Into the Impossible With Brian Keating - Greg Zuckerman, author of THE MAN WHO SOLVED THE MARKET: How Jim Simons Launched the Quant Revolution (#040)

Episode Date: April 20, 2020

   Find show notes and other resources here Brian Keating, Director of the Simons Observatory, interviews Greg Zuckerman, author of the bestselling biography of Jim Simons, “The Man Who Solved The Market”. Portfolio/Penguin has published Greg Zuckerman’s latest book, THE MAN WHO SOLVED THE MARKET: How Jim Simons Launched The Quant Revolution. This book, the culmination of two challenging years of research, is the story of how Simons, a secretive mathematician and code breaker, set out to conquer financial markets, overcoming a series of imposing obstacles to become the greatest moneymaker in modern finance. Recruiting colorful and enigmatic mathematicians and scientists, Simons embraced algorithms and computer models while Mark Zuckerberg was still in grade school, launching a quantitative revolution that has shaken Wall Street. With their winnings, Simons, his colleague Robert Mercer, and others at Renaissance Technologies have upended the worlds of education, science and politics. THE MAN WHO SOLVED THE MARKET was shortlisted for the Financial Times/McKinsey Business Book of the Year award. The book competed against five of the year’s best nonfiction books for the award. It’s been reviewed in Bloomberg, and the Financial Times, and adapted in the Wall Street Journal. Get your copy here: or from our friends at Warwicks.com For more, including an excerpt of the book and its many endorsements and reviews, visit here. Learn more about your ad choices. Visit megaphone.fm/adchoices

The only thing we can be sure of about the future is that it will be absolutely fantastic. Five, four, two. It is my pleasure to be joined with a friend of mine, Greg Zuckerman, an author and writer. This is not picking up on. There's a book coming in here. This is the man who solved the market, how Jim Simons launched, the Quant Revolution. And I am Brian Keating, co-director of the Art of the C. Clark Center for Human Imagination at UC San Diego. goes, Arthur C. Clark Center for Human Imagination. And this is the Into the Impossible podcast

based on one of Arthur C. Clark's laws. He had many laws, one of which you're probably familiar with, that any sufficiently advanced technology is indistinguishable from magic. You've probably heard that before. And then another one is the only way to find out what's possible is to go a little bit beyond into the impossible. And so that's what we like to think of ourselves. We talk with creative people with folks all over the world in all different genres from studies of the cosmos near and dear to my heart to business leaders, thought leaders, such as yourself, Julian Guthrie, you're going to have Peter Diamandas on soon, science fiction writers like Annalie Newitz and David Brin.

And then sometimes we do things that are just of interest to me, like Krav Maga, the physics of Krav Maga. We did an episode on that. So I want to bring to people's attention that this book, which is phenomenal book, and not just because you took an epigraph, I was going to say epitaph, but there's an epigraph, chapter six. But you've also written many other books. And actually, I came to know you, this isn't showing up super well, but we'll put a link to it.

There it is. This is one of your other books written with your two sons called Rising Above. This one's about inspiring women in sports, and you have another one, inspired. men in sports. And these are wonderful books because they're really written for middle grade type audiences. And many of us have middle graders at home and we're running an unlicensed middle grade school as we speak. And so those books tie in biography and sports and I think life lessons in a way that are sort of unique. And I find the thematic of your work. So thank you, Greg, for joining us. And it's great to be here. And I'm a,

I'm a big fan of your own book. So whoever has purchased a copy, I recommend it just as an observer, not a science person myself. But it was eye-opening and educational and also enjoyable. Yeah. So I actually got an email from you when I was writing my book, and you were asking some interesting questions about the project that I'm involved with called the Simon's Observatory. Hopefully we'll get to that. I wanted to first take the opportunity.

you may not know if you haven't listened to some of our podcast guests with authors. I'd never like to give away the topic of the book too much in too much detail, the thesis of the book in some cases. However, your book, because I don't want to compromise sales, you know, book sales, because many authors rely on book sales. But I think in your case, because your book was essentially number one and still is in the top, you know, 10 or so on Amazon and another fine booksellers, I think we will get into a little bit more of the,

nuts and bolts of your book. But first of all, congratulations on that. Thank you. Not just in your category. Many of us have been number one or some of us have been number one. I was delighted to be that way. But for you to be number one in all of Amazon, it's just such a phenomenal accomplishment. And no surprise because your books are quite amazing to read. For the record, I think I only hit three on Amazon. So just for the record. All right. Well, that's a stickler when it comes to accuracy. But yeah. That's right. Okay. And you've had other books, of course. In the business world, of course, this book written not too long ago.

This was also a bestseller. This is called The Frackers. And this was the kind of just unbelievable story of how the United States really got to this preeminence and sort of wildcatting and the exploration of natural resources, oil, gas, et cetera. And I should also mention for the audience who's not familiar with Greg that he is also a special writer for the Wall Street Journal. And you've been there, how long, Greg, decades? right? I've been there since 1996, actually, coming upon 24 years. Yeah, it's a long time to be at anyone organization, institutions. So yeah, they treat me well. I like them. So I've stayed.

