UPDATE Jim Simons: Market 'Resilient,' Not Going Much Lower
We've updated this post with even more insights from famed trader Jim Simons!
In the hedge fund world, Jim Simons is all but a legend. As the so-called founding father of quant trading and the founder of Renaissance Technologies his flagship medallion fund has returned 45 percent on average since its inception in 1988.
Considered by some to be 'the best trader on the planet,' CNBC's Melissa Lee spoke with Simons in his first interview since the 'Flash Crash' on May 6. It's also his first interview since stepping down from the day-to-day operations of Renaissance in late 2009.
There may be a lot of bears in this market, but it appears as though Simons isn't one of them. In fact, he finds it impressive that the market is performing so well.
"I would've expected it to be lower," he said, characterizing the market as "resilient" and added, "Maybe it won't go much lower."
That's not to say he doesn't have concerns.
Like so many other investors, Simons is worried about housing and the state of the economy.
"I think that housing prices will go lower from what I can tell," he said. "I think consumer spending is going come back at a very slow rate."
"The nation's balance sheet has been decimated," he explained. "People just don't feel as wealthy because they're not as wealthy."
With so many pundits citing the rise of the machines as the cause of the 'Flash Crash,' Lee asked Simons where he was when the Dow lost as much as 998.50 points in a matter of minutes.
Simons remembers getting a call from Peter Brown, a co-CEO of his firm, who told him the market was down 9 percent.
"It is?" Simons remembers asking.
"No, wait a minute," Brown replied. "It's only down 8 percent."
"It is?" Simons asked again.
"No, now it's only down 7 percent," Brown said.
In those few minutes, Simons said the market dropped quickly. It moved so fast, the billionaire hedge fund manager said he didn't have time to react to the first piece of news by the time he was getting the second. His firm, however, cancelled some orders. Thinking that their trades would be broken, many hedge funds stepped away from the market in those moments of tumult.
"We stepped out for one round of up-and-down trades, but we came back," said Simons, explaining that after the specialists stepped back, the market recovered. "It showed the system was pretty robust ... in spite of the exchanges making it more difficult by having conflicting rules."
Future of Renaissance
After Simons said he was stepping down, chatter on the Street suggested that Renaissance had topped and that the firm would close two funds -- Renaissance Institutional Equities and Institutional Futures funds due to underperformance.
However Simons told us that wasn't likely. Then after our interview on Monday Renaissance sent out a letter to investors confirming that both funds would, in fact, remain open.
Read More: Renaissance Will Keep RIEF and RIFF Funds Open
Math For America
One of Jim Simons great passions is the quest to improve math and science eduaction. Because quant funds rely on complex statistical formulas Simons is very aware of America's short comings in these areas. In fact, a large percentage of the mathematicians employed by his fund come from abroad.
Simons has little choice.
"American kids are not going into math (and science)... in the numbers that they should," he said. And Simons believes that's happening "in part because (students) are not prepared and in part because they're not inspired."
Because Simons believes the solutions lies with great teachers he's founded Math for America, which awards fellowships that may include one year toward a masters degree and stipends of up to $100,000 in addition to the base teachers' salary in New York City public schools.
Ultimately, the goal is to improve the quality of math education and to make teachers salaries a little more competitive with other options math experts might have.
Click here to learn more about Math for America
Get even more insights from Jim Simons. Click here to go to the web extra to learn who he thinks might be the next target for lawmakers in Washington!
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Trader disclosure: On Sept. 13th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Seymour owns (AAPL), (BAC), (INTC); Edwards owns (PM); Finerman’s firm owns (BAC); Finerman’s firm owns (GLW); Finerman’s firm owns (HPQ); Finerman’s firm owns (JPM); Finerman’s firm owns (PLCE); Finerman’s firm owns (DTG); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (ARST) calls; Jon Najarian owns (CSCO) call spreads; Jon Najarian owns (RHT) call spreads
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