This Lecturer Became Filthy Rich by Applying Mathematical Knowledge to Investing

Jakarta, CNBC Indonesia - A mathematics lecturer succeeded in becoming a billionaire thanks to his ability to apply his knowledge in the world of investing.

That figure is James “Jim” Simons, known as one of the most successful investors after founding a hedge fund with average annual returns of around 60%.

On 10 May 2024, Simons breathed his last in New York City. The founder of Renaissance Technologies died at the age of 86.

Renaissance Technologies is a quantitative investment management company (quant) that uses mathematics and statistics as its investment methods. Its most famous managed fund is named the Medallion Fund.

Between 1988 and 2018, Renaissance’s flagship Medallion Fund generated profits of more than US$100 billion and an average annual return of 66% before the company’s very high asset management fees.

Its annual profit was 39% after those fees, a record that surpassed the performance of Warren Buffett, George Soros, Peter Lynch, and other investors during that period. Nevertheless, the Medallion has not been accessible to the general public for years and only manages funds from Simons and his colleagues.

From Mathematician to Billionaire

Compared to other mathematicians, Jim Simons is better known as a hedge fund manager because he spent more time in the investment world.

Many people think that just working as a lecturer will not make one rich, let alone a trillionaire. This is reinforced by testimonials and discussions about lecturers’ salaries that have recently heated up. However, it turns out there is a figure who succeeded in becoming extremely wealthy despite only working as a teacher.

This is the story of James Harris Simons, alias Jim Simons, which can serve as a lesson on how a lecturer can have assets of US$30.7 billion or Rp482 trillion.

As a note, Jim Simons was a mathematics lecturer from the United States. For Simons, mathematics was already part of life. He always loved the subject that many people find very challenging. His love for mathematics led him to successfully graduate with a PhD from the University of Berkeley in 1961 at the age of 23.

His passion for mathematics continued into his career. He was recorded as a lecturer at Harvard University and once helped the US Department of Defense as a mathematical codebreaker. However, there was one thing that bothered him in his life journey, namely money.

In his autobiography The Man Who Solved The Market: How Jim Simons Launched The Quant Revolution (2019), Simons recounted that he needed more money for daily life and repeatedly sought ways to earn money. As a result, he founded a company called iStar using his mathematical abilities.

Through iStar, Simons sought to make money by mathematically researching and calculating stock exchange trading. This method succeeded in making him rich and opened up new business ideas in the investment sector.

In 1982, he founded the investment firm Renaissance Technologies. Here, Simons gathered many mathematics experts. They were all given similar tasks: creating trading models, analysing information, and making predictions about stock market dynamics.

According to an explanation from the Wall Street Journal, this approach became what differentiated Simons’ investment company from competitors. As a scientist, Simons turned the company into a laboratory. Everyone could share ideas and collaborate to achieve optimal results.

In the end, such tasks succeeded in making the company profitable. From then on, Simons’ name rose to prominence. Especially after Renaissance Technologies proved to generate abundant profits for investors. From 1988 to 2018, the company succeeded in delivering 39% annual returns.

As the owner of the company, Simons naturally became very wealthy. Forbes records that he had assets of US$30.7 billion or Rp482 trillion. With that wealth, he ranked 51st among the richest people in the world.

And all those efforts were carried out alongside his duties as a lecturer at various universities. So, throughout his life, he taught and also did business. To this day, his company still exists and is filled with many experts in mathematics, physics, and computers. They all work in the capital markets sector.

Now, Jim Simons has retired. In his remaining years, he was also active in philanthropic activities in the United States, donating a lot of money for the benefit of the community.