Yeah, it's a great, great publication. We are subscribers, and we always enjoy your writing and your compatriots over there. Thank you. So I wanted to talk about Jim Simons because he is, he's sort of this, in one sense, very inscrutable character who has had at least three careers, three careers that he sort of is commonly associated with, first being math professor, mathematician, back in the 60s, 70s, and even the beginning of the 80s. The second one is as a hedge fund titan running one of the most, if not the most successful, in terms of return on investment. hedge funds in history through his Renaissance technologies hedge fund.

And then the third career is sort of what he's obsessed with for the last couple of decades, along with his wife Marilyn Simons, is running a large philanthropy, which is one of the largest, if not the largest philanthropies that supports what we call pure scientific research. This is research without the direct aim of coming up with a drug or some new design for something. it's actually pure and apply pure research so mathematics computer science you know quantum quantum chemistry quantum materials things like that and of course cosmology astrophysics that

I study and he's I really think he's almost started a fourth career and tell me if you agree Greg with the Flatiron Institute it's sort of he's now like a college university founder I mean it's a think tank but it's but it's a huge enterprise so let me start with that what do you find the last of these four careers, you know, is that sort of out of place, or is that in keeping with his visionary status in the preceding three different fields? Is it just another challenge that falls along, cleaves along the same lines? Well, first I have to correct you, he actually had an earlier career that wasn't long, wasn't many years, but it was a distinct career in that he was a code breaker during the Cold War breaking code a la, you know, Alan Turing

some similarities against the Russians. And that was another interesting, fascinating career. As for this one, there's some similarities. And it is a remarkable last leg of his life in that he is tackling all kinds of big questions. And in some ways, big challenges. And I think that's what he enjoys. And behind it all is, it's what he's gone after what he enjoys doing. math early on people discouraged him his family doctor kind of said oh you can't make any money focusing on math and today's worth 23 billion dollars and a major funder of political candidates and such so he was wrong there the family doctor but in each of these legs in his career it's something he's passionate about but also he likes taking on challenges and today it's everything

as you know trying to and i love to kind of hear you're earth thoughts in terms of the origins of life, which I find personally kind of fascinating. And it's another question that people have struggled with for years. Just like, it's not so different from solving the market. I mean, for thousands of years, people been trying to understand how to best competitors and figure out solutions and outsmart rivals when it comes to beating the market. And Jim kind of has. But that was a similar kind of question.

And then these are lifelong questions others have struggled with. And he takes on. And yeah, that's the Flatiron Institute to some extent, too. You can make some similarities with Flatiron in terms of embracing data and being a scientist. He's always been a scientist and looking for patterns and looking when others kind of see chaos. He kind of looks for order. And I think that's what a scientist is trained to do to some extent. So there are a lot of similarities when it comes to all these legs in Jim Simon's career.

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is he's extremely curious. I think the thing that he is most, you know, related to in my mind is his, you know, relentless curiosity. I mean, he calls it pondering. He calls it, you know, sort of this deep thought that he has. But it's what's so amazing to me to see him and Marilyn both, they, you know, they can talk very deeply about aspects of experimental cosmology, detector development, you know, dark matter, dark energy.

And then, you know, he can go pivot immediately and so can Marilyn into, you know, de novo genetic, you know, modifications, phenotypes, epigenetic effects in autism to other effects. And differences between sexes in the animal kingdom. It's just phenomenal how, how both, you know, broad and deep they both are. And I think Marilyn really, she's really, I think, his secret weapon because, you know, she's, you know, several years as junior. incredibly passionate herself and incredibly energetic. And she just has this relentless spirit to pursue knowledge. Even, you know, catch her when she's, I think she's having a down time, you know, or just, you know, just doing, you know, kind of decompressing.

And she's doing a crossword puzzle and pen, you know, it's really phenomenal to see how the two of them complement each other. He hates puzzles, as far as I know. He really doesn't like doing, you know, solving these puzzles and games and stuff like that. One thing that's interesting about Jim is that he's sort of an outsider. I mean, yes, he did work for the IDEA, and now we kind of associate, you know, the NSA as being, if not the biggest, probably one of the biggest employers and mathematicians in the whole planet.

And so, you know, they're obviously involved in code breaking and forecasting, etc. I want to talk first about, you know, the Renaissance technologies. So when it started, I wonder, did people sort of, you know, laugh at that name? or maybe you can talk about the etymology of the name. I know it, but could you say, explain to the readers, how does that come about, why is it Renaissance technologies? And in what sense, is it a technology? I mean, come on, it's just, you know, computer trading, right?

So what sense is it really a technology? Sure, why don't I kind of take a step back? A lot of your audience doesn't realize this guy, Jim Simons, mathematician, a claim mathematician, probably one most important geometers of the past 50, 100 years, has impact in world's mathematics, but also physics. He is the greatest moneymaker in the history of modern finance. And I use that term specifically, if that clear, is he a trader, is he investor?

