By: Aaron Erber  | 

Passion Leading to Success

There is something really special about the intertwining of passion and business. When financial success is a mere byproduct of this passion it is truly a win-win. This application that channels inner fulfillment lends itself to almost every field and endeavor. A great example of this would be one of the great mathematicians, James Simons. Although Simons founded Renaissance Technologies and is one of the most successful hedge fund managers of all time, he is known for his preferred passion for math, with his title being “Mathematician.”

James Simons was born in Newton, Massachusetts, and had a mind for math from the outset. At just four years of age, Simons intuitively understood Zeno’s paradox by proposing that a car would never run out of gas if every time it needed to move it just used half of the gas it had left (with the only problem being that it wouldn’t travel too far). Simons continued his mathematical pursuits throughout his teenage years and later at MIT. Simons then went on to study at UC Berkeley and co-developed the Chern-Simons theory, which has contributed to the fields of mathematics and physics.

After working for the NSA cracking codes and heading the math department at Stony Brook University, Simons found himself getting involved in the stock market. He started trading, getting investors and even recruited a graph-model maker for his business. Simons recognized that commodities charts seemed to have some shape and that they didn’t look random. However, after creating some models for the commodities, Simons and his partner put them aside while they focused on fundamental trading. After some time, Simons went back to his passion and mathematical roots by starting to build mathematical models for the market. After constantly working on and updating these models for eight years, Simons started Renaissance Technologies which fully traded off of these mathematical models. Simons also brought in Ph.D. mathematicians, computer scientists, astronomers, and other academics that were able to analyze data. These models really revolutionized quantitative trading — many quantitative trading firms have emerged since.

Quantitative trading uses mathematical models to understand trends in the market and how to capitalize on them. As it gathers more and more information it will be able to analyze which variables in the market have a significant effect on a given security. This can lead to many correlations, such as perhaps the price of a drill and gold. If such a correlation were to exist and is recognized by the model, the model might suggest the firm to buy gold when the price of a drill increases or vice versa.

To this day, Renaissance Technologies is the most successful hedge fund in the world. Its largest fund, the Medallion Fund, has generated over $100 billion in profits. All of this was started by passionate people, who applied their passions to a field that they can analyze. James Simons avoids the limelight and infrequently gives interviews, yet in the few that he has given it is amazing to listen to the way he speaks and to his messages. You would never believe that he runs and created the most successful hedge fund. He loves math and applying it to other parts of his life. He has extended this passion to the good of others as he runs a charity that donates to math and science teachers across the country. 

It isn’t stated that he used passion to create wealth, but it is certainly implied. He surrounds himself with people who are academics and donates to perpetuate his love of mathematics and science. Success to James Simons has been loving what he does. When asked whether he is more proud of his success in the academic world versus what he has accomplished in the financial world he said: “he was proud of both.” This simple answer sheds light on this idea. To Simons, it was about his enjoyment and impact, not necessarily the monetary effect. He is an example of “love what you do, follow your passions, and success will be your reward.”


Photo Credit:  Pixabay

Photo Caption: Being passionate is the most important thing