The reality is that most extremely wealthy people are very far on the right tail of intelligence. People exist that can predict the market, they are just very rare.
While mister Simons might not be the best example, I sometimes feel that you can easily beat the market if you are well connected and have access to information that can move the markets before anyone else. For example how much know-how do you need to beat the market if you're a US senator? You know before anyone else what's going to happen regarding policy and can plan accordingly.
There were rumours about this even regarding Simons' Medallion fund. About how all the talk about math and algorithms was just a red herring to divert from the fact that it was mostly insider knowledge that did the heavy lifting. Alas these rumours were never confirmed as far as I know.
You have no clue, sorry. Insider trading cannot generate the consistency and returns as RenTec does. Even insider traders lose money if the market does not react as expected.
There are tons of strategies out there that does not involve insider trading or fraud. One such example is simply shorting Bitcoin at the market open whilst going long QQQ. This has paid a lot , like today , in which Bitcoin is down 3% and QQQ down a tad. There are people running this strategy now which despite being public knowledge, is still profitable. Shorting bitcoin during market hours, in fact, realizes all of the downside of Bitcoin without the upside from shorting it.
There are other strategies like this. now imagine you assemble the greatest minds in the world and tons of computing power to find many strategies and run them 24-7.
even small funds, this was the investment thesis at the hedgefund that my dad worked for circa 2006-2008. they promised super dampened volatility but, as you might guess, they went belly up during the great recession.
The cause? Someone, somewhere in their financial product chain was not being faithful about the volatility of the asset they were basing their whole model on so when the market went tits up they did to.
There are US senators that make millions by using their spouses as intermediaries to buy and sell shares. Insider trading as a crime only exists for those that are not well connected enough
Those senators just trade on their own behalf because its not illegal to.
Why would they involve their spouse? If it was illegal for them to trade but their spouse made a trade it would be trivial for the SEC to trace it back to intel they learned.
You are right that enforcement is weak, but that is not because it is legal. The notion that members of Congress can legally trade on knowledge derived from or used in the performance of their duties has not been true for over a decade at this point.
> Simply put, insider trading is illegal. But, if you are a member of Congress, there is a loophole. Members of Congress and their families are allowed to trade stocks with almost no limitations. There isn’t a limit on lawmakers trading stocks based on classified information nor is there oversight regarding the trades that lawmakers are allowed to make based on other information they are privy to as part of their job. This is in glaring contrast to the strict insider trading laws that ban the same kind of behavior of everyone else in the county.
Not sure why this was downvoted. IQ almost certainly plays a large role. Why do these top quant firms so aggressively filter for IQ, like puzzles and test scores?
I’m doubting. Simons might be an exception given that he got a PhD in maths at age 23. He was always smart, and I think he was bound to excel in whatever field he chose.
But people don’t need be extremely smart to get wealthy. Just executing well on a simple idea can make one extremely wealthy, and there’s considerable luck involved. There’s also the need to have persuasive skills, connections, charisma, and all that to convince people to follow their vision, aka Steve Jobs and Elon Musk.