He's not an investor the way we traditionally define those kinds of people. But yet, his firm, to this day, is the most respected on Wall Street. So I'm sure many of your audience know him from the world of science, mathematics, but when it comes to trading and investing and making money on Wall Street, there's no one like him. And he in some ways is a pioneer when it comes to developing mathematical models to trade this quantitative approach, computers as opposed to intuition and judgment. And getting to your question, so basically he gave up academia, gave up mathematics to some extent in 1978, and said, you know what, I'm going to try my hand at training and investing

And it kind of goes to your point as being an outsider when you talk to Jim, and I've been lucky enough to spend time with him. And I've seen every interview and such. He sort of sees himself as an outsider in that even when he was in the world of mathematics, he sort of had one foot in that world. And he had the other world firmly placed in the real world, as it were. He was trading. He was investing. He liked the markets. He couldn't always, didn't always have the time to focus on them. But he's very unique in that regard. He's also just an outsider in his personality, and you know better than I do, but many mathematicians, I don't want to generalize or stereotype, but they're not the most outgoing sorts usually or often. You know, the joke about mathematicians is an outgoing one, is one who stares at your shoes, as opposed to his or her own shoes during a conversation.

And again, it's a stereotype. It's not always the case. admit many, many, and of course of my research for the book, but you can generalize to some extent often. And Jim's not like that. He is a guy you want to have a beer with. He is funny, mischievous, smokes like a chimney, likes to drink. It's a funny guy, interesting guy. And as you suggested earlier, he's curious about the world around him, about others, not focused on himself always. So he took an outsider's approach. And for why, though, in other words, he decided to embrace mathematical models. And it didn't work for a while. It went back and forth and getting the name, Renaissance has technologies sort of suggest maybe a venture

capital kind of firm. And that's because it was. They were doing other kinds of things. And for a while, we're talking years, it wasn't clear if he was going to make it when it came to investing and trading. And maybe he'd have more success as a vendor capitalist. So it took until really, I argue, 1990, from 1978 to 1990, they kind of turned the corner. But as late as sort of 1988, 1988, 1989, he wasn't 100% focused on trading. And he was doing sort of this venture capital kind of investing kind of activity, which is suggested by the name. Yeah. Yeah. And I think, you know, what's, what's interesting with Jim is that he is very self-analytic. He understands what makes him tick, I think, better than anybody. And it's not so much that he does, you know,

kind of have that chess playing, poker playing, I think was his game mentality, where he is sort of attuned, as you, as you said, you know, he is, he has a secret edge, which I think is that his personality is one that's very sensitive. So we are supported, our research is supported on the Simon's Observatory, obviously by the Simon's Foundation. And, you know, just as an example of his leadership and, and as well as Maryland. You know, within a few days after the COVID crisis really struck, you know, we got correspondence from the top down that, you know, they're here to support us, you know, mentally, physically. You know, we have 300 people working on every continent, including Antarctica, as you know,

for this project. And just that he's so, you know, deeply concerned with not how fast can we get back going and, you know, beat the competition or whatever, but really just about us as human beings. Yeah, I think he's always really noted that. I think he tailored his approach. I asked him once, you know, how did you deal with these squabbles amongst faculty? So he was the first chairman of the faculty in mathematics at the formerly known, the State University of New York at Stony Brook.

I believe now it's called Stony Brook University, where he co-taught and actually recruited my late father, James Axe to come from Cornell to work with him. Who was a major character of my book? May I interject there? Yes, he is. and I'm thankful that his legacy, you know, comes through in the book. But when we talk about the, you know, kind of personalities it takes to really deal with faculty, there's an old joke amongst, you know, the academic set that, you know, the reason that academic squabbles and the faculty club are so intense is because the stakes are so low.

And if there's anyone who deals with high stakes, it's Jim or, you know, has been, typically throughout his career, it was Jim. But in the case of, you know, faculty, me, I don't know. asked me, like, how did you, what was your leadership philosophy? And he told me something very interesting. He said, you know, a lot of faculty, and I think this applies to corporations as well. Faculty will get really wound up about stuff. And it could be that there's some legitimacy to that, that they actually have, you know, a good reason to be, you know, kind of enthused and passionate and squabbling about things. But it could be that you're just spinning their wheels. And he said,

you know, I would have to, you know, quickly apprise the situation. Was it, you know, in category A or category B. And if it was in some aspect that I cared about, well, then I'd get involved. But most of the time, I wasn't as involved. And I let them hash it out. So he'd let them have these brutal, you know, back and forth battles, you know, for hours. And then he would, you know, leave, be very hands off. And then when it was time for him to act, when there was something important to him, then he would say, then he had accrued a lot of poker chips that he could go all in on. And I think it afforded him a lot of credibility with other faculty, that he would both listen to them and that he would only speak when something was truly important. So people knew when he was speaking that Jim had,

