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Jim Simons: Market 'Resilient,' Not Going Much Lower

Monday, 13 Sep 2010 | 1:19 PM ET

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.

Market Outlook

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.

One-on-One With Hedge Fund Legend Jim Simons
Hedge fund legend Jim Simons, founder of Renaissance Technologies, shares his market and economic outlook with CNBC's Melissa Lee.

"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."

'Flash Crash'

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.

Jim Simons & the Flash Crash
Jim Simons, founder of Renaissance Technologies, discusses the Flash Crash, the market's reaction and how his company dealt with orders in the immediate aftermath, with CNBC's Melissa Lee.

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."

Watch 'Fast Money' Monday at 5:00 PM EST for even more market insights with trading legend Jim Simons and check this post for additional updates, as well.

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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; Pete Najarian owns (STI) calls; Pete Najarian owns (CNI) short calls; Pete Najarian owns (TCK) short calls; Pete Najarian owns (SCCO) calls; Pete Najarian owns (AKAM) call Spread; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST); Cortes is short (XRT); Cortes is short Gold; Karabell owns (C), (GS), (FCX), (BRCM)

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