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Well-Known Member
Renaissance is made up of people like Mercer and Magerman — trained in computer science, physics, mathematics and statistics. Instead of poring over prospectuses and profit and loss statements, they apply their sciences to the data that affect markets. It’s called quantitative analysis, and they themselves are known as “quants.”
The truly awesome money machine at Renaissance is a private fund called Medallion, which is only open to Renaissance employees. According to a Bloomberg report, “Medallion has pumped out annualized returns of almost 80 per cent a year, before fees.” Even in a bad year, it churns out more than 20 per cent returns.
“The people I worked with were great scientists. I mean, we could have solved a lot of important and interesting problems if we’d worked on different things. Instead, we made hundreds of millions of dollars,” said Magerman. He then added with a rueful chuckle, “Whatever.”
The Medallion investing formula is secret. “Everything I learned, everything I built, I can’t talk about it, I can’t publish it. I can’t share my knowledge with other people. As a scientist, I’ve really done nothing.”
But in the course of our conversations, Magerman made a provocative observation: The problem that Renaissance Technologies faced trying to predict market behaviour is, he said, essentially the same problem that Cambridge Analytica faces in voter analysis and persuasion.
Data analysts are largely skeptical that Cambridge Analytica could have had a decisive impact on the 2016 U.S. election or the Brexit referendum, but Magerman brushes that off with a reminder that so-called experts were also skeptical that computer algorithms could predict financial markets.
“They said there is no way they can do that with the data available,” he said. And yet, there’s Medallion, with its unheard-of nearly 80 per cent annualized returns. There's Cambridge Analytica, on the winning side of two political upsets.
And there is Mercer, a brilliant scientist at the helm of both companies.
In January 2017, before Trump’s inauguration, Magerman called Mercer to chat about politics and the new administration. He wanted to persuade Mercer to withdraw support from Trump.
They talked about Obamacare and the social safety net and disagreed about Trump’s positions on those issues. Then, Magerman says Mercer made a series of comments on U.S. society:
The United States began to go in the wrong direction after the passage of the Civil Rights Act in the 1960s;
African-Americans were doing fine in the late ‘50s and early ‘60s before The Civil Rights Act;
The Civil Rights Act “infantilized” African Americans by making them dependent on government and removing any incentive to work;
The only racist people remaining in the U.S. are black; and White people have no racial animus toward African-Americans anymore, and if there is any, it’s not something the government should be concerned with.
Magerman felt he couldn’t keep that to himself.
“I really thought I was just going to let people know what I know and that would be the end of it,” Magerman said of his decision to do an interview with the Wall Street Journal, which amounted to a warning flare about Mercer to anyone paying attention.
The story quoted Magerman saying that Mercer has contempt for the social safety net and that he now wants to use the money Magerman helped him make to “shrink government to the size of a pinhead.”
But the most sensational part was what Magerman relayed that Mercer had said to him on the phone one day. “I hear you’re going around saying I’m a white supremacist. That’s ridiculous.”
Magerman, having cleared his conscience in the Wall Street Journal, expected to go back to work at Renaissance Technologies. Instead, he was suspended.
“If they hadn’t suspended me, I think the story would have kind of died quickly,” he said, but that’s probably not true. After the article appeared, Magerman continued to talk to the media.
He wrote a piece for the Philadelphia Inquirer in which he said that, during the presidential election, Mercer “was effectively buying shares in the candidate” and “now owns a sizable share of the United States presidency” and that “Mercer has surrounded our president with his people, and his people have an outsized influence over the running of our country simply because Robert Mercer paid for their seats.”
After that, Magerman’s suspension was made permanent and he sued his boss for wrongful dismissal.
Famously publicity-shy, Mercer did not welcome any of this attention, but he also began distancing himself from Steve Bannon. In November, he sent an email to staff at Renaissance Technologies to try to reassure them about the lawsuit and the scandal swirling around the company.
“Of many mischaracterizations,” Mercer wrote, “the most repugnant” have been “that I am a white supremacist or member of some other noxious group.” He said he found discrimination on the basis of race, ethnicity, gender or creed abhorrent, “but more than that, it is ignorant.”
He said he didn’t intend to impose his political views on anyone else, but that he believed ”individuals are happiest and most fulfilled when they form their own opinions, assume responsibility for their own actions, and spend the fruits of their own labor as they see fit.” That’s why he supports conservatives, he said, because they believe in smaller government.
He said that he did not share all of the views of Steve Bannon and that he’d passed his share in Breitbart along to his daughters. The email read as though politics were just a hobby he’d put behind him because it no longer held his interest.
Mercer's daughter Rebekah was part of the transition team that helped Trump choose his cabinet.
