Olivia: The most successful investor in history isn't Warren Buffett. It’s a secret-hoarding mathematician you've probably never heard of. His fund averaged 66% annual returns for 30 years, generating over $100 billion in profits. And he did it by ignoring everything Wall Street thought it knew. Jackson: Whoa, 66 percent a year? That sounds completely impossible. That number is just staggering. How is that even real? Olivia: It is, and that incredible story is from The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman. Jackson: And Zuckerman is no lightweight. He's a top investigative reporter at The Wall Street Journal, a three-time winner of the highest award in business journalism. He spent years digging into this. Olivia: Exactly. And what he uncovered is a story of a true outsider. Jim Simons never even took a single finance class. He was a pure mathematician who thought business was boring. Jackson: That’s the paradox, isn't it? The person who was least qualified, according to traditional standards, is the one who ends up conquering the entire field. Olivia: That’s the heart of it. And it brings us to our first big idea: the unbelievable persistence of a misfit genius.

Olivia: Simons’s story starts with him as this wonderfully absentminded kid. There's a great anecdote from when he was 14, working at a garden supply store. He was so lost in his own thoughts that he kept misplacing everything. When the owners asked what he wanted to do with his life, he said, "Study mathematics at MIT." They just burst out laughing. Jackson: I love that. The world is laughing at him, and he's just completely unfazed, living in his own world of ideas. It seems like that confidence was there from the very beginning. Olivia: It was. And it was fueled by this core piece of advice he got from his father, who regretted living a life based on others' expectations. His dad told him, "The lesson was: Do what you like in life, not what you feel you ‘should’ do." Simons said he never forgot that. Jackson: That's a powerful lesson. But how does a math prodigy who just wants to think all day even end up on Wall Street? It seems like a total left turn from pure mathematics. Olivia: It was a long and winding road. His first real taste of this world came after academia, when he was working as a codebreaker for the Institute for Defense Analyses, or IDA, during the Cold War. He was helping the NSA crack Soviet codes. Jackson: A codebreaker! Okay, that makes a bit more sense. He's looking for hidden patterns in chaos. The market is just another form of code. Olivia: Precisely. That's where the seed was planted. He saw the rise of computing power and had this idea for a company, iStar, that would use computers to trade stocks. This was back in the 1960s. But the venture failed before it even started. He couldn't raise any money. Then, to make matters worse, he got fired from the IDA for publicly opposing the Vietnam War. Jackson: Wow, so he gets fired, his first venture fails... he's in his late 20s, and his big idea is basically dead in the water. Most people would have given up and just stuck to the safe path in academia. Olivia: And many of his peers wanted him to. When he eventually left his tenured post to pursue trading full-time, the academic community was shocked. One colleague said, "We looked down on him, like he had been corrupted and had sold his soul to the devil." He was truly an outsider everywhere he went. Jackson: That’s incredible. He's facing ridicule from the world he's leaving and skepticism from the world he's trying to enter. Olivia: And it took him until he was 40 years old to even start his investment firm, which was originally called Monemetrics. And it wasn't in some fancy Wall Street tower; it was in a dreary strip mall office on Long Island, next to a pizza joint. Jackson: A 20-year journey just to get to the starting line. It really reframes genius not as some flash of insight, but as this stubborn, almost irrational refusal to quit, even when you're filled with self-doubt. Olivia: He was filled with it. At one point, after a series of devastating losses, he told a colleague, "Sometimes I look at this and I feel like I'm just some guy who doesn't really know what he's doing." But he kept going. Jackson: That's the most relatable part of the story. The feeling of being an imposter, even for the man who would eventually solve the market. Olivia: And that stubbornness was crucial, because when he finally started, his first real attempts to build a trading machine were an absolute disaster. This brings us to the "black box" itself—the revolutionary, and at first terrifying, machine he wanted to build.

