Which is the best app for someone who doesn’t know anything about investing?

[karlmarx]

Hi Karlmarx! Good to see your post!

Just to side track that Rentech's Medallion is an Enigma... the open fund run by Rentech actually didn't do as well which they explained it by saying it's different strategy

Just some simple maths:

    "Since 1988, his flagship Medallion fund has generated average annual returns of 66% before charging hefty investor fees—39% after fees—racking up trading gains of more than $100 billion. No one in the investment world comes close. Warren Buffett, George Soros, Peter Lynch, Steve Cohen, and Ray Dalio all fall short."
    — ‘The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution’ by Gregory Zuckerman 2019

Let's just conservatively say he made this $100b and withdrew the capital. Every year they made money but 2020 alone they made whopping 76% ie $76b. Simplistically their current perf fee of 44% would have netted them conservatively $77.4b past 30 years. And I'm being very conservative without including any capital. I'm not sure I heard of many ultra-rich RenTech employees except the big man himself. But at this compounded rate the big man would be the richest guy on earth within 10 years conservatively.

Let's see. I wouldn't invest in such scheme unless I get a 44% payout of the profit every year as well

https://en.wikipedia.org/wiki/Renaissance_Technologies
https://www.efinancialcareers.sg/news/fi...chnologies

Good to see you too Specuvestor! I was told I've been missed. 

My recollection from the book by Gregory Zuckerman is that the Medallion Fund's returns are high, but its strategies are not (yet) scalable. The open fund operates in more liquid markets/instruments to be able to deploy massive capital, but the returns are far from the Medallion. So while the annual returns from Medallion may be spectacular, I think WB is still unmatched in terms of compounding returns.

Also mentioned in the book is that the prize of being an RT employee is the opportunity to invest in the Medallion. Since the beginning of his career, Jim Simmons has been sharing the spoils with highly talented people who are able to boost the fund returns.

In another thread where gambling is discussed, it should also be noted that there are also individuals who have excelled at gambling. Edward Thorp not only counted cards in blackjack, he also calculated the speed and time of a roulette ball during its spin! Thorp's methods appealed to him because he was both a mathematician and a physicist. 

With regards to fundamental and technical investing, my own unchanging view is that it looks easy only because the concept being sold to the public is way too simplified. WB may perhaps be the biggest perpetuator of such a view (and I am just as much a victim to this seduction).

He likes to present students with a scenario to pretend that they can own a stake of their top 3 classmates earnings, and asks them who they will choose. In case the lesson flies over the head of investors; this is what you do when you are investing.

But what is apparent to the students, but much less so to investors, is that the students know their classmates very well. Meanwhile investors most of the time not only do not know their target companies intimately, they also do not know who their target companies are competing with. So there's no way the investor can make a wise choice, until he/she has seen all the companies (students) in the same market (classroom).

[i4value]

Investing based on fundamentals rely on business performing well in the future. I tend to think that if you don't understand how business works, you will have a tough time trying to invest based on fundamentals. If it was so easy to run a business, all entrepreneurs would be millionaires. The reality is only a handful make it. So understanding how business works is more than just reading their annual reports.

I think technical has the lure because many of the "rules" are visual. You see charts, trendlines, etc and this makes everyone think it is "easy".

[specuvestor]

Just saying that if Medallion can make at least $76b in 2020 I'm not sure what is the definition of "not scalable" Berkshire on the other hand the returns are moderating vs S&P500 as expected.

Agree Buffett sometimes make investment look too simple cause he is very good at simplifying complex issues. However in the Annual meeting 2 years ago (?) discussing automobile sector and also when he talked about ETF, he did mention that investment is hard. I also think he doesn't talk about Structure and temperament enough. He and Munger are brutally logical (which might not be a good thing for their family)

[Wildreamz]

Just saying that if Medallion can make at least $76b in 2020 I'm not sure what is the definition of "not scalable" Berkshire on the other hand the returns are moderating vs S&P500 as expected.

Agree Buffett sometimes make investment look too simple cause he is very good at simplifying complex issues. However in the Annual meeting 2 years ago (?) discussing automobile sector and also when he talked about ETF, he did mention that investment is hard. I also think he doesn't talk about Structure and temperament enough. He and Munger are brutally logical (which might not be a good thing for their family)

The cap is around $10bil. So not sure, if the "$76 bil in 2020" number is accurate: https://t1mproject.medium.com/how-the-me...a254c43eb7

By not scalable, probably means he can't compound returns; hence, the cumulative returns only grow linearly instead of exponentially. If it's compounded at 66% for 10 years, $10 bil will become $1.6 Trillion. If it's distributed to shareholders every year, the total returns will "only" be $66bil after 10 years.

