The Look-Through
Hello Friends!
This week – a look inside an ultra-secretive quant hedge fund, a quick read on how the age-old “trolley problem” takes on a new meaning, and an instance of advertising taken too far.
1. A Talk I Recently Attended
I was fortunate enough to recently attend a talk given by WSJ journalist, Gregory Zuckerman, and author of the book called, The Man Who Solved the Market on the ultra-secretive hedge fund known as Renaissance Technologies and it’s founder and CEO Jim Simons.
RenTech’s flagship fund, Medallion, has returned 66% every year since 1988. Even with an elementary understanding in finance it’s easy to comprehend that these returns are unheard of.
Zuckerman called RenTech the “biggest moneymakers in the world” in his talk and his phrasing was selected carefully: “Money makers” because people working in research aren’t traders and neither do they “care” about businesses they invest.
Source: The New York Times
For the superstar PhDs working at RenTech everything is about recognizing patterns in price movement of securities and using that information to make money.
The industry-beating returns and the company’s reputation of using time-tested models means there’s always a demand to get an allocation in Medallion but never a need to raise outside money.
Medallion ONLY holds money that belong to current and former Renaissance employees and some very close friends—otherwise it’s closed off to investors!
Takeaway: If you’re baffled by how Jim Simons and RenTech do what they do then don’t worry because you are not the only ones. Wall Street doesn’t either.
2. Article I found fascinating
Long gone are the days when the famous trolley problem (pictured below) was JUST a moral quandary or a thought experiment. With Elon Musk being hell-bent on making self-driving cars a reality for everyone, philosophers are taking various different stances over how to program these machines.
Source: McSweeney’s
Here’s a small sample of questions that the algorithm behind self-driving cars needs to consider:
If a crash is inevitable, should it be completely utilitarian and attempt to save the maximum number of pedestrians?
Should the passengers in the car get safety preference over the pedestrians?
Should it be programmed to swerve in order to to avoid a crash regardless of its immediate surroundings (i.e. disregard barricades, fields, other objects)?
3. A Quick Watch On Advertising
How can a brand be the first on Google without paying anything for it?
This was the tagline of a commercial North Face put up recently. North Face (yes the same brand you probably thought only sold jackets) actually started off as a climbing equipment brand in 1966 and recently partnered with an ad agency to ‘hack’ Wikipedia in order to pull off a publicity stunt. If you watch the video you’ll see that the campaign involved replacing photos of popular tourist spots on Wikipedia with similar photos of the same locations but with a model wearing North Face apparel.
Since most Google search results return a Wikipedia link/image as the top result, photos of North Face clad models started showing up at the top of Google search results providing North Face with millions of dollars worth of free publicity.
Source: North Face Commercial (www.adage.com)
Pulling off stunts to attract attention is nothing new and most of us already have a few etched into our memory (Felix Baumgartner’s Red Bull sponsored space jump was my favorite!) However, what the ad agency and North Face did went too far into the unethical and illegal category as the Wikipedia foundation immediately removed the photos and complained that the effort breached the site’s user terms for paid advocacy.
Parting thoughts: Despite a public apology from North Face and the ad agency, I find it hard to believe that the reaction/criticism the video received was not part of the plan. And to good effect too, as the old adage goes: “all publicity’s good publicity.”
4. Shower Thoughts of the Week
Here are this week’s shower thoughts (via Reddit):
You can tell a lot about a person by if they consider 4am late at night or early in the morning
There is nothing more stressful than arriving to something early and being the only one there.
Before phones the question "where are you?" was a lot less common.
That’s all for this week!
Cheers,
Rohail
More of one thing, less of the other? Comment here or reach out on Twitter (@rwk93) - Instagram (ro.khan)