his idea. Little by little, he takes the failure and uses that as another informational advantage. And he's like, okay, well, I'm going to find somebody else.

And he starts working with them. And they may have a key insight that he wants to keep, but maybe some bad insights he wants to avoid. So eventually have a falling out that's inevitable. And then he just keeps that. Yeah, I'm going to take the good ideas and avoid the bad and keep pushing forward. I think that's good advice for life. But before he's able to do that, we got to go back to wrestling with self-doubt. Our old friend is here.

Good old self-doubt. The losses in 1984 trading tobacco left deep scars on Simmons. The fund was losing millions of dollars daily. Simmons contemplated giving up trading to focus on his expanding technology businesses. Simmons himself was wracked with self-doubt. He had to find a different approach. Okay, so eventually he starts working with other colleagues where they build together, they build something that

that's very close to what Simmons envisioned when he was 28 years old. Right? This automated system that doesn't rely on human intuition. Now the weird thing is how he reacts when they finally do this. And this is not like, this is something that can make a lot of money, but it's not like, he's got to go through about two or three more iterations till he finally gets like the crazy numbers. This is still crazy numbers to any normal person, but Jim is an empire builder

and a psycho. And so that's what I mean. Like goes from me, like he's not satisfied making hundreds of millions. He wants to make billions. So I want to read this section to you. And then I'll tell you the note I left myself. He says, his method wasn't based on a model Simmons and his colleagues could reduce to a set of standard equations. And that bothered him. These results came from running a program for hours, letting computers dig through patterns and generate trades. This sounds exactly what he wanted to do anyways. To Simmons, though, it just didn't feel right. I can't get comfortable with what the system is telling me.

I don't understand why. It's a black box, he said with frustration. His colleague agreed with Simmons' assessment, but he persisted. Just follow the data, Jim. It's not me, it's the data. It works, Jim, and it makes rational sense. Humans can't forecast prices. Let the computers do it, they urged. It was exactly what Simmons originally had hoped to do, yet Simmons still wasn't convinced of this radical approach. When I read that section, it's's just like the insight there is this is what

he wanted to do but he was still unsure like we love love playing tricks on ourselves our mind is undefeated um and just understand that like even like he's think about how strange this is he might have been working let's say what 20 years where we are in like he had this idea for 20 years he starts finally getting to the point where it he sees just on the horizon it's right there and what happens back to feel his old friend self-doubt mind playing tricks on him like i don't just it doesn't feel doesn't feel right there's just something that that that happens um that we have to understand this is something that happens rather and we just have to understand that it's it's it's going to happen to us it's going to happen to other people and like we just have

to when that happens i love this idea because it's almost like a to me what what is happening to simmons here is almost like a fear of the unknown you know because we love to tell ourselves stories we want to know the why but like there is no explanation for this it's more it's more complex than we're able to reason with and so that fear what jimmy iveen always says the founder of endoscope records and he's had a crazy life but he always says like a lot of people use he's like i use fear as instead of letting it like push you from the front or uh push you from the front use it as like fuel to push you from moving forward so he's like i've trained jimmy says i've trained myself as soon as I feel fear to keep moving forward. Cause I know my natural instinct, my natural result,

what most humans will do is they'll stop. Going back to the system that they're developing, part of what gives them a huge advantage and why the system starts working so well is because they study the past to gain an information advantage and they just have access to information that other people don't and it's access to good information so it says they had access to more extensive pricing information than their rivals thanks to their growing collection of clean historic data since price movements often resembled those of the past that data enabled the firm to more accurately determine when trends were likely to continue and when they were ebbing so this is something they talk about over and over again in the book, that they feel their huge advantage is the fact that human nature doesn't change. And so they have these clean

data models of how humans have reacted in the past. And their hypothesis moving forward is that humans are going to react the same way in the future. Okay. So this is the state of... Now, this system works for a little bit, but again, I told you they have to go through these iterations. They have to keep going forward and tweaking this thing. So they're going to have success over and over again, and they're going to go backwards, and then they're going to fix it. Eventually, they're going to get to the point where they have the system go on. So this is the state of his business right after he starts the Medallion Fund.