In fact, Mercer was the third-largest Republican donor ($25.5 million) in the 2016 presidential race. In the New Yorker profile, a “high-level Renaissance employee” is quoted as saying, “Bob thinks the less government the better. He’s happy if people don’t trust the government. And if the president’s a bozo? He’s fine with that. He wants it all to fall down.”
I asked Magerman if he was the anonymous employee behind the quote. He said he couldn’t remember saying it, but it certainly sounded like something he would say.
Of course it does. One of Magerman’s cautions about “instant billionaires” is that they really don’t understand what the government is for. They didn’t get rich by providing the goods, services and infrastructure that bring people into direct contact with their community and its interests — they got rich in financial markets, making money for the sake of it.
Often cited among the accomplishments of the Trump administration’s first year are the number of regulations that have been eliminated in the name of freeing businesses to create jobs. But the real shrinking of the role of government has been in Trump’s choice of cabinet members, whose aim seems to be to assail the policy goals of their departments.
Thus, the secretary of energy is someone who once campaigned to get rid of the Energy Department; the Secretary of Education has advocated against the public schools system; the Environmental Protection Agency director has a record of repeatedly suing the EPA; and the Attorney General has a reputation for opposing the expansion of civil rights.
Other departments are reportedly withering from neglect, as key positions are filled by unqualified people or not filled at all. The tax cut bill passed in December is forecast to add about a trillion dollars to the federal deficit, forcing further restraint on future governments.
It’s hard to imagine that Mercer would be unhappy about any of that given his thoughts about the size of government and the observation that he “wants it all to fall down” — and especially since his daughter Rebekah was part of the transition team that helped Trump choose his cabinet.
It’s the government Magerman feared Robert Mercer was angling for, the one Magerman paid a big price for trying to warn us about.
Magerman’s own future is uncertain, though not insecure. He’s got enough money to live luxuriously and not work another day in his life. Plus, he’s been experimenting in the food and beverage industry with a couple of glatt kosher eating spots, and he’s long been an active and generous philanthropist in the Jewish community.
But he misses the passion he had for the problem-solving work he did at Renaissance Technologies. It seems inevitable that speaking out against his boss will cost him significant income, but he’s proud that acting against his self-interest inevitably bolstered his credibility.
Was it all worth it?
“It’s like, was having surgery worth it?" Magerman says. “I mean, it was necessary. There was a disease that I thought, like, maybe I had a scintilla of a cure for.”
The truly awesome money machine at Renaissance is a private fund called Medallion, which is only open to Renaissance employees. According to a Bloomberg report, “Medallion has pumped out annualized returns of almost 80 per cent a year, before fees.” Even in a bad year, it churns out more than 20 per cent returns.
“The people I worked with were great scientists. I mean, we could have solved a lot of important and interesting problems if we’d worked on different things. Instead, we made hundreds of millions of dollars,” said Magerman. He then added with a rueful chuckle, “Whatever.”
The Medallion investing formula is secret. “Everything I learned, everything I built, I can’t talk about it, I can’t publish it. I can’t share my knowledge with other people. As a scientist, I’ve really done nothing.”
But in the course of our conversations, Magerman made a provocative observation: The problem that Renaissance Technologies faced trying to predict market behaviour is, he said, essentially the same problem that Cambridge Analytica faces in voter analysis and persuasion.
Data analysts are largely skeptical that Cambridge Analytica could have had a decisive impact on the 2016 U.S. election or the Brexit referendum, but Magerman brushes that off with a reminder that so-called experts were also skeptical that computer algorithms could predict financial markets.
“They said there is no way they can do that with the data available,” he said. And yet, there’s Medallion, with its unheard-of nearly 80 per cent annualized returns. There's Cambridge Analytica, on the winning side of two political upsets.
And there is Mercer, a brilliant scientist at the helm of both companies.
In January 2017, before Trump’s inauguration, Magerman called Mercer to chat about politics and the new administration. He wanted to persuade Mercer to withdraw support from Trump.
They talked about Obamacare and the social safety net and disagreed about Trump’s positions on those issues. Then, Magerman says Mercer made a series of comments on U.S. society:
The United States began to go in the wrong direction after the passage of the Civil Rights Act in the 1960s;
African-Americans were doing fine in the late ‘50s and early ‘60s before The Civil Rights Act;
The Civil Rights Act “infantilized” African Americans by making them dependent on government and removing any incentive to work;
The only racist people remaining in the U.S. are black; and White people have no racial animus toward African-Americans anymore, and if there is any, it’s not something the government should be concerned with.
Magerman felt he couldn’t keep that to himself.
