From geometry to hedge funds to the theory of computing

 

Jim Simons lecturing

“Mathematical models, miscast as villains in some accounts of the current financial crisis, have been responsible for keeping the hedge funds of at least one carefully watched firm spectacularly profitable. In a classic case of giving back, profits from those funds are now being used to benefit the discipline from which the models emerged”.

In 1968, James Simons was chairman of the mathematics department at Stony Brook University. For his seminal work on differential geometry, especially his discovery with Shiing-Shen Chern of the so-called “Chern-Simons invariants”, he was awarded the 1976 Oswald Veblen Prize by the American Mathematical Society. This work had made him a household name among mathematicians, and physicists, particularly string theorists. In 1978, he left academia to run an investment fund that traded in commodities and financial instruments on a discretionary basis.

He eventually founded Renaissance Technologies’ hedge funds, which employs mathematical models to analyze and execute trades. Renaissance uses computer-based models to predict price changes in easily traded financial instruments. These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions. To do that, Renaissance mostly employs grads and post-grads in mathematics, physics and statistics. No financial background is required. His fortune is now estimated at $8.5 billion.

Jim Simons is now a benefactor for the mathematical and computational sciences, but also for research on autism. After giving (back) millions over the years to Stony Brook University, UC-Berkeley, MSRI, MIT, CAMS, and the IAS among others, he recruited my good friend and fellow co-founder of the Banff International Research Station, David Eisenbud, to be the Simons Foundation’s director for mathematics and the physical sciences.

Ghoussoub and Eisenbud at BIRS

Asked how his ten years as Director of the Berkeley based Math. Sci. Research Institute (MSRI) might have prepared him for this position, Eisenbud replied: « the two activities are inverses of one another. At MSRI, finding the money to support mathematical programs was a constant challenge. At the Simons Foundation, the money is there; the question is identifying the areas and people who will put it to the best possible use.»

When was the last time you heard this kind of talk?

What’s first on Eisenbud’s menu?

A New Institute for the Theory of Computing. It will cover everything from complexity theory, algorithms, machine learning, randomness and pseudo-randomness, zero-knowledge proof, computer networks, to computer vision, robotics, and streaming algorithms.

Jim Simons “can see for miles and miles…”

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