Bloomberg - Inside a Moneymaking Machine Like No Other 13min

The fund almost never loses money. Its biggest drawdown in one five-year period was half a percent. ... Few firms are the subject of so much fascination, rumor, or speculation. Everyone has heard of Renaissance; almost no one knows what goes on inside. ... For outsiders, the mystery of mysteries is how Medallion has managed to pump out annualized returns of almost 80 percent a year, before fees. ... Competitors have identified some likely reasons for the fund’s success, though. Renaissance’s computers are some of the world’s most powerful, for one. Its employees have more—and better—data. They’ve found more signals on which to base their predictions and have better models for allocating capital. They also pay close attention to the cost of trades and to how their own trading moves the markets. ... At their core, such models usually fall into one of two camps, trend-following or mean-reversion. ... “You need to build a system that is layered and layered,” Simons said in a 2000 interview with Institutional Investor, explaining some of the philosophy behind the firm and the Medallion model. “And with each new idea, you have to determine: Is this really new, or is this somehow embedded in what we’ve done already?”