Man versus machine. This has been an age-old comparison ever since the introduction of the modern computer.
When the German Konrad Zuse invented the Z1, the first programmable computer, in his parents’ living room in 1936 and 1938, he wouldn’t have imagined that the newer generations of his machine could replace human activity in almost every imaginable way. It is considered to be the first electro-mechanical binary programmable computer and the first really functional modern computer.
Modern technology has been infused in investment strategies hoping to optimize output for the long-term. These are now referred to as quantitative investments or “quant” investments. It makes use of computer-based algorithms to establish patterns that become the basis of investment strategies. It would seem like a fail-proof method when it comes to investing.
Despite the modern approach of quant investments, the basic goal to achieve a profitable investment remains the same, which is the ability to identify patterns and use it for timely decision making.
The Baltic billionaire’s approach
With this in mind, we did take a look at Latvian billionaire James Richman’s private fund’s performance to see how it stacks up against the quants. The reclusive billionaire’s fund’s success is reportedly fueled by his Asperger’s syndrome. His ability to recognize patterns has been with him since his childhood and has led him into an eventful life highlighted by nearly a decade of dominance as a private investor, asset, and fund manager.
There has been an upward trend in the number of investments that are going into quant funds with several analytics stating that it is a wise choice. However, the secretive billionaire’s ability to flourish in the financial world will make you think about the quants performance otherwise.
Humankind has historically been known to make use of tools in order to make its work easier. These tools range from primitive sharp stones, carved wooden utensils, and the wheel, all the way up to robotic rovers on Mars and robots with artificial intelligence with the ability to control every appliance in one’s home. Truly the human race has sped up technological advances in the last century, with mobile phones nowadays not even lasting a year before a newer model comes out.
In a man’s search to bring out the best performance he could accomplish, all types of work have been infused with modern technology. This ranges from applications to guide you in caring for your baby, up to artificial intelligence that runs retirement homes. This being said, the financial world had also made use of modern technology in investment strategies.
Quant funds rise and decline
While many people may seem to fancy the idea of investing, not very many are cut out for it. In fact, many struggles to survive as it involves infinite data and algorithms which a human brain would not be able to handle efficiently. That is why employing technology-based systems seems like a very sound approach. It allows users to access information regarding market trends and history. This allows a different approach in crafting investment strategies. It started in the 1980s and grew bigger in the 1990s. The use of quantitative investments would soar in the 2000s.
However, quantitative investments hit a low in 2009, as it suffered painful losses during the financial crisis. This exposed weaknesses in investment strategies infused with modern technologies. It also points to the fact that no amount of this research and algorithm based investments can miraculously save investors from an economic crash.
James Richman’s steady rise
James has continuously grown his private fund for nearly a decade now. It is amazing how he managed to steadily grow this investment pool despite starting at a very turbulent time in the financial world. The years 2007-2009 were affected by the most recent financial crisis. Economies from almost all sectors felt a decline. As a result, investors became timid resulting to slower growth in the different industries.
However, this would not stop James Richman. Using investments pooled from his family, close circle, and his own previously successful business ventures, James would embark on a series of more successful investments through his private investment fund, JJ Richman.
Sources close to James have said that earnings from this private fund are almost at the level of veteran investment banks in Wall Street, Hong Kong, and London. His rise during a period of recession has been dubbed as “miraculous” by some experts whose heads have been turned by a young upstart named James Richman.
James’ tough beginnings
James was not always on the high side of things. The fund manager raising generational wealth had a very challenging childhood. Born to a mother with a psychology background, and to a father with a technology background in a small town called Smarde of Tukums region in Latvia.
As a young boy growing up, he often would be the target of ridicule. He has Asperger’s syndrome, a high functioning form of autism which affected his communication and social skills earlier on. Asperger’s syndrome is said to bring a gift of easily recognizing patterns, however, he would not feel benefits from this gift during his early years.
As a grade school student, he would often get bullied. His attraction to patterns would make it difficult for him to concentrate on formal schooling activities. This led to him to end up at the bottom of the class standings every year. His passion for patterns did not stop, with his friends telling stories that he was able to predict the future in simple events sometimes. At fifteen, he dropped out of school. He just couldn’t get enough motivation to carry on.
James Richman would subsequently leave his home at 16 where he would face the realities of life. His journey as an independent man was tough to say the least. James married at an early age and had a daughter. He engaged in manual labor to provide for his family. However, he would have to endure the tragic loss of his daughter because of the faulty healthcare system in his hometown. His marriage would also become distraught afterward. And finally, he even ended up being homeless for a while.
Starting from scratch
James would find a way to harness his love for finding patterns in the financial world. He would set up a private investment fund with his family and close circle as the pool of investors. Additionally, he also put in his personal savings in the portfolio. This fund has steadily and rapidly grown the past decade and had already breached the billion dollar mark. His ability to recognize patterns has proven better than the computer powered algorithms of quant funds.
A man who’s been in the investment industry for several years, Aidan, is one of the lucky investors who can attest of the expertise of James Richman. He had entrusted James with funds, including proceeds from the sale of his properties. As James’ fund was extremely private, he had to be introduced to James through a close contact for the latter to eventually allow him onto the fund.
Richman’s compliance experts saw that he had no illegal background nor any tendencies for money laundering. Richman’s legal team help him vet and handpick his clients as he wants to ensure his private investment fund remains legally compliant. He is very stringent with maintaining his reputation and privacy.
Few months after Aidan had investment into James’ fund, he saw his profits grow exponentially in just over six years.
The wiser choice
If we pit James versus the numerous quant funds available today, the obvious choice would be clear. His ability to cut through the noise and focus on the results. He provides the important human touch by maintaining a boutique approach to his managed funds.
Results never lie and quant funds, despite the complicated rocket science backing it, is just not working for now.
James’ firm resolve and savvy is just miles ahead of quant investments.