Who is the richest stock trader in the world?

The current richest trader in the world is Jim Simons with a net worth of $28.6 billion according to Forbes making him the 47th richest person in the world. His wealth was earned by founding the hedge fund Renaissance Technologies Corporation and the money management fees he generated through the industry’s best returns on capital for his clients and the capitalization he made on his own money invested in his Medallion fund.

Jim Simons Fund

In 1982, Jim Simons, a 40-year-old retired math professor, founded the hedge fund Renaissance Technologies and staffed it with mathematicians, computer scientists and physicists to pioneer the world of algorithmic trading. Since 1988, Jim Simons’ Renaissance Technologies Medallion Fund has averaged +66% per year and made over $150 billion in capital market profits.

The most amazing thing about Jim Simons’ feat of mastering the financial markets is that he never took a finance course, took no interest in business, and hired people outside of Wall Street to work in his hedge fund. His team brought a new perspective to the world of trading by looking at it with a new perspective and through the filter of math and not predictions, egos or opinions.

Jim Simons Trading Strategy

Renaissance Technologies specializes in systematic trading using quantitative models derived from mathematical and statistical analysis. The Medallion Fund was established in 1988, it began using a better and broader version of Leonard Baum’s mathematical models, which were further improved by algebraist James Ax. He explored the correlations that could be used to create an edge to profit from. The Medallion fund was named by Simons and Ax after the math prizes they had both won.

The return of Jim Simons

The Medallion Fund has the best record of consistent long-term returns in history, returning over 35% annualized over a 20-year period. From 1994 to mid-2014, it averaged an annual return of 71.8%. No one else even comes close to long-term returns, not Warren Buffett, not George Soros, not Paul Tudor Jones. Jim Simons is a giant in the land of the greatest traders.

Even after a management fee of 5% and a performance fee of 44%, which is much higher than the standard management fee of 2% and 20% performance fee, the Medallion Fund has still generated outstanding returns. 40% per year net after expenses since its creation in 1988. .

They were so successful that they had to close this fund to new outside investors. It now only trades the capital of current and former employees and partners. To keep the size of the fund stable, they now distribute annual gains to avoid further compound growth. $10 billion seemed to be the liquidity cap for their systems ability to trade without moving their markets, because when trade sizes get too large, a fund can become the market.

From 1988 to 2020, the Renaissance Technologies Medallion Fund has grown from $20 million to over $10 billion in assets under management.

Renaissance Tech Medallion Fund Returns: 1988-2020:[1]

Year/Net returns after management and performance fees.

1988 +9%

1989 -4%

1990 +55%

1991 +39.4%

1992 +33.6%

1993 +39.1%

1994 +70.7%

1995 +38.3%

1996 +31.5%

1997 +21.2%

1998 +41.7%

1999 +24.5%

2000 +98.5%

2001 +33%

2002 +25.8%

2003 +21.9%

2004 +24.9%

2005 +29.5%

2006 +44.3%

2007 +73.7%

2008 +82.4%

2009 +39%

2010 +29.4%

2011 +37%

2012 +29%

2013 +46.9%

2014 +39.2%

2015 +36%

2016 +35.6%

2017 +45%

2018 +40%

2019 +39%

2020 +76%

Jim Simons retired at the end of 2009. The fund is now managed by Peter Brown, a computer scientist specializing in computational linguistics who was hired by Renaissance in 1993 while working at IBM Research. Simons remains a non-executive chairman and still has money in his funds, mostly in the incredibly profitable Medallion black box strategy. As measured by his return performance, Jim Simons is currently and the best fund manager and trader on earth based on his numbers. Renaissance currently has over $110 billion in assets under management, most of which is capital from company employees.

It seems that math and computer science are the most important tools for any trader to master by these results.

Jim Simons pictured here.

Gleuschk, CC BY-SA 3.0 via Wikimedia Commons

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