Now, the Medallion Fund is the one I told you about at the very beginning of the podcast, the one that's going to make over $100 billion in profit. Okay. So it says Simmons had spent more than, and this gives you an insight of how much he's struggled and persisted. Simmons has spent more than a decade backing various trades and attempting a new approach to investing. He hadn't made much headway. It talks about this guy flamed out, this was his old partner, this other guy wasn't around anymore either, and now his new fund with two other people was down $20 million amid mounting losses. Simmons was spending more time on his various side businesses than he was on trading. His heart didn't seem to want to be in the investment business. Strauss, another person

he's working with, and his colleagues became convinced that Simmons might shutter the firm. And the reason I brought that section into the podcast is because you see entrepreneurs do this all the time. When they run into a roadblock with their business, they're stuck. They don't know what to do. Really, what you're searching for is momentum to get back on track, right? That's your number one goal. But what we do is we focus on everything else but that. And so what Simmons is doing, he's confused. So you start immediately going back to maybe your second or third best option because you don't know how to progress.

I think it's a better idea just like, oh, okay, when I notice I'm distracting myself, that means I need to lean in more. I need to go and focus on one thing, just getting back on track and regaining that momentum. All right, so eventually he has a falling out with all his partners. And again, he's the one that runs the medallion fund. He's the one constant person throughout all of this. And he links up with somebody, this guy's name is going to be Berkelkamp. And Berkelkamp was working like part-time and he would analyze what Jim's former

partner that is now out of the Medallion Fund was doing. He's like, well, he's got one good idea, but he was distracted by all these other less good ideas. He's like, so why don't we just focus his one insight that he had, or not one, one of his insights he had was why don't we focus on what's working? Which is interesting that he needed somebody with outside eyes to tell him that, right? Because that seems so obvious to us because we're on the outside. But when you're lost in the thick of things, it's very hard to think clearly. And so this huge revelation that Burkle Camp has leads to the Medallion Fund starting to really get on track and really generate the money that

Simmons is interested in. And it's interesting, the strategy was almost opposite of the person running it before. So he says, he advocated for more short-term trades. This is what the Medallion Fund is known for. At the beginning, they'll trade two, three times a day. Eventually, they get to trading 150,000 to 300,000 times per day. And Burkowkamp's idea is we're going to set up a fund like a casino setup. This is a really interesting part of the book. So he says, he advocated for more short-term trades. Too many of the firm's long-term moves had been duds. While Medallion's short-term trades had proved its biggest winners,

it made sense to try to build on that success. Yes, absolutely. Let's go. So he said, Burkelkamp also argued that buying and selling, he's got really weird ideas, but these ideas are literally what their future success is built on. And I say weird because I don't think I would have came up with them. Maybe you would have, but they're weird to me. Burkelkamp also argued that buying and selling infrequently magnifies the consequences of each move. Mess up a couple times and your portfolio could be doomed. But if you make a lot of trades, each individual move is less important. Broker Camp hoped Medallion could resemble a gambling casino.

So this metaphor really helped me understand what the hell they were doing. Because they can give you ideas of what they're doing, they're not going to tell you exactly what they're doing. But this gives you, when I read this section it really kind of crystallized what's happening. So he says he wants it to resemble a gambling casino. Just as casinos handle so many daily bets that they only need to profit from a bit more than half of those wagers, Berkamp wanted the fund to trade so frequently that it could score big profits by making money on a bare majority of its trades. With a slight statistical edge, which they derived from their models and their historical data, the law of large numbers would be on their side, just as it is for casinos. So this is what Burkle Camp says. If you

trade a lot, you only need to be right 51% of the time. That fundamental insight is exactly what they do from the time we are in the book till now. They say, listen, we are only right 51% of the time, but we're 100% right 51% of the time. And if you do that, and they also add leverage and all this other stuff, you can make billions of dollars trading. All right, so the new strategy is working, and it says, the firm implemented a new approach in late 1989 with the $27 million Simmons still managed. Remember, they lost a bunch of money earlier. They had these huge run-ups, remember they lost a bunch of money earlier They they have these you know huge run-ups. They lose a bunch of money So they start in 18 18 1989 with 27 million and essentially that 27 million is gonna generate a hundred billion dollars of profit

