This publication spoke to the author of a book about a person who opened up investment to the often misunderstood world of quantitative approaches - aka "quants".

Family office consultant and regular Family Wealth Report commentator Joe Reilly recently caught up with Gregory Zuckerman to talk about his book The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution.

Joe Reilly:  Ok, so we knew Simons did well, but not that well. Some 66 per cent a year for thirty years would make him one of the greatest wealth creators of all time. How is he not a household name like Rockefeller or Gates?
Gregory Zuckerman: Jim Simons and his team are the greatest money makers in the history of modern finance (notice that I call them money makers, like you did “wealth creators”. One can debate whether they are traders or investors). But they are also the most secretive. They've had no need to boast or share details about their returns. So it's been hard for journalists and others to write about them. For decades they only invested their own money, not the money of outsiders. Even more important, they haven't wanted a hint of their approach to leak out, given how competitive the business is. And frankly, they share very different personalities from Buffett and the others. They don't watch CNBC or Fox Business. So they have zero interest in being featured by them. Perhaps most important, they're quants. It's a very challenging area for journalists to write about in a compelling way for the average reader. Trust me that was the challenge I faced and I almost gave up several times along the way.

I can’t imagine this was an easy book to write?  How did you overcome the resistance of people to speak?
Everyone I spoke with had a different motivation for speaking. But I think at the end of the day, they realize they were involved in something remarkable, an accomplishment never before seen in the world of finance, and one that even they wanted to share. The most unlikely people - mathematicians and scientists who mostly don't care for the world of business and investing -- are the ones who solved the market. They knew they did something special and I think part of them wanted to speak about it.

There is a lively debate among folks I know in the business right now over what the killer edge was for Simons.  I have heard many theories over the years, some bizarre, yet your book lays out a case that it was mostly lots of trial and error.  What do you think his real edge has been?
My book lays out over a dozen edges, maybe 20 if you add them all up. Renaissance hires much better talent than anyone else. They motivate employees in better ways. They manage employees in different ways and create innovative ways for them to work together. They use leverage in a creative way. They hide their signals so their trading can't be detected. They are humble about their models. They do mid-frequency trading and, as such, have less competition than one might expect. There's more in the book. 

One of the reasons why Buffett is so well loved is that there are practical lessons you can take away from his investment style. Are there similar lessons the average investor can learn from Simons?
Sure - first and foremost, don't try to compete with Simons and his colleagues. Meaning if they are focused on two-day, short-term patterns you need to hold investments much longer.  And don't fall for investment stories. Simons and his team don't even know what stock symbols stand for. Most important, one needs to have a system or a set of rules, like they do, rather than relying on intuition and judgement. That just doesn't work anymore. 

How would you distinguish RenTech from some of the other well known quant players like Two Sigma, AQR and Bridgewater?
They're very unique. They focus on short-term patterns yet they're not high-frequency. Two, Sigma and PDT do a lot of that but most others don't. Bridgewater isn't even a quant firm. I have no idea why people think it is, but most do. AQR is a different kind of firm, with an orientation in factor and other investing. Renaissance is different in so many other ways too, from its embrace of non-intuitive signals to how it avoids silos (eg firms like Two Sigma). It's all one model, which is rare in the quant world.  

You spent two years doing a deep dive into this firm and have been writing about the financial world for over twenty years now.  How has the hedge fund world changed?  Are quant funds going to dominate the space in the future?
It's just harder than ever to get an edge or an information advantage. Regulators and other factors have leveled the playing field. It's a different world since I started. It's why I wanted to write this book - Renaissance is the last firm I could identify with a consistent ability to beat the market with a high Sharpe ratio. I'm not sure quants are going to dominate, but they do have an edge.

Is Simon’s philanthropy very data driven or is he more of an old fashioned cause philanthropist?
It's definitely data-driven. He's a big believer in the approach, though perhaps not as much of a stickler as he is in investing.