Book Review: The Man Who Solved the Market

The Man Who Solved the Market - How Jim Simons Launched the Quant Revolution by Gregory Zuckerman

Jim Simons was a mathematician who became a quantitative investor. The book described how he wanted to derive patterns from the stock market, like a mathematical model. Unfortunately, there was no mathematical model to reproduce the stock market movements, but he managed to find some patterns in trades that have a short duration.

There were a few things mentioned which I think contributed to his success:
- He was lucky. He had many failed trades before he got lucky. \
- He had access to a lot more resources (i.e. money) which gave him an edge over other traders. He earned above average salary before he became a trader. He had access to computers, software engineers, long before computers became mainstream. This allowed him to analyse data faster and more accurately than others.
- He also bought data from other financial institutions, to add more dimensions to his data analysis. - The pattern he followed was to follow where the action is, i.e. when a stock has a lot more buying/selling action than normal, it means that there is something to follow.
- As his fund became bigger, his trades have substantial volume to move the markets, which in turn creates signals that other traders pick up and follow, and just nice, that allows him to offload his trades and take profit.

After reading this book, I am more convinced that having money, and a lot of it, gives you an edge in knowledge, resources, wealth and in turn, more wealth. Trend following only works when you are setting the trend, not following it.