you know, deeply thought about the problem and that it was very meaningful for him. But he also allowed other people intentionally to work on things for themselves and hash things out for themselves. I think that's a leadership style that, you know, I've tried to emulate as much as I can. The other thing, you know, that I took from him, I mean, famously, they're very secretive at Renaissance. I have no idea how things work over there, never did. I only knew that they had this huge advanced stockpile of data, actually dating back, as you point out in the book, you know, perhaps hundreds of years, you know, shipping manifests of, you know,

back to the, you know, 1700s or something in the Malacca Straits of, you know, Malaysia or whatever. And that, you know, and they had these signals, as all hedge funds do, that some are long term, some are short term. but I think it's ironic that for a firm that's so predicate on data analysis and data crunching, that it's really not the machine learning aspect, it's more of the psychology that he came to be so adept at. And through his well-schooled education and human dynamics and psychology, he has this ability to calm people, whether it be investors, as you talk about in the book, during crises, and even his own employees, when they have these interneesign squabbles. So the book shines, I think, brightest. Of course,

I like most of the stuff and I like the stuff about me and I'm not going to be, I'm not going to deny that. But it's a leadership book. It's actually, I call it a stealth leadership book. I've given it to a bunch of friends. Cosmologists, why would a cosmologist care about this? I think it's a stealth leadership book. So was that your intention? No. And it's fascinating to say that because it didn't occur to me until I was done with a book that it is as much a management book as it is a trading book. And it's funny, you go on Amazon and I'm sure you know the feeling and you only focus on the bad reviews that the good ones, you don't really care about. I'll let you know when I get one. I'll let you know when I'll get. No, I'm just kidding. You can look at mine. And most of mine bad ones are,

well, yeah, it's a good story, Greg, but I want to learn how to be a billionaire myself. There are no formulas in here, where are the formulas that I can embrace. And the senior people, executives, Wall Street types, but others too, who really enjoyed the book, I think most of them pick up on that same theme that they've learned some management skills because that's what makes them so unique. I go around the country and I give speeches or I used to them until COVID. And people always kind of say, well, what's the secret sauce? What's the secrets as a Renaissance? And they've got the greatest data and they've got computer and they got the talent, et cetera. But I think the secret sauce is how Jim has managed that talent, how he's recruited it.

And he goes back to Stony Brook. And there are skills. There are all kinds of techniques and tactics in which he's recruited. He recruited your father in a very unique way. He got your father who was the youngest or one of the youngest tenured professors ever at Cornell to leave Cornell for this sort of upstart, overlooked department at Stony Brook with Jim leading it. There's really no reason for him to have gone. And he had ways he was able to persuade people to leave their jobs. And he applied some of those techniques at Renaissance. And I think we could all kind of learn them too. But that is his ability to, he understands the quantitative approach.

He is a mathematician. He can build algorithms. He enjoyed doing that both when he was a cold breaker and later as well. But the key thing for him is he can talk, he can get people to work together. And maybe it's like that in the world of academia, maybe it doesn't always, but that's been his approach that unlike every other firm, and I've been working on Wall Street again, writing about Wall Street for 23 years, no one has an approach like Renaissance where people, hundreds of people, or at least for sure dozens of people work together at the firm. Every other firm is about silos. You make some discovery, you keep it for yourself. You don't share it with others and just all about people working together. So there are all kinds of fascinating things that I learned about management, management techniques. and a way to get super smart, talented, quirky, often, stubborn frequently, individuals to work together. Yeah, and exactly. So, you know, again, you wouldn't think that a business tycoon would have lessons to teach a practicing cosmologist. But, you know, here's another example. So Jim told me once that they're radically transparent within Renaissance technology,

you know, kind of opaque outside, right? It's crazy. They are, yeah. This episode is brought to you by Netflix. Most valuable promotions in Netflix are hosting a blockbuster triple headliner Saturday, May 16th. Rhonda Rousey returns to face fellow woman's MMA pioneer Gina Carano in the main event.

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And it's kind of the opposite of even like Bridgewater, Ray Gallio, is another famous, even maybe richer, hedge fund Titan. In his book, Principles, was a wonderful book. He talks about how they would videotape every single meeting, and if it didn't have something confidential or proprietary related to a trade, they would actually make it public. So Jim didn't go quite that far, but he gave me a wonderful tip that I've used for the last 10 years,

and that was that all their meetings, they have a weekly meeting, where they'd all go around and just talk about what they were working on, their trade ideas, their signal analysis ideas. And these are quons. you know, like you said, they're not typically, you know, very, very much, you know, comfortable getting out of their shelves. But everyone goes around, and it's similar with quantitative cosmologists, right? So they don't want to do that anymore, but it brings them out. And the thing that we do in my group meeting every Friday is all my students go around the room.

