“A bubble is just a bull market you’re not in” Eddy Elfenbein

Whilst funny, and to a certain extent true (Sydney housing anyone?), if the stockmarket recovers swiftly from the coronavirus induced swoon (if it doesn’t, this is a moot point), and keeps going at speed it went at last year some thought needs to turn to the last phase of a bull market morphing into a bubble. Often overused, bubbles do exist and bubbles are different to bull markets.

Let me turn to one of my favourite books of last year.

Like many readers, I try to use the Christmas holidays as a period to read the books I said I’d get around to but never seem to over the course of the year. Top of the list was “The Man who Solved the Market”, a story of Jim Simons, the chain-smoking mathematician and his secretive hedge fund, Renaissance Technologies.

Most readers would have heard of Warren Buffett and the awe in which he is held by fundamental investors. Well, Simons’ returns dwarf those returns with 66 per cent per annum before fees for over 30 years, and his fund has made over $100 billion of profits for investors.

Yet very few knew much about Renaissance and how the quant fund ran money because Simons shunned publicity.

Read on >