In this regards, Buffett's record is much more impressive, since returns at Berkshire is compounded ("scalable"). His higher net worth than Simmons (even after hefty fees) is a testament to that.

[specuvestor]

yes just saying the compounding maths will make a lot of their employees billionaires and the numbers are non audited I believe which cannot ascertain the AuM, while the audited public funds was mediocre. With such return on PA one also wonder why bother to have public funds. Buffett on the other hand has 99% of his wealth in the public entity.

Credible founder, black box, positive return year in year out, lack of cashflow transparency, defy other comparables eg quant funds... the script just sounds familiar. Jim Rogers say Saudi reserve is 250b barrels 50 years ago and probably 50 years later. Diff is we actually see the oil ie cashflow coming out.

But what do I know. I'm just an observing spectator looking at the duck

-The Medallion fund has been closed to external capital since 1993, and analysis of the flagship fund’s annual returns suggests that significant distributions are made each year to keep the fund about the same size. For example, despite the fact that Medallion reported annual net returns above 29 percent every year between 2010 and 2018, the fund’s assets under management stayed at about $10 billion throughout that period.

“They are closed, and whatever profit they make, they pay out,” Harvey notes. “With a lot of funds that have a good idea, they take on extra money, and as that money is applied to the same strategies, the profitability goes down.”

The theory that Medallion’s strategy is capacity-constrained could also explain why Renaissance Technologies’ other hedge funds — Renaissance Institutional Equities Fund and Renaissance Institutional Diversified Alpha — don’t follow the same strategy as Medallion, as Zuckerman reports. The two funds, which unlike Medallion have allowed outside investments, have delivered returns that are “relatively mundane and in no way comparable to Medallion,” according to Cornell’s paper. (For example, the Financial Times reported that RIEF and Diversified Alpha were up 8.5 percent and 3.2 percent, respectively, in 2018; Medallion was up 76 percent.)

“The other two funds are doing well, but it’s nothing out of the ordinary,” the UCLA professor clarifies by phone. “They’re like going out into my backyard and seeing a coyote and a raccoon.”

As to the Medallion fund?

“It’s like I saw a T. rex in my backyard,” Cornell says. “I just don’t get it.”

https://www.institutionalinvestor.com/ar...sor-claims

[karlmarx]

Ah, you're saying that Medallion's returns are sus! Well I guess only insiders will know whether it's T-rex or a raccoon.

Personally I'm not interested in the quants approach to investing/trading. Maybe my choice of citing Medallion was a bad example, but I do believe there are those who succeeded in taking the quants approach.

[EnSabahNur]

My quick notes on the podcast interview between Goldman Sachs and Peter Brown, CEO of Ren Tech

Nothing groundbreaking, good to listen if you are not so familiar with Ren Tech

He did take a dig at Seth Klarman at the very end though.

https://adragonhoard.blogspot.com/2023/0...-with.html

[weijian]

My quick notes on the podcast interview between Goldman Sachs and Peter Brown, CEO of Ren Tech

Nothing groundbreaking, good to listen if you are not so familiar with Ren Tech

He did take a dig at Seth Klarman at the very end though.

https://adragonhoard.blogspot.com/2023/0...-with.html

I think the market is big enough for both Peter Brown and Seth Klarman - so both are right.

Peter Brown's Ren Tech looks at short term (up to day kind) market inefficiencies and has hundreds of thousand position turnovers daily. Seth Klarman doesn't and isn't going to do that. Seth Klarman looks at markets and companies and decides whether they are over/under appreciated and make big bets on that. Ren Tech doesn't and isn't going to do that.

Also, we have to remember that value investing only works, because it doesn't work all the time. Ditto growth investing...Maybe Ren Tech's algorithms are the exception (but everyone has to keep evolving to stay relevant)

P.S. A little biased towards Seth Klarman (for obvious reasons)

[specuvestor]

Chess is constrainted in 64 boxes of possibility

If we able to precisely define human's selfishness, greed, fear, irrationality into constraints then computing might work. Even ETF unintended consequence of chasing market cap is raising questions on how intelligent is this self-feeding bias, basing off efficient market theory.

[EnSabahNur]

Jim Simons has passed away

https://sg.finance.yahoo.com/news/jim-si...09458.html

Jim Simons, the billionaire investor, mathematician and philanthropist, died on Friday in New York City, according to his foundation, the Simons Foundation. Simons was 86 years old.