There's 30 of us in undergraduates, grad students, postdocs, other faculty. And we all say, what do we do this week? What challenges do we face? Because it could be, well, I'm programming Python and I have this overflow, you know, this problem or that problem or, and then, oh, I had that last year. You have to install this library. And, you know, it's something that I wouldn't have done. So recoup productivity, you know, time, hours multiply by the IQ points of these people. And I think it's a lot. And, and of course, I think, you know, that, that lesson came from Jim. One thing that's kind of, you know, a little more

enervating about Jim is that he, and maybe it's just his honesty, but he talks frequently, you know, very surprisingly for someone who's so quantitative, who's so data driven. He talks about the role of luck and how big a role it played in his life. And I wonder if you could comment, you know, does it seem as incongruous to you that this, you know, quantitative, literally quant, you know, it's the essence, the epitome of a reliability forecasting signal. You know, then he says, oh, most of life is luck. Well, he's had a lot of bad luck. So I think he has had to come to grips with that.

aspect. I'm referring on it in his personal life. Yes, he's worth $23 billion and has a gorgeous yacht, which I'm sure you've been on. I don't think I would never, as a journalist, I couldn't go on it. But the super yacht is worth hundreds of million dollars. And as a happy marriage, thankfully, but he's also lost two children at young ages to fluke accidents, one in which a son was riding a bicycle and an elderly woman backed up and crushed him within seconds and the other in a diving accident. So I think he's had to confront the issue of luck, be a good luck or bad luck in his life. And he frequently talks to people about how he's had the high, seen the highs and lows of life. And yes, they know they've got a really good sense of when they can make money

and they crunch, they turn out some of the best returns Wall Street's ever seen year and year out, even in this year. We're taping this in 2020 in April. And I'm giving you a scoop here right now, but I haven't written it yet, but they continue to do really well this year as well. It's crazy. And yet, social rights, you wouldn't think it's about luck,

but he's a worldly person, and he's had to confront the issue of bad luck in his life as well. Yeah. Yeah, and I think the other thing that really, you know, kind of speaks to me about Jim is that he he is comfortable being in so many different worlds, whether academia, like we talked about,

finance, but he has no errors. I mean, he's still this, you know, Boston, you know, kind of bred, a thick, gravelly accent, you know, cutting, cutting presents when he comes into the room, but I don't know if you watch a show billions on showtime, do you? I don't.

It's just too close to what I do day to day, so I shouldn't get away from, but it's supposed to be very good. Yeah, I know. I never watch the Big Bang Theory. People ask me about that. There's an axe. People ask me all the time about this character acts

in the TV show. That was your friend of the name. Exactly, right. Yeah. Luckily, it's spelled differently. I have no relation to that particular ax. But, you know, we've been watching it. My wife and I, you know, in COVID care,

you know, kind of just, just the wind down at the end of the day. But, you know, it's kind of, if there is, you know, reality, especially, and it's not, you know, not safe for viewing at the office. but, you know, and it could be a little bit graphic for those. It's not for children, certainly. But, but, you know, the cutthroat world depicted couldn't be farther from the Jim Simons that I know.

Of course, you know, you can only know so much about a person, but he's intensely private on one side, you know, and then on the other side, he has a, you know, a multi-million view TED talk about his life, which, you know, with Chris Anderson himself, you know, the father of Ted. I wonder, how do you reconcile those two different aspects? I mean, one of us most often used quotes is from animal farm, you know, where the donkey is asked, you know, you're so lucky you have this tail to keep away the flies. And he said, well, I'd rather not have the flies and not need the tail. And, you know, that's Jim's perspective. You know, I'd rather not have all this attention. And then, you know, he'll make a speech that'll bring down the house. So listen, I think Jim Simons is remarkable. Individual, a good person, and I'm a cynical, skeptical journalist. But let's all. Also, be clear, one of his passions in life is money.

He loves money. He's loved money from the day one. He's wanted to be wealth from day one. He doesn't throw his money around, but he enjoys finer things as well. He's got a nice home and super yacht and all that. So when it comes to money, he pursues it. And he always has. He's been very focused on that from day one.

And people close to him, we're never sure why. Some people, family members and others and friends thought maybe he wanted the money. He knew he had to get really rich to have impact on society. And he's done that. But you could make criticisms of him as well. So listen, one of the sad things for me is, as we struggle here trying to deal with this pandemic, that all this brainpower is at hedge funds. They're trading markets.

They're trying to make a little money here, a little money there. And these guys are much smarter than I could ever be. And if we're looking for it, this is what they do. they look for patterns. Shouldn't some of that brain power be used potentially to find some of the patterns in what we're struggling with right now? And it almost is sad to me at the end of the day that they've siphoned off all this talent from your world, from the world of academia, from the world of medicine, hypothetically, to the world of trading, which it's a net net. You take your money from some other investor. Now, they would counter, and one could counter that,

well, people like Jim Simons have made so much money. They've gone on and done really great things with it. multiplied it. And, you know, Bill Gates has made the same argument and Warren Buffett. And it's a strong argument. You could also make the argument that they've done other things with it. Robert Mercer, his partner is the single most important individual, I would argue, to the rise of Donald Trump. So these are also very complex individuals. And I like that as an author. A lot of times people with my books, especially, a lot of people come away, they're like, yeah, Greg, I really like the book, but I don't know if I like the characters. And that's true of the frackers. and great straight ever in this one as well. And it's fine by me. I personally think Jim

