Cracking Codes and Problems at the IDA
At IDA, Simons developed a fast code-breaking algorithm for a long-standing problem. However, because this work was confidential, he couldn’t share accomplishments with outsiders.
A soap film stretching across a wire frame has minimal area. Plateau’s Problem: Do such minimal areas always exist and are they always so smooth no matter the wireframe? In 1930, ‘Yes’ was proved for 2-D. Almgren, PU Prof, proved it for 3-D. Simons extended this to 6-D and formed a counter-example in 7-D.
Simons and Crew relied on a hidden Markov model theory. The market has (8) underlying states, e.g. “high variance”, “good”, etc. By determining the most likely states, one could make appropriate bets - the ‘why’ didn’t matter.
Other notables that were trying to solve the market: Harry Markowitz (Modern Portfolio Theory), Edward Thorp.
Simons at SUNY Stony Brook’s Math Department
The Vietnam War put criticism on the IDA. Simons publicly disavowed the war. He was let go. Opportunely, SUNY Stony Brook had spent 5 years looking for someone to revitalize its Math Dept. Simons was recommended to the College President, and accepted the job. There, he honed a skill for recruiting talented math minds.
Barbara felt stunted - she had married at 18 and had a kid at 19. They divorced. She went to UCB, completed CS PhD, did research at IBM, headed ACM and became a national expert on computerized voting.
Simons contributed to quantifying shapes in curved 3D spaces. Chern extended it to all dimensions. The Chern-Simons theory won accolades and found applications in condensed matter, string theory and supergravity.
Despite Zuckerman’s insistence that Simons wasn’t exceptional amongst his colleagues, his math aptitude is impressive.
The Allure of the Trading World
Freifeld built econometrics models to forecast commodity prices. Although they made money, Mayer remarked that there was no socially redeeming value in it.
In 1977, world currencies had begun to float (no longer pegged to the price of gold). Recognizing the volatile era, Simons eventually left academia to focus on currency trading.
At IDA, Simons built models to spot signals in the noise of comms of US enemies. At Stony Brook, he courted and managed talented mathematicians. Now, he’d hire their brains to develop formulas to profit from market data.
Princeton has a history with wars that it prefers to keep under wraps. How many DoD projects are ongoing with the faculty and the IAS?