From the Reformed Broker Listing the five greatest investors ever
I don’t agree that Jim Simons, who is the founder of Renaissance Technologies, should be included on the list of the greatest mangers, because in spite of the intense interest surrounding his fund, its methodology is still opaque. Nothing is known about how it made its money besides vague “quantitative/statistical methods.” If one includes market making and other advanced non-directional methods, the short list of ‘greatest managers’ increases greatly, but that is not the same as market timing, stock picking, and investing. Market markers and quants seek to profit regardless of the direction of the market or economy, not by predicting or picking stocks, but by taking advantage of order flow and matching buyers with sellers and taking a tiny fee in the middle. If one includes order flow processing and market making, then investment banks and brokers such as Goldman Sachs, JP Morgan, Ameritrade, ETrade, etc., would merit inclusion. For example, if a hedge fund or mutual fund wants to make large purchase of Google stock or certain stock or futures options, it may not care if it gets the best price possible. It may pay a 1% higher price than the quoted price, in order to be filled quickly. So a market maker may profit by buying the underlying asset at the market price and selling it at a 1% mark-up to the hedge fund, pocketing the 1% difference. It may also engage in various hedging strategies. So a market maker may buy thousands of S&P 500 call options at $2/contract and then hedge it by shorting some of the S&P 500 (such as shorting an ETF like SPY) to make the trade ‘delta-neutral.’ And then attempt to sell the options at a 1-10% (or higher) mark-up to a buyer, such as an institution or hedge fund, that is less discriminating about getting a good price. Upon execution of the trade, the corresponding short hedge is covered. There are many such strategies. But this is not the same as investing and managing money on behalf of clients.
Regarding the list of greatest investors, if the list were expanded to 10 entries, I would put myself at around #8 or 9 for for my nearly unblemished track record for stock picking and market timing (such as Facebook and Tesla stock) for the past decade, as well as correct forecasts about the economy, as well as research relating IQ to individual stock performance and economic performance, both national (such as countries) and local (cities). A link between IQ and economic performance was posited in a 2002 book by Richard Lynn and Tatu Vanhanen, IQ and the Wealth of Nations, but this can be applied for investing.
Right now, the S&P is yet again another new high, now almost at 3200, a gain of 200 points in less than a month.
This is like the ’90s again but with much lower inflation, much lower interest rates, much lower valuations, and much stronger corporate profits and earnings growth. I expect 15-20% annual gains for the S&P 500 for the next 5-10 years. I remember in 2016-2017 on Reddit and YouTube, in the aftermath of Trump’s win and Brexit, there was (and still is) considerable interest in speculating about economic collapse and unrest. People were asking “when is the next recession?,” “how much higher will the market go,” and “will there be collapse or unrest that threatens the U.S. economy,” and my answer then, as it is now, is “not for a long time, maybe never,” “much higher,’ and “no.” If there is collapse and unrest, it will be overseas first and in corrupt, low-IQ countries such as Brazil, Turkey, Chile, Lebanon, Spain, Italy, etc., which are much closer to collapse than the US, as I correctly predicted and wrote about in 2016-2017. That is what is happening already. Brazil, Chile, and Lebanon had major incidents of unrest this year. Hong Kong is exception, as an example of a high-IQ region undergoing unrest, but their economy is relatively insulated from this turmoil, as opposed to these less intelligent countries in which such unrest threatens their economies.