81–90 of 261 posts
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Uh, if all it took to beat the market was consistently rebalancing your portfolio everyone would be doing it. It takes more than that to consistently beat the market.
A lot of money managers are doing that. It's a tiny percentage, something like 2%. The reason that it isn't as common is because the time table is like 15-20 years, not 3-5.
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Just to make sure I understand you: the idea is that the excess returns of fund A above the index would be no larger than the under returns of fund B below the index?
Yes, but on a $ basis rather than a % basis.
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But how do you know these return numbers? Esp since as you say the fund has no outside investors? Who has audited these numbers and what is your source specifically? I‘m aware of Rentec for many years and also awed by the numbers but I‘ve always wondered where do people actually get them?
Every five - 10 years the up to date track record is provided to reputable third parties to curate publicity. For example, Bloomberg and WSJ. Generally speaking though, most firms with a track record like RenTech's prefer to keep it quiet because they don't solicit outside investment. In particular: RenTech likes to keep a handle on this publicity for the purposes of courting extremely good talent from academia and i…
Also, what Princeton Alpha offshoots? IIRC, Princeton Alpha was a PDT spinoff that closed due to poor performance. Maybe you mean Princeton/Newport offshoots?
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I think you've been drinking too much of the Warren coolaid. If you are American, vilifying wealth and building companies is quite a silly endeavour. This blame game mentality is counterproductive and will only restrict and impede your own financial success.
I mean what is the end effect of this though? Basically some smart people get very rich. Due to zero-sum game, other people lose. No benefit is derived in the real economy. The only possible benefit is increased liquidity... which really isn't that beneficial past a point right? I don't see the benefit. If you have a different angle I'd be glad to hear it.
Wealth is not zero-sum, it's created. Real GDP (i.e. adjusted for inflation) in the world has increased from ~$3.4T to ~$110T since the 1900s.
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It's an interesting idea, but in this case Fund B only came into existence after 15+ years of market beating performance by fund A. A funny thing from the recent book: One of Rentech's earlier employees spent his first few months there trying to figure out what the scam was.
Thanks, I didn't know that. Do you know if there were any other funds by him at the time? I could also create a dozen funds that do randomly different things and just close the ones that didn't do well to get me started.
He did have about 10 years worth of poor-to-decent results running other hedge funds before he found real success with RenTech. So it's not like this all came out of nowhere.
I use to service pools back in high school on the north shore of long island. And I remember doing Simons house, unbelievable property. The house keepers house was 5x bigger then mine..and the pool was massive, right on the edge of a cliff overlooking the long island sound. Sry if its offtopic but this read made me think of it!
Compare them with a Big N that has 10,000s of SWE’s. It’s a safe assumption that each engineer is individually less talented but even so, how do they iterate/experiment with such few employees?
Note that RenTec also runs two other funds that are larger than the Medallion Fund, but both under perform the index. On a completely unrelated note, if I were interested in creating a fund that appeared to have market beating returns for decades and I wasn't concerned about the legal consequences, here's one way I might do it: I would create fund A and B and seed them with some initial capital. For fund A, I would c…
Citations needed: last time I checked, their outside funds beat the index.
As for your conspiracy theory: their outside funds didn't exist until recently.
A great book about RenTec and Jim Simons came out recently: The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution. Everyone in the industry worships Simons and RenTec as practically god-like. What they've managed to do shouldn't really be possible and is out of this world. According to Wikipedia over a 20 year period between 1994 and 2014, RenTec realized an 71.9% annualized return in their inte…
> here's no outside investors in the Medallion fund anymore, so if it is a scam, they would only be scamming their own employees The "it's a scam" theory that I heard had nothing to do with it being a Ponzi scheme, instead it was about laundering high-tax income into low-tax capital gains while maintaining a plausibly deniable investment cover story. It didn't have to beat the market, it just had to beat regulators.…
Note that RenTec also runs two other funds that are larger than the Medallion Fund, but both under perform the index. On a completely unrelated note, if I were interested in creating a fund that appeared to have market beating returns for decades and I wasn't concerned about the legal consequences, here's one way I might do it: I would create fund A and B and seed them with some initial capital. For fund A, I would c…
> Note that RenTec also runs two other funds that are larger than the Medallion Fund, but both under perform the index. Citations needed: last time I checked, their outside funds beat the index. As for your conspiracy theory: their outside funds didn't exist until recently.