The universe of “business books” is a large and diverse one.
There are
exposes of shady businesses and businesspeople – one of the most popular subgenres
– books that espouse or criticize some kind of economic ideology, books about
markets and their eccentricities, books about business dynasties or the clash
of financial titans, and books that “forecast” future trends.
There are
likely other subgenres that I’ve missed, and there are books that combine elements
from all of the above.
They can all
be interesting, entertaining, and/or enlightening. But I’ve found that business
books often fall short of the expectations that their advance publicity create.
I read one
recently that didn’t. In fact, The Man Who Solved the Markets: How Jim Simons
Launched the Quant Revolution, by Gregory Zuckerman, exceeded my expectations.
The title
captures the book’s objective: to chronicle the development of “quantitative
trading,” trading driven by sophisticated computer algorithms, as practised at
Renaissance Technologies Corporation, the firm that was spearheaded by the main
character in Zuckerman’s book, Jim Simons.
The book. published in 2019, is
heavily character driven.
It starts,
after some interest-whetting preliminaries, with a 14-year-old Simons “trying
to earn some spending money” at a garden-supply store in Newton, Massachusetts.
The first
few chapters are about Simons’ childhood and early adulthood. They depict the
origins of his driven personality, his brilliance at mathematics, intense curiosity,
and deep-seated interest in money.
Zuckerman
tells us about his early academic career in mathematics and his time at a secretive
government agency charged with decoding encrypted Soviet intelligence.
He also
describes Simons’ first tentative steps into the world of investing, including the
early reversals that created his resolve to find a method of investing that
left the critical decisions to a machine process and removed the human element.
“I don’t
want to have to worry about the market. I want models that will make money as I
sleep,” Zuckerman quotes Simon as saying. “A pure system without humans interfering.”
As the book
moves into the period when Simons is concentrating his attention on Renaissance,
the cast of characters broadens to include the many people – mostly scientists
and mathematicians – who joined him in his quest.
Some only
aligned themselves temporarily with the quirky and sometimes difficult Simons.
Others – notably Robert Mercer – remained and became mainstays at Renaissance as
it grew and developed, and eventually became massively successful.
Almost all
of them are vividly but succinctly described, with a handful of telling details
creating a vivid, nuanced description of their complex personalities.
Collecting all
the details Zuckerman deploys in his narrative couldn’t have been easy.
As he notes
in the introduction, Simons and his coterie were intensely secretive, believing
that widespread knowledge of their trading strategies would empower their
rivals and blunt their own effectiveness.
A lot of
reporting time must have been spent gathering info on Simons and his colleagues,
but Zuckerman uses the information with economy and precision.
Business
books sometimes end up feeling bloated and repetitive, with the authors
seemingly feeling compelled to include every anecdote, fact, or statistic they
uncovered.
Zuckerman,
on the other hand, gives us just enough information to understand the personalities
and the situations they’re involved in.
The Man Who
Solved the Markets is a riveting read and, at 326 pages, doesn’t outlast its
welcome.
He also
negotiates the technical aspects well, giving enough detail about the
theoretical foundations of Renaissance’s trading strategies to make their
novelty and significance understandable, but not so much that it slows down the
flow of the narrative.
The book’s
subject might seem esoteric, but it’s a story whose significance extends beyond
the boundaries of “business” and deep into the fabric of our everyday lives.
Simons’
company use of data, algorithms and machine learning in investment anticipated and
influenced the spread of the techniques to other aspects of the economy and
society.
“Renaissance
anticipated a transformation in decision-making almost every business and walk
of life,” Zuckerman writes. “More companies are accepting and embracing models
that continuously learn from their success and failures.”
Simons and
his company were, in essence, pioneers of the emergence of data and algorithms
as key factors in many aspects of contemporary life.
Their
innovations also created such extreme wealth that it enabled some of the
players at Renaissance to have a big impact on politics in the U.S. and elsewhere.
The most
notable – and disturbing – example is Robert Mercer, a computer scientist who
eventually replaced Simons at the top of Renaissance as co-CEO along with Peter
Brown.
Long an exponent
of libertarian, anti-statist views, Mercer, along with his daughter Rebekah, played
a pivotal role in electing Donald Trump as President of the United States, both
financially and tactically.
“Between the $26 million he had spent on
Republican causes, his daughter’s insistence that Trump tap (Steve) Bannon and (Kellyanne)
Conway to resuscitate his flailing campaign, and Breitbart News’s unflinching
support for the Trump campaign, Bob and Rebekah Mercer were among the most
responsible for Trump’s shocking victory,” Zuckerman writes.
Simons, on
the other hand, donated to the Democratic Party and spent much on his fortune
on philanthropic spending relating to science, mathematics and education.
Ultimately,
the public impact of these secretive men and their esoteric, computer-driven
approach to investing was enormous.
The broader
significance of the story of Simons, Mercer and the innovations that created
their enormous wealth and influence, and the compelling way it’s told, combine
to make The Man Who Solved the Market and riveting and worthwhile read.
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