# Renaissance Technology 1. When Simmons worked at IDA it was described as an "idea factory". Everyone had the same title and things were specifically structured to foster openness. (pg. 25) 2. His ability to identify the most promising ideas of his colleagues was especially distinctive. He was a terrific listener. If you have a pile of 50 ideas, 49 bad and 1 good, he would find the 1 good. 3. Simmons struggled to get things off the ground even in his first go at things having the renowned mathematician Lenny Baum on his team. 4. A teammate (Straus) started collecting and organizing all sorts of different data sets just to have on hand. This was like a little bet just in case they ever needed them. They would. This minimized the friction of trying new ideas. 5. In his head Simons was all in on giving to control to models, but it took years for his heart to be able to handle it. In some ways he never could (even as late as 2020 he still had a sizable amount of money being actively managed by a veteran trader). Pg 116 6. For all the brainpower the team brought on, the model usually focused on two simple and commonplace trading strategies. Sometimes it chased prices (momentum) and other times the model wagered a move would reverse (mean reversion). Lesson: Start simple. 7. Trending (momentum) strategies require and investor to live through tough periods when trends ebb or can't be identified, because new ones are right around the bend. 8. Laufer made an early decision that would prove extremely valuable. Employ a single trading model rather than maintain various models for different investments and market conditions. A single model could draw on more data and correlations across different asset classes. Narrow, individual models can suffer from too little data. 9. Rival trading firms often put researchers in silos, sometimes having them compete with each other. Simons insisted on a single, monolithic trading system. All staffers had access to the entire system and could easily run experiments. 10. One of the biggest advancements for the firm was automating capital allocation and risk management. If a strategy wasn't working or market volatility surged, Renaissance's system tended to automatically reduce positions and risk. Learning: Renaissance first and foremost needed to *stay alive*. By staying alive they accomplished unprecedented results over the long run. 11. They focused heavily on the areas they understood best, while slowly expanding into other markets (with small teams and less exposure). It took years to transition from just trading futures (their sweet spot) to stocks. 12. At one point a trusted strategy - if certain stocks rallied in previous weeks, buy more of these shares under the idea that this surge would continue - started bleeding money. It had worked for years, but in 2000 when the dot com bubble burst this strategy completed failed as a bear market had started. They lost 300 million in 3 days. In a market crisis Simons tended to pull back on the reliance of certain signals (to the chagrin of researchers). 13. In July 2007 when the system was struggling (lost 1 billion), Brown (current CEO) wanted to *add* positions. Simons overrode the decision and forced them to sell. "Our job is to survive. If I'm wrong we can always add positions later". 14. --- Date: 20231007 Links to: Tags: References: * The Man Who Solved the Market