“I really thought I was just going to let people know what I know and that would be the end of it,” Magerman said of his decision to do an interview with the Wall Street Journal, which amounted to a warning flare about Mercer to anyone paying attention.
The story quoted Magerman saying that Mercer has contempt for the social safety net and that he now wants to use the money Magerman helped him make to “shrink government to the size of a pinhead.”
But the most sensational part was what Magerman relayed that Mercer had said to him on the phone one day. “I hear you’re going around saying I’m a white supremacist. That’s ridiculous.”
Magerman, having cleared his conscience in the Wall Street Journal, expected to go back to work at Renaissance Technologies. Instead, he was suspended.
“If they hadn’t suspended me, I think the story would have kind of died quickly,” he said, but that’s probably not true. After the article appeared, Magerman continued to talk to the media.
He wrote a piece for the Philadelphia Inquirer in which he said that, during the presidential election, Mercer “was effectively buying shares in the candidate” and “now owns a sizable share of the United States presidency” and that “Mercer has surrounded our president with his people, and his people have an outsized influence over the running of our country simply because Robert Mercer paid for their seats.”
After that, Magerman’s suspension was made permanent and he sued his boss for wrongful dismissal.
Famously publicity-shy, Mercer did not welcome any of this attention, but he also began distancing himself from Steve Bannon. In November, he sent an email to staff at Renaissance Technologies to try to reassure them about the lawsuit and the scandal swirling around the company.
“Of many mischaracterizations,” Mercer wrote, “the most repugnant” have been “that I am a white supremacist or member of some other noxious group.” He said he found discrimination on the basis of race, ethnicity, gender or creed abhorrent, “but more than that, it is ignorant.”
He said he didn’t intend to impose his political views on anyone else, but that he believed ”individuals are happiest and most fulfilled when they form their own opinions, assume responsibility for their own actions, and spend the fruits of their own labor as they see fit.” That’s why he supports conservatives, he said, because they believe in smaller government.
He said that he did not share all of the views of Steve Bannon and that he’d passed his share in Breitbart along to his daughters. The email read as though politics were just a hobby he’d put behind him because it no longer held his interest.
Mercer's daughter Rebekah was part of the transition team that helped Trump choose his cabinet.
In fact, Mercer was the third-largest Republican donor ($25.5 million) in the 2016 presidential race. In the New Yorker profile, a “high-level Renaissance employee” is quoted as saying, “Bob thinks the less government the better. He’s happy if people don’t trust the government. And if the president’s a bozo? He’s fine with that. He wants it all to fall down.”
I asked Magerman if he was the anonymous employee behind the quote. He said he couldn’t remember saying it, but it certainly sounded like something he would say.
Of course it does. One of Magerman’s cautions about “instant billionaires” is that they really don’t understand what the government is for. They didn’t get rich by providing the goods, services and infrastructure that bring people into direct contact with their community and its interests — they got rich in financial markets, making money for the sake of it.
Often cited among the accomplishments of the Trump administration’s first year are the number of regulations that have been eliminated in the name of freeing businesses to create jobs. But the real shrinking of the role of government has been in Trump’s choice of cabinet members, whose aim seems to be to assail the policy goals of their departments.
Thus, the secretary of energy is someone who once campaigned to get rid of the Energy Department; the Secretary of Education has advocated against the public schools system; the Environmental Protection Agency director has a record of repeatedly suing the EPA; and the Attorney General has a reputation for opposing the expansion of civil rights.
Other departments are reportedly withering from neglect, as key positions are filled by unqualified people or not filled at all. The tax cut bill passed in December is forecast to add about a trillion dollars to the federal deficit, forcing further restraint on future governments.
It’s hard to imagine that Mercer would be unhappy about any of that given his thoughts about the size of government and the observation that he “wants it all to fall down” — and especially since his daughter Rebekah was part of the transition team that helped Trump choose his cabinet.
It’s the government Magerman feared Robert Mercer was angling for, the one Magerman paid a big price for trying to warn us about.
Magerman’s own future is uncertain, though not insecure. He’s got enough money to live luxuriously and not work another day in his life. Plus, he’s been experimenting in the food and beverage industry with a couple of glatt kosher eating spots, and he’s long been an active and generous philanthropist in the Jewish community.
But he misses the passion he had for the problem-solving work he did at Renaissance Technologies. It seems inevitable that speaking out against his boss will cost him significant income, but he’s proud that acting against his self-interest inevitably bolstered his credibility.
Was it all worth it?
“It’s like, was having surgery worth it?" Magerman says. “I mean, it was necessary. There was a disease that I thought, like, maybe I had a scintilla of a cure for.”