Simons is one of the most remarkable, fascinating characters and a good person, but he's not a stank either. No, look, as you said, that's your job. And, you know, I'm tempted, you know, again, to make you break your your vow not to watch billions because there are characters in there that, you know, one reminds me of you, you know, is this reporter for the journal, but they don't, that's like a financial street journal or something. Yeah. But it's a guy who's like going out, after the billionaire hedge fund guy, but he's also got the side where he can be flipped and go for the state prosecutor, you know, the Southern District prosecutor paid by GM. Anyway, you should watch it. But the point that I'm getting at is Jim is not like that kind of chop shop or boiler

room, you know, kind of character. I'm not, and I'm not, I'm not just purely different. Because you're talking about the field as a whole. I will say, though, because I've asked him, you know, in the beginning, I had some students that were incredibly brilliant, and they weren't suited for the world of academia by their own nature. And so I said, well, you know, maybe, maybe instead of working on the Simons, you know, a telescope funded project by the foundation, maybe you might like an introduction, or maybe they ask me for an introduction to some of the contacts I had at Renaissance back in the day. I'm not super close with people at Renaissance anymore, but obviously Jim Simons is formally retired, but he's, you know, still an active member in terms of, you know, the philosophy

and maintenance of the fund. But he said to me, look, we don't hire quants so much anymore. And I was kind of surprised, but I know personally professors who dropped out of astronomy and went to go work for it. And, you know, to play devil's advocate to what you just said. I mean, he was, you know, his point was that eventually you get this phenomenon that you describe in the book with you get like overmodeled. So it becomes like there's only so much you can do.

And you see this nowadays, unfortunately, in the incidents of COVID and forecasting, when's going to peak, when's this resource. is going to be, you know, you can have a model for every person. The question is, you know, when you have only scientists working here, he told me that they were actually suffering in some, so they had some internal rubric or metric by which they were realizing that they actually needed some of these scientists to have some business knowledge. And they really didn't.

They didn't understand the basics that an MBA would have fresh out of school, even though obviously an MBA can't do the same kind of very high-level quantitative mathematical approach that they do. And so I think he's moderated that. So I think there is less of that brain drain than you might think, although there are still people there. Look, they're incredibly private. We don't really know what they do. But the bottom line is, you know, there's a balance. And I think, you know, some people want to do stuff in academia and then have it applied to the quote unquote real world rather than, you know, letting these tools only be of use to some abstract, you know, abstruse calculation about the early universe.

example. But I get your point. I do make the argument. Yeah, that it's, you know, it's interesting how he can be, you know, private on one side, public on the other side. I think, again, his overarching, you know, it's not like he's going to, another billion dollars is going to mean that much more to him as in a personal wealth. Like, you know, we always joke from that line in, um, in Wall Street. You know, it's like how many yachts can you water ski behind? You know, like I, I've, you know, told that to my friends who are quants too. And it's like, how much money can you make, fine. But he is devoted to this, and he wants the foundation, he's told me personally, he wants the foundation to last forever. That to me means he's going to endow it with the vast

majority of his wealth and wealth generated by this engine of capitalism and argue about it as you like, but without which we wouldn't have these discoveries that, you know, he's, he is, you know, he thinks closing it on the first, you know, cures or treatments for autism as you close the book with. I found it very, very, very, very, flattering that the things that he's most interested in in life are kind of those big questions on one hand, the origin of time, the origin of life, the origin of, you know, how matter came to be, the kind of stuff that I study. And then this kind of stuff that's very practical for people that are suffering with diseases and conditions and maladies on earth. And he, you know, just as a,

you know, kind of out there, I don't know if this is insider information, but he, you know, he invest in companies that are looking for cures, for example, for COVID and so forth. So I think, you know, and he has this huge repository of genetic information that people, you know, under his, under his supported organizations are working on. For example, in autism, building up databases for the first time, applying some of the quantitative techniques, you know, that are used in the quant field to this. So, can we take a step back for listeners that aren't familiar with, you know, what is quantitative analysis? What is technical analysis? Is it just looking at, you know, the tea leaves or, you know, can you explain, you have an explanation? what these things are. Sure. So I guess when Jim Simons began trading, investing in a serious way,

there were two approaches to making money. There were sort of the random walk approach and the efficient market. You can talk about Chicago school, etc., where you can't really beat the market. If you see examples like a Warren Buffett, you know, that's like the monkey writing Shakespeare kind of thing. And with the random walk, the idea is you can't really predict. future news, so you can't really predict future prices. And the other of you was that by doing research, traditional kind of talking to approaches like talking to management, looking at financial reports, a la Warren Buff and that kind of Peter Lynch approach, then you could beat the market. And Jim tried to completely, he embraced a completely different third approach, which was akin to