Like it's gonna keep going into the future So says the results were almost immediate startling nearly everyone in the office The more they did more trading than everting medallions average holding time To just a day and a half It's down from a week and a half Scoring profits almost every day So that's in 1989 They start to make a ton of money

So it says for much of This is an important part Right Because this is again Like not only is your own mind Going to play tricks on you As we've seen But other people are going to Even when you're succeeding Other people mind going to play tricks on you, as we've seen,

but other people are going to, even when you're succeeding, other people are going to tell you you're wrong. We are a bizarre species. And we get in our way a lot of times. So it says, for much of 1990, Simmons' team could do little wrong. It was as if they discovered some magical formula after a decade of fumbling around in the lab. One day, they made more than a million dollars, a first for the firm. Simmons rewarded the team with champagne. The one-day gains became so frequent that the drinking got a bit out of hand. So every time you make a million dollars, you have champagne. Now they're drunk every day. For all the gains, few outside the office shared the same regard for the group's approach. Who cares? These people don't know what they're

talking about. Ignore them. We were viewed as flakes with ridiculous ideas. Medallion scored a gain of 55.9% in 1990. Dramatic improvement over its 4% loss the previous year. That's Berkelkamp was the one that led that key insight. And so listen, the story of this page is even with wild success, people will still tell you that you're wrong. Who cares? These people just don't matter.

They fundamentally do not matter. You cannot let them play with your mind. Your mind's going to mess with you on its own. You can't let other people do it. I'm kind of running over my point on the next page. So they just had a 55. This is what I mean, okay? So I guess I'll tell you the note first

Note it myself We have to remember that we humans Have the tendency to get in our own way I think I've said that a lot today They just had Jim is going to do some weird stuff here And he's a brilliant person They just had a 55%

56% return And Jim is Worried about overall They just had a 55%, 56% return. And Jim is worried about overall macroeconomic environment. So he's like, hey, maybe we should buy some gold. Essentially, he's like, I have an intuition that we should do something. But Jim, you just said that you didn't want to rely on intuition, that when you relied on intuition in the past and you succeeded and then inevitably failed, you got sick wanted to throw up all this other stuff so what are you doing so so he's calling up his trading partner burke camp he said buy gold and burke's like no we're gonna no jim we're not doing

that we're gonna let the system run they hang up a bit later it calls again did you see gold it went up and and burke camp's like what are you what doing? He says, Burkle Camp was baffled. It was Simmons who had pushed to develop a computerized trading system free of human involvement. And it was Simmons who wanted to rely on the scientific method, testing overlooked anomalies rather than using crew charts or gut instinct. Yet the team had worked diligently to remove humans from the trading loop as much as possible.

And now Simmons was saying he had a good feeling about gold prices and wanted to tweak the system? We get in our own way. This section was interesting because it's, I love this idea that books are the original links. And so, you know, the people that he's going to mention here, they're a bunch of past episodes of founders. So it says, Ed Thorpe became the first modern mathematician to use quantitative strategies to invest sizable sums of money.

Thorpe was an academic who had worked with Claude Shannon, the father of information theory, and embraced the proportional betting system of John Kelly, the Texas scientist who had influenced Burkle Camp. So it's interesting how all this stuff ties together. It's just a matter of which sequence you read the books in. If I had read this book first instead of the other books, this book would have led me to them. I just happened to discover them beforehand. But I really think it's very interesting how Simmons is going to have a lot of success. And Burkercamp was a huge influence on that success. And yet he was influenced by people in the past he read John Kelly's paper the Kelly criterion

they knew of Ed Thorpe had made had thought about investing with Simmons and Berkelkamp was also a huge he'd run he ran into in the in the hall I forgot where they're I think they were at MIT and he starts he just bumps into Shannon and tries to start a conversation with them even though everybody knew Shannon was a huge introvert, because he respected him so much. And it's interesting, he bumps into Shannon, and one of the first things out of Shannon's mouth was like,

hey, this is not a good time to invest in the market. And BrokerCamp didn't even understand, because at that time he wasn't interested in investing. He's like, why is Shannon talking about investing? So I don't know. I love how all this stuff ties together. And I think it's just more of an indication that we're just on the right track and that we're studying the right people. Okay.

