Since 1965, Buffett’s holding company Berkshire Hathaway (NYSE: BRK-B) has beaten the S&P 500 by more than 8% per year. Over that time, Berkshire has generated annualized returns of more than 18% versus the 10% increase in the overall market. Buffett’s track record is incredible.
But he is not the best. it isn’t the best. In fact, Jim Simons the founder of hedge fund Renaissance Technologies has generated far better returns than Buffett, while entirely avoiding fundamental investment analysis!
The flagship fund for Renaissance Technologies is the Medallion Fund. From its inception in 1988 through 2018, the Medallion Fund generated an unbelievable annualized returns of 66% before fees.
It’s more than triple what Buffett’s Berkshire Hathaway has generated since 1965.
Simons isn’t a fundamental but a technical trader. Given the results, the system Simons’ team came up with worked better than any investment strategy in history. Formally, the strategy employed by the Medallion Fund can be described as using computer-based models to analyse data in order to spot non-random price movements that are then used to make predictions.
The fund has made Jim Simons and his investors rich beyond belief. Despite waiting until he turned 40 years old to seek a career as an investor, Simons is estimated to have amassed a personal fortune of $25 billion.
Sven Franssen