The Man Who Solved the Market

Zuckerman, a Wall Street Journal reporter, writes the history of Jim Simons and Renaissance Technologies, whose Medallion fund produced returns of roughly sixty-six percent annually before fees over three decades, which is the best record in the history of investing. The biographical material covers Simons' mathematical career, including his work on differential geometry and the Chern-Simons theory, his code-breaking work, and his decision to leave academia for trading.

The firm's development is the substantive material. Zuckerman documents the early failures, the recruitment of mathematicians and scientists rather than of people with financial backgrounds, the accumulation of clean historical data going back decades which was itself a major undertaking, the shift from human-interpreted signals to fully automated systems, and the contributions of specific individuals including Leonard Baum, James Ax, Elwyn Berlekamp, Peter Brown and Robert Mercer.

Zuckerman is explicit that he could not obtain the strategies and that nobody outside the firm has. What he establishes is the structure: many weak signals combined, very short holding periods, enormous transaction volume, leverage applied to small edges, and the decision to cap Medallion's size and to return capital rather than degrade returns.

The outside fund available to investors has performed unremarkably, which Zuckerman covers and which is the practical caution. The political material about Mercer's funding of political campaigns occupies substantial space and is unrelated to the investing. The book cannot explain how the returns were produced, which limits it to being the best available account of the institution rather than of the method.

Special writer, The Wall Street Journal; three-time Gerald Loeb Award winner

The Man Who Solved the Market is the definitive account of Renaissance Technologies, and The Greatest Trade Ever is the standard narrative of Paulson's subprime short.

The Wall Street Journal