Now, here's the point. Remember when I said Jim was just like his heart and his mind were messing with him because this is what I want, but I don't understand why. I don't understand why. Eventually, Jim gets over that. And then he has this great metaphor for how Jim thought about the system that they were developing. He says, I don't know why planets orbit the sun simmons said suggesting uh one need to to spend too much time figuring

out why the market patterns existed that doesn't mean i can't predict them so again i think that just helps the book can get it's a great story but it can be sometimes confusing what the hell is going on so these metaphors really help me understand and uh that's why i'm sharing it with you um let's see okay so continue that kind of line of thought it says simmons viewpoint can be seen as profound even radical at the time most academics were convinced markets were inherently efficient okay so we talked about this a lot the people we studied a lot of people that don't agree you know at this time um i don't know what it's like in academic circles now but definitely uh back in let's say five decades ago whenever it was the the the the conventional wisdom was it's useless to try markets are

perfectly efficient um don't do this and so we study people that you know said yeah i don't agree with that the henry singletons the claude shannonannons, the Ed Dorps, the Warren Buffetts, the Charlie Mungers, really any entrepreneur. Because I don't think they, I know that their theory is like on financial markets, but if you take that idea that, you know, markets are already efficient, all the opportunities are there,

like there'd be no entrepreneurship. You just go get a job. So entrepreneurs, I think instinctually, practitioners as opposed to academics, instinctually understand that that's not true. Like one of the reasons I started companies when I was so young is because, first of all, I had to. I had to make money.

And I didn't think, you know, making $10 an hour or whatever it was 15, 20 years ago, whenever that was, I thought I was worth more than that. And I was willing to bet on myself to prove that. So I think that's not a unique thought by any means. It's why you start a company. You're like, eh, I can capture way more. First of all, I can provide more value, and I can capture more of it than just going to get a job. So he says they were convinced there's no way that markets would be da-da-da-da,

suggesting that there were no predictable ways to beat the market returns and that financial decision-making of individuals were largely rational. Simmons and his colleagues sensed that professors were wrong. They believed investors are prone to cognitive biases, the kinds that lead to panics, bubbles, booms and busts. So it also talks about in here, it's like, well, they came to that realization early. And then after the fact, you had people like Danny Kahneman and Amos Tversky about providing like, like reasons after the fact of why this is probably true, right?

But Simmons didn't know that. It says, Simmons had embraced a statistics-based approach because of the work—or he did not, excuse me, he had not embraced statistics-based approach because of the work of any economist or psychologist, nor had he set out to program algorithms to avoid or take advantage of investors' biases. So he was doing it because he instinctively thought that was accurate. One of my favorite quotes that illustrates what's happening in this part of the book is that business is like nature. It doesn't care if you arrive at the right answer for the wrong reason. I think it's extremely important because it's a very bizarre way for people to think.

Business is like nature. It doesn't care if you arrive at the right answer for the wrong reason. I don't care if I arrive at the right answer for the wrong reason. I just want the right answer. Simmons just wanted the right answer. So he says, what you're really modeling is human behavior. Humans are most predictable in times of high stress. This is talking an insight in how the system they built operates. Humans are most predictable in terms of high stress. They act instinctively and panic. Now, this is so important because it's going to talk about their entire premise

of what the hell they're doing. Essentially, it's the entire premise of what you and I are doing right now. Our entire premise was that human actors will react the way humans did in the past, and we learned to take advantage. So I want to direct your attention now to they were trying to recruit somebody right and he comes to visit and decides i'm not going to do this so he says and this is why he says it looked like four guys in a garage they didn't

seem that skilled at computer science and a lot of what they were doing seemed uh by the seat of their pants just a few guys dabbling at computing. It wasn't very appealing. This is just a reminder, appearances can be deceiving. At this time, the fund had already grown to around $300 million and they were seeing annual returns above 50%. Four guys in a garage that don't look like they know what they're doing. And the note I left in terrible handwriting is, it's important to note, this opinion by outsiders persisted well past the point

of Simmons outperforming everyone else. Perhaps there's a lesson in human nature there. And what I mean about outperforming, check this out. These numbers are mind-blowing. But this also, the reason, that's not the reason I'm reading it to you. The reason is because this tells you a lot about Simmons' personality.