technical analysis. And the people I spoke to worked there in the 70s and 80s, saw themselves of technical analysts. And just for your audience, who don't know what that is, there was this kind of ancient kind of approach where you look at charts and you build charts for the patterns of financial, any kind of financial instruments. And if you scrutinize it enough with the naked eye, even, you can see potential patterns. And what Jim and his colleagues did was, They said, well, we think there's some order here to this chaotic market, and we're going to do it in a, do technical analysis in a much more sophisticated way. And they became pioneers in this approach. And they're not the only ones. They're people not too far from you, Ed Thorpe and Southern California,

a few others who embraced it early. And Jim wasn't the earliest, but he was an early pioneer. And they said, we're going to build mathematical models. We're also going to kind of, try to trade and invest in a way that eliminates all the behavioral economics mistakes that we all have come to learn. And didn't call baby, labor economics back then, but all the mistakes, the dumb stuff, the things were apt to do, greed and fear and all the things in between. And Jim said, you know, we're going to let the computers, we're going to turn it over to a computer. And part of it was just his being uncomfortable with traditional trading approaches, is the way he described it.

To me and to others is when I made a lot of money, I felt like a hero. When I lost money, I felt like a dope, you know, that whole kind of old school dope. You know, I think people say dope anymore.

But it's like positive, I think you're, I'm dope, whatever. Not that I would know. But Jim decided to take this other approach where we're going to turn the decisions over to the machines and create algorithms. And in so many ways, one of the reasons I wanted to write the book is

Jim's obviously a pioneer where it comes to this quantitative approach, but he's also a pioneer where it comes to machine learning. artificial intelligence, they were doing this decades ago. Big data. They didn't call big data, but they bought up all this data and cleaned it. When no one was cleaning it, no one cared about that kind of thing. And no one cared about the data. He was buying data when no one cared about it. So it's a whole different approach that Wall Street and broader society has embraced, you know, Facebook and Amazon and your world and Netflix. And it's all predictive algorithms. and that's what these guys were doing, Jim Simons and his colleagues in the 1980s and in 1990s.

And some of the biggest breakthroughs, as people who read the book will see, weren't those that Jim Simon's authored. And some people, that's another criticism of my book. Well, you see it, you call it the man who solved the market. It's really the man. And that's true. It's not unlike Steve Jobs, who's the architect of the genius behind Apple, but he also didn't come up with a lot of the breakthroughs. And that's similar to what Jim Simon's, who's great taste. And you could probably speak to that.

I heard a lot of professors he worked with talk about, he was a very smart guy, obviously, but they were amazed by his taste. And he knew what kind of problems, I think, to tackle and what problems not to tackle. So in all those ways, he's very much a pioneer that we can learn from. That's right. Yeah, I think that is sort of the intangible, you know, secret sauce that really separates people like him. And, you know, I think there are other people, you know, who might even be more financial. successful. But in terms of, you know, stacking up these, these meta skills from, from, you know,

the social psychology of working with these people to the pure technical and, and, you know, infinitely complex, theoretical, you know, understanding that he has in terms of basic mathematics. But I think, again, what really, what I'll always associate with him is this relentless curiosity, that he just, he just doesn't give up. He has to understand stuff. He's not afraid to ask questions. even if it makes him, you know, I mean, sometimes he'll ask you to explain something, you know, several different times. And, and you'll lock in that he's trying to think of everything in terms of perhaps his first love, you know, geometry, you know, understanding things, abstract spaces and even charts and technical, you know, graphs and quantitative analysis in terms of, you know,

curvature and derivatives and so forth in a geometric sense, not in the financial sense. And it's almost like, Yeah, I mean, I didn't know so much about that before I read the book of his younger sort of aspirations at, you know, wealth. I don't ever get the sense it's wealth as a scorecard the way that some people do approach wealth. I mean, conspicuous, you know, celebrity, you know, predicated on, you know, amassing more wealth than somebody else. I think it was pretty interesting. You know, when I was with him, we took him down over the summer last year in 2019, the northern hemisphere summer to the Simon's Observatory site, to, do a groundbreaking of the future site and to visit the Simon's Array, which is already operating at 17,000 feet above sea level. Now, this is a guy who has, you know, spent smoking merit cigarettes for the better part of the last 60 years and is in his early 80s right now. Go back to the whole theme of luck and we're all luck todays, but go on, yeah. Right, yeah. So, you know, I had tried to, you know, station caches of oxygen and, you know, supplies and, you know, I'm one of my favorite pictures of getting him, like, shoveling, you know, dirt at 17,500 feet. And he's just, you know, he doesn't care. He just wants to do it. And then as soon as we were down below a safe altitude, you know, don't tell his doctor, I hope he's doctor. I think his doctor is, you know, five years older than he is. He was, you know, he was healthier than I was. He was, you know, he was healthier than I was. He was a shoveling dirt and marching around the site. Yeah, yeah. He's a freaking nature. He'd get him to wear socks for the first time.

