In a podcast by Goldman Sachs, they interviewed Peter Brown, CEO of Renaissance Technologies, the famous quantitative hedge fund. Here are some interesting points.
- the strategy of their funds is to maximum returns for an acceptable amount of risk (which they focus on controlling) and he thinks the S&P 500 is not a great mix of risk vs return.
-made efforts to automate as many back office processes as possible when he took over. Is trying to get rid of Excel use in the firm
-made sure they had reserves to ride out big storms in the financial markets
-during Covid, they didn't trust Zoom's security and built their own system to communicate.
-feels creativity and esprit de corps is better working in the office
-hires people with no finance background
-encourages collaborations, everyone is paid from same pot of money
-builds trading systems and let them run, with as little human interference as possible
-took a long time to get their systems and processes right
-focus on what they do well
-once raised the pay of a colleague, so that he can contact the person in the middle of the night
-once attended a talk by Seth Klarman at Harvard. Klarman says investing takes creativity and finesse, which he says a computer can't have.
Peter pointed out that when Garry Kasparov, the chess Grandmaster, beat Big Blue the IBM computer, in a chess match, he said pretty much the same thing. In a second match, Big Blue "crushed" him.
Enjoy.
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