Jackson: Okay, let's get into it. What is this "black box"? How did it actually work? I've heard the book is a bit secretive on the details, which makes sense given the company's reputation. Olivia: That's a common critique of the book, and it's true, Zuckerman couldn't get the secret formula. But he gives us something more valuable: the philosophy behind it. Simons and his team—who were mathematicians, physicists, and computer scientists, not finance guys—believed that predictable patterns existed in market data, just not in ways humans could intuitively grasp. Jackson: So they weren't looking at company earnings or news headlines? Olivia: Not at all. They ignored all of that. Their goal was to find statistically significant signals in the data, without needing to know why a stock was moving. As Simons himself put it, "I don’t know why planets orbit the sun. That doesn’t mean I can’t predict them." They just wanted to predict the movement. Jackson: That's a radical idea. To basically say, "The story doesn't matter, only the numbers do." But it sounds like it didn't work right away. Olivia: Oh, it was chaos at first. A perfect example is one of their early computerized models, which they called the 'Piggy Basket.' They let it run, and it started making money, so they gave it more capital. But then the model went completely haywire. Jackson: What happened? Olivia: It started buying potato futures. Millions and millions of pounds of them. The system, for reasons no one could understand, was trying to corner the global market for Maine potatoes. They got a call from the regulators at the Commodity Futures Trading Commission, basically asking, "Are you guys trying to corner the potato market?" Jackson: They almost cornered the potato market by accident? That's hilarious and terrifying. So the 'black box' was just a wild, unpredictable beast at first. Olivia: Completely. They were forced to sell at a huge loss, and it shattered their confidence. For a while, they even abandoned the models and went back to more traditional trading. But the key breakthrough came when they realized they didn't need to be brilliant on every trade. They just needed a tiny, consistent edge. Jackson: This is the casino idea, right? Olivia: Exactly. One of Simons's key partners, Elwyn Berlekamp, argued that if you trade a lot, you only need to be right 51 percent of the time. The law of large numbers takes over. So they built a new system for their Medallion fund that made hundreds of thousands of tiny, short-term bets a day. Jackson: And what was their success rate? Olivia: According to Robert Mercer, one of the eventual co-CEOs, it was 50.75 percent. He said, "We’re right 50.75 percent of the time . . . but we’re 100 percent right 50.75 percent of the time. You can make billions that way." Jackson: Wow. So it's not about one big, brilliant prediction. It's about being slightly better than a coin flip, but executing it millions of times with leverage. That's a totally different way of thinking about the market. It’s less about being a hero and more about being a perfect, emotionless machine. Olivia: A machine for printing money. But that leads to the most complicated and controversial part of the story: what happens when that money starts reshaping the world outside of Wall Street?

Jackson: This is where Robert Mercer comes in, right? The brilliant but reclusive programmer who became co-CEO and then this huge political force. I've heard this is the part of the book that really divided readers. Olivia: It did, because the story takes a sharp turn from finance into the heart of modern American politics. You have this incredible, stark contrast. On one hand, Jim Simons becomes one of the world's greatest philanthropists. He and his wife Marilyn pour billions into autism research, founding the Simons Foundation, and into improving math and science education. He's trying to solve some of humanity's biggest problems. Jackson: And on the other hand? Olivia: On the other hand, you have his partner, Robert Mercer. He uses the fortune he made at Renaissance to fund a completely different kind of revolution. He becomes the primary financial backer of Breitbart News. He invests in Cambridge Analytica, the data firm at the center of the election scandal. And he becomes one of Donald Trump's most important and influential supporters. Jackson: That's a chilling thought. The same data-driven, anti-establishment ethos that conquered the market was now being applied to politics. The logic that finds hidden patterns in stock prices is used to find hidden patterns in voter behavior. Olivia: It's the same intellectual DNA. One of the Renaissance researchers explained their trading model by saying, "What you’re really modeling is human behavior. Humans are most predictable in times of high stress—they act instinctively and panic." They learned to take advantage of that in markets. The political machine the Mercers funded learned to take advantage of it in society. Jackson: And this created a huge internal war at the company, didn't it? I read about the employee, David Magerman, who publicly called out Mercer. Olivia: He did. Magerman, who had worked there for decades, felt a moral obligation to speak out. He wrote a scathing piece in the Wall Street Journal, saying Mercer was using the money he helped him make to "implement his worldview by supporting Trump." Jackson: What happened to him? Olivia: He was suspended and then fired. The conflict tore the firm apart internally. Simons, a major Democratic donor, was in an impossible position. He personally disagreed with Mercer but was reluctant to interfere. Eventually, the public pressure became too much. There were protests outside Mercer's Long Island estate. Clients started getting nervous. In the end, Mercer was forced to step down as co-CEO to protect the firm. Jackson: It's a powerful cautionary tale. The "black box" was so successful it generated a level of wealth that became a political force of its own, one that even its creators couldn't fully control. Olivia: The machine escaped the lab. And it shows that you can't separate the model from the real world. The numbers always have consequences.

Jackson: So, when you put it all together, what's the big takeaway from The Man Who Solved the Market? It feels like it's so much more than just a finance story. Olivia: I think it's a profound look at the nature of disruption. Jim Simons was a true disruptor—an outsider who broke all the rules and built something the world had never seen. He proved that a scientific, data-driven approach could find order in what seemed like pure chaos. Jackson: But the story doesn't end there. It's not a simple hero's journey. Olivia: Not at all. And that's what makes the book so essential. It shows that disruption is never clean. The same pattern-seeking mindset that can solve the market can also be used to polarize a nation. The same machine that creates immense wealth can also fuel immense division. Jackson: It forces you to ask: what is the ultimate responsibility of those who create these powerful new tools? Is it enough to just build the thing and let the world deal with the consequences? Olivia: That's the heavy question it leaves you with. Simons himself seems to have wrestled with it, pouring his fortune into science and education. But the genie was already out of the bottle. Jackson: It makes you think about all the 'black boxes' running our world today, from social media algorithms to AI. In a way, we're all living in the world that Simons and his team helped create, whether we know it or not. Olivia: And that's why this story is so important. We'd love to hear what you think. Does the brilliance of the innovation excuse the political fallout? Find us on our socials and let us know your take. Jackson: This is Aibrary, signing off.