He never put on socks before. Yeah, he is a freak of nature. He's a sharpest attack. He's approaching 83. He goes on hikes with the Simons Foundation and members there, younger people, and he's leading the pack. But get back to your earlier point, he considers himself a ponderer. And he said to me, he was in grad school,

and he realized he wasn't the quickest. You know, he's accomplished so much in math and geometry, etc. But he doesn't consider myself to be the quickest. mind, but he gnaws at those problems. And even when he was a young kid, his mother sometimes had to get him out of a tree. He was in the tree just thinking for a long time. And he embraced these kind of menial jobs like sweeping and floors. I began my book talking about it. And he liked these menial jobs because it allowed him time to think. So he's a ponderer and just a fascinating mind, a beautiful mind in some way anyways. Thank you for this book and the opportunity

to chat. I'm sure things are super hectic. on Wall Street, you hinted at the, you know, that perhaps Jim is not, you know, making out too poorly. He won't be, you know, downsizing to a minor yacht instead of a mega yacht, a micro yacht. But hopefully, hopefully the foundation is, it remains stable and continues to do the great work they do. Not only in cosmology, obviously, that's my personal interest, but the Flatiron Institute, which they support and the research, the Simon's Foundation, Autism Research Initiative, at, you know, they support hundreds of millions of dollars in pure scientific research, not really looking again.

Basic research. Basically, I mean, he's one of the biggest, two or three biggest founders of basic research today. You know, you could argue, you know, maybe it's a shame that it takes billionaires today to do that, to be responsible. But he's objectively doing really great things with his money. Yeah, and I think, you know,

it's filling a niche that is done also in public-private partnerships with the National Science Foundation, you know, giving tons of money to research to, to understand the cosmos and help the human beings get a better understanding of what the cosmos is all about. So I just want to close by thanking you. Also mention your other books, The Frackers, Rising Above, two books written with your sons, Gabrielle and Elijah, who I've had the pleasure to meet at your book launch party. That was really fun. Thank you for inviting me. Thank you for coming. Look, we discussed today is the man who solved the market, how Jim Simon's,

The Quant Revolution, written by Greg Zuckerman. It's endorsed by Malcolm Gladwell, Michael Lewis. It was Muhammad O'Learyon, Edward Thorpe. And I just want to ask, what are you working on now besides the stuff for the journal? I've got my hands full with journal stuff, market stuff. But what I'd love to do, I haven't really shared this with anyone, I'd love to write a story about whoever comes up with the vaccine. God willing, there is a vaccine for,

for this, that, that stops this pandemic and its tracks. So I like science. At one point, I was really thinking about doing a book about immunotherapy and the frackers got into some of the science and obviously got into math with this book. But if I can, and I haven't really done any work with, I'm overwhelmed with work at the journal. But if, if I could write a book about the individuals who figure out the treatments in the vaccine for COVID, that would be a real pleasure. a privilege, but let's see if I can figure that out. Yeah, I think you're absolutely right. I mean, it would make almost like a detective story starting with the origin of the virus,

the Chinese cooperation with the West and how we can overcome this and avoid repetition of the 1918 flu. Yeah, it's sort of, I like just, it might be interesting, might not be, but I do see, you know, there being some green shoots from this awful tragic, you know, the consequences of this pandemic, obviously every single single, life is an infinitely tragic loss. But that it could be that what the Manhattan Project did for physics in the 20th century and mathematics. And, you know, without that, there probably wouldn't have been a Jim Simon's working at the, you know, the Cold War, that there may be a new century

of biology, of biophysics, certainly with all the great breakthroughs that are coming with CRISPR and so forth, and how we're now seeing how we, you know, can cure diseases using viruses. I mean, it's unbelievable that's the breakthroughs that my colleagues are making all around the world. So I would definitely be interested in reading that. No doubt it would be another one of the best sellers. I'll come back in a few years. We can do this again. That'll be awesome. All right, Greg, thank you so much. The man who saw the markets. And if your audience, if your audience wants to reach out, constructive criticism, I'd love to hear people's constructive criticism and email me, LinkedIn, Twitter, whatever. Yeah, we'll put your Twitter and your LinkedIn,

profiles in the show notes, and we'll put it up on YouTube. And thank you very much. Greg All right. Great seeing you. Be well. Thank you. The only thing we can be short of about the future is it will be absolutely fantastic. If you enjoyed this episode of Into the Impossible, please subscribe, comment, share, and review. For a chance to win a free copy of our most recent guest's newest book, send a screenshot of your review to Info, at imagine.ucsd.edu.edu. We appreciate hearing from you and are always open to your suggestions for future episodes.

Into the Impossible is a production of the Arthur C. Clark Center for Human Imagination at UC San Diego in the Division of Physical Sciences. Directed by Eric Vary, Brian Keating, and Patrick Coleman, produced by Stuart Volgo. For more information, go to imagine.ucsd.edu. Find us on Twitter at Imagine U-CSD.