Why don't we keep it at $600 million, they asked Simmons. That way the medallion could rack up $200 million a year in annual profits, more than enough to make his employees happy. That is insane amount of money. And that's like, that's different different from being worth $200 million. You are actually making, that is real cash coming back to you, $200 million. No, Simmons responded.

We can do better. Emperors want empires, griped one colleague. What Jim wants to do is matter. He wanted a life that meant something. If he was going to do a fund, he wanted to be the best. Now, you can imagine with somebody with that kind of personality that's not happy with $200 million a year in profits, you can imagine what kind of environment you think that person's creating at their company. Well, here's a description of that fireman Simmons pushed for results within weeks if not

days an urgency that held appeal the atmosphere was intense one visitor likened it to a perpetual exam week okay so the at this point they still needed one more breakthrough the final breakthrough is uh comes from two guys I think they're Mercer and I forgot the other person's name. Mercer and Brown. Okay. So, and I love seeing, let me tell you how. They wind up rating IBM's computation linguistics team. So, I'm going to read this section to you. They're light on the details, but just the way they look at things. So the reason I'm going to bring this up is because I love seeing people draw parallels from other domains and then bring those insights into their own work. Okay. And that's exactly so from 200 million, a couple hundred million, whatever the

number is every year to billions and billions and billions of dollars rapidly. The final innovation was this. And it says, it became clear to Mercer, and this is their thinking abstractly, right? It became clear to Mercer and others that trading stocks bore similarities to speech recognition. Let me back up. There was a fundamental ceiling on the size of the markets that up until this point they were operating in. Right. And so Jim kept saying over and over again, like

to get to the level he wants to get at, he has to be able to trade various other products and it starts with stocks. So they had to build a system to adapt to stocks, and they tried it, didn't work, went really slow, etc., etc. The whole theme I've been telling you over and over again. It was not immediate. They had to do trial and error. They had to think about what they were doing,

constantly run experiments, and then eventually keep focusing on what's winning. So now I can read this part to you. It became clear to Mercer and others that trading stocks bore similarities to speech recognition. This blew my mind. Which is part of why Renaissance continued to raid IBM's computational linguistics team. In both endeavors, now they're going to compare both of what they want to do and what they had experience doing.

In both endeavors, the goal was to create a model capable of digesting uncertain jumbles of information and generating reliable guesses about what might come next while ignoring traditionalist who employed analysis that wasn't nearly as data-driven and to further explain that point Simmons has a great he does a great job of taking extremely complex things and then, like, I mean, he's a teacher at heart. That's what he did for, you know, most of, not most of his life, maybe two decades of his life.

So he explains that paragraph. Now let's, he's going to translate that for us, right? And so he's going to summarize that point here. Simmons summed up the approach in a 2014 speech. It's a very big exercise in machine learning if you want to look at it that way. Studying the past, understanding what happens, and how it might impinge non-randomly on the future. Okay, so remember when I said earlier I wish... The book is broken down into two parts, okay?

Like 75% of the book, something like that, 70% of the book is part one into two parts okay like 75 of the books only has 70 of the book is part one and then you have part two i have two notes in part two um if if i could do this again i would just read part one and then stop part two starts to get into stuff like they're already fabacy wealthy so then you have like a bunch of people coming new people coming into the firm has a lot to do with like backstabbing in like uh contentious interpersonal relationships uh office politics they get into current events and uh and real like uh national politics that that stuff's just not interesting to me in my own personal life i don't i i barely pay attention to current events in my personal opinion the information information age, we're overwhelmed with so much noise and information.

Personally, I just use time as a filter. And time is a great way to separate noise from signal or signal from noise, however you want to say that. So there's nothing for me to say there. That's fundamentally uninteresting to me. I like to read about ideas that are true today, that were true in the past, and that will be true in the future.

The last few chapters in this book, no one's going to give a shit about in the future. So I'm skipping over all that. I'm going to end the podcast here with life, something that I think is true today, was true in the past, and will be true in the future. And it's life advice from an 82-year-old Jim Simmons.

