By Stephen DeAngelis
James Harris Simons, a math professor turned hedge fund founder who recently passed away, once stated, “Past performance is the best predictor of success.” Better known as Jim to friends and colleagues, his past performance was certainly a predictor of his eventual success. In 1958, at the age of 20, he received a bachelor’s degree in mathematics from MIT and, three years later, he earned a PhD in mathematics from the University of California, Berkeley. In 1976, he won the American Mathematical Society’s Oswald Veblen Prize, for his work in the field of geometry.[1] Journalist Gregory Zuckerman notes, “A mathematician who became one of the most successful investors in modern financial history, has died at age 86. A cutting-edge code breaker and geometer, Simons helped pioneer a revolution in trading, embracing a computer-oriented, quantitative style in the 1980s well ahead of the Wall Street crowd. He and his team employed trading algorithms and artificial intelligence to outperform the market — and the likes of Warren Buffett and George Soros. Later, Simons became a political donor and an influential philanthropist in the worlds of science, health and education. Simons, the son of a Boston shoe-factory executive, developed an early passion for mathematics and ignored the advice of the family physician who urged him to steer clear of the field because he wouldn’t make a living. The warning proved misplaced.”[2] At the time of his death, Simons was worth a reported $31.4 billion, making him the 51st-richest person in the world.
His journey to becoming one of the world’s wealthiest individuals took a circuitous route. Wikipedia notes, “In 1964, Simons worked with the National Security Agency to break codes. Between 1964 and 1968, he was on the research staff of the Communications Research Division of the Institute for Defense Analysis (CRD of IDA) and taught mathematics at the Massachusetts Institute of Technology and Harvard University. After being forced to leave the IDA due to his public opposition to the Vietnam War, he joined the faculty at Stony Brook University. From 1968 to 1978, he served as chair of the math department at Stony Brook University. Simons was asked by IBM in 1973 to attack the block cipher Lucifer, an early but direct precursor to the Data Encryption Standard (DES). Simons founded Math for America, a nonprofit organization, in January 2004, with a mission to improve mathematics education in United States public schools by recruiting more highly qualified teachers.” As that brief bio confirms, Dr. Simons was a bit of risk taker. Journalist Jonathan Kandell reports, “The prizewinning mathematician abandoned a stellar academic career, then plunged into finance — a world he knew nothing about.”[3]
He might not have known the world of finance, but he did know mathematics. Kandell reports, “After publishing breakthrough studies in mathematics that would play a seminal role in quantum field theory, string theory and condensed matter physics, Mr. Simons decided to apply his genius to a more prosaic subject — making as much money as he could in as short a time as possible. So, at age 40, he opened a storefront office in a Long Island strip mall and set about proving that trading commodities, currencies, stocks, and bonds could be nearly as predictable as calculus and partial differential equations. Spurning financial analysts and business school graduates, he hired like-minded mathematicians and scientists.” Although his ambition to quickly make as much money as possible sounds greedy, Dr. Simons’ true desire was to advance science, mathematics, and education. Upon Dr. Simons’ passing, Thomas Sumner, a staff member at the Simons Foundation, wrote, “[Dr. Simons was] a legend in quantitative investing, and an inspired and generous philanthropist. Together with his wife, Simons Foundation chair Marilyn Simons, he gave billions of dollars to hundreds of philanthropic causes, particularly those supporting math and science research and education. In 1994, they established the Simons Foundation, which supports scientists and organizations worldwide in advancing the frontiers of research in mathematics and the basic sciences. Jim was active in the work of the Simons Foundation until the end of his life, and his curiosity and lifelong passion for math and basic science were an inspiration to those around him. He was determined to make a meaningful difference in the level of support that mathematics and basic sciences received in the United States, notably by sponsoring projects that were important but unlikely to find funding elsewhere. Over its 30-year history, the Simons Foundation’s work has led to breakthroughs in our understanding of autism, the origins of the universe, cellular biology and computational science. Jim and Marilyn’s giving continues to support the next generation of mathematicians and scientists at schools and universities in New York City and around the world.”[4]
Journalist Hank Tucker reports, “Simons was intensely private, and the specifics of the investing strategy that fueled his success remain mostly a mystery. He made his last public appearance in September 2023 at the 11th Annual Forbes 400 Summit on Philanthropy in New York. He and his wife Marilyn Simons were presented with the Forbes 400 Lifetime Achievement Award for Philanthropy and spoke about their charitable work with Forbes Editor-at-Large Maneet Ahuja. Jim credited Marilyn with being the initial driving force behind the Simons Foundation, which they founded in 1994. ‘I just made the money and Marilyn gave it away,’ he quipped on stage. That was likely true when they first began making charitable gifts. But in his later years Simons committed himself more personally to their charity.”[5]
In 2016, Simons told Forbes Magazine, “The whole economy is more and more dependent on quantitative skills, and we’re behind in teaching them.” He tried to rectify that situation. In trying to find a fitting conclusion to this in memoriam piece, I came across the words of an anonymous man eulogizing his late father. He said, “[He was] a man of few words, but when he spoke, his words held the weight of the world. His advice was always clear and straight from the heart, even when the truth was tough to hear. He didn’t sugarcoat life, he equipped us to deal with it.” I suspect Dr. Simons’ closest colleagues and family members felt the same way about him. He was a giant in the field of mathematics as well as a generous philanthropist. He will be missed.
Footnotes
[1] “Jim Simons,” Wikipedia.
[2] Gregory Zuckerman, “Jim Simons, a Pioneer of Quantitative Trading, Dies at 86,” Wall Street Journal, 10 May 2024.
[3] Jonathan Kandell, “Jim Simons, Math Genius Who Conquered Wall Street, Dies at 86,” The New York Times, 10 May 2024.
[4] Thomas Sumner, “Simons Foundation Co-Founder, Mathematician and Investor Jim Simons Dies at 86,” Simons Foundation, 10 May 2024.
[5] Hank Tucker, “Billionaire Jim Simons’ Last Interview: The Hedge Fund Legend On The Universe, Making Money And Giving It Away,” Forbes, 10 May 2024.