I think older people, especially older successful people, are smarter. They have had, they've seen more. They've been able to separate what is actually true or what is actually valuable from things that are not valuable. And that's why I spent so much time trying to learn from people that have already gone where I'm trying to go.

So he says, Simmons shared a few life lessons with the school's audience. Work with the smartest people you can, hopefully smarter than you. Be persistent. Don't give up easily. So he did that. He worked with smart people. A lot of those people, especially in their specific domain, he says, they're a lot smarter than me. Be persistent. He definitely did that. Don't give up easily. And then this I just love because this is the way I feel about whenever I see like a well-run business or a well-thought-out idea. There is a beautiful element to it for me. It is beautiful. Good writing, great books. There's just all kinds of things in life that are like that. Staring at the ocean, looking at mountains, whatever. He says, and I think it's good life advice, be guided by beauty. It can be the way a company runs or the way an experiment comes out.

There's a sense of beauty when something is working well. I think that's a lovely way to end this story. If you want the full story, I'd definitely read the book. Like I said, stop at part two. Maybe you might be more interested in that stuff and then read about it if you want to. But I could see, again, I said it before, it's very thrilling. Like, let's go to the back page real quick. You got Ed Thorpe, who, you know, has become somebody that I definitely don't idolize him. That's not the right word, but something I look up to. And like, when I read the story, Ed Thorpe's life, man of all markets, like, I look at his life as something that I want to aspire to. The fact that he was so successful in so many different domains that are important and he understood when enough was enough. He just, I think I've been telling

friends, I've been buying that book for a lot of people that in my opinion, he mastered life. My opinion of what a master life looks like. Everybody probably has a different opinion, right? So he says, talks about this book. He he says zuckerman vividly tells the story of how jim simmons and his team of scientists developed the most successful quantitative trading operation in history it was immensely enjoyable one of my favorite writers michael lewis he says the definitive account of a strange and wonderful subplot of the financial crisis um so there's it's it's very well reviewed it's sold a lot and a lot of people like it and i understand if you want to see the next book I'm doing,

because there's a lot of people who are saying they're using this as like a giant book club. I don't know how the hell. I don't expect anybody to read 52 books a year. And I'm not saying that people have said they have done this, but people are buying the books if they find out what I'm doing in advance. So they have it done or at least partially done by the time the podcast comes out. That's really interesting byproduct. I'm kind of surprised by that. If you want to see that, I leave a link in the show notes. It says a list

of all the books that have appeared on Founders, something like that. But anyways, you can either click that link. It just leads you to the URL, which is, um, amazon.com forward slash shop forward slash founders podcast. And so as soon as I know what the next book I'm going to do, um, I don't know if I know that next week yet. I have, you know, I can't even tell you how many books I have in queue. Uh, but anyways, I put it up there. Usually by the time you're hearing this, you, if you go to amazon. Usually, by the time you're hearing this, if you go to amazon.com forward slash shop, forward slash Founders Podcast,

you could already see what the next book is I'm doing. Almost every time. By the time the podcast comes out, I already know. And I might start, I don't like having a set schedule too far in advance because I really try to focus on what am I most excited to read about now, which is more enjoyable to me. And I it's better for for your experience as well uh but as far as much as I can know in the future I'll just start putting them even if I know maybe two the

next two or three books um I'm gonna have some series like I'm gonna do at least there's four books I have that are all about like early days of Detroit industry because I'm fascinated by like the beginning of the automobile industry and then the the fact that it happened in one city, and now that city, through competition, kind of exploded, like a bomb went off, and that industry got destroyed. I don't know. So anyways, I was like, well, instead of splitting those up, I'm going to do a bunch. So when I know the series, I'll do that. I have a series on a father and son, two biographies. One was recommended to me from a listener that made me find who their dad was when I started doing research. So that kind of stuff where I know that, hey, in the next like three or four weeks, this is what I'm going to

focus on or whatever. I'll put that on amazon.com forward slash shop, forward slash founders podcast or founders. I don't even know what it is. Just click the link. You'll figure it out. You're smart. All right. Thank you very much for your attention. Thank you very much for your support. And I'll talk to you next week.