A year-old video of the late Jim Simons—the secretive mathematician behind Renaissance Technologies, often called the most successful hedge fund in history—has gone viral again on social media.
In it, Simons breaks down the basics of investing: beta is the return you get from the overall market, like the S&P 500, while alpha is the extra return that comes independent of market moves.
With a hint of pride, he notes that his famed Medallion Fund generated about 90–95% alpha, almost untouched by market swings.
It’s a fascinating glimpse into the mind of a quantitative genius. But what’s more fascinating is how this explanation—hardly new—has become viral fodder in 2025, with retail investors dissecting alpha and beta in comment sections as if mastering the terminology might improve their returns.
Jargon without depth
This reflects a deeper truth about financial social media: the democratisation of jargon without the democratisation of expertise or resources. Retail investors are now fluent in hedge-fund terminology while often confused about the basics—consistent saving, diversification, and low-cost investing.
The irony is that Simons himself admitted that Renaissance’s public funds—the only ones available to ordinary investors—“don’t do as well” as Medallion and carry significant beta exposure. The fund that generated near-pure alpha was closed to outsiders, reserved only for employees and Simons himself.
This pattern repeats endlessly across financial social media. Complex concepts designed for institutional portfolio management get repackaged as investment wisdom for individual savers. The result is a generation of retail investors who can discuss alpha and beta with apparent sophistication, whilst making elementary errors in their actual investment decisions. Of course, this pattern repeats in many fields, from health to technology, but those are not my subjects.
Back to basics
Consider what actually matters for most individual investors. They need to save consistently, maintain diversified portfolios, keep costs low, and avoid the temptation to overcomplicate their approach based on half-understood concepts. These basics aren’t glamorous enough to generate social media engagement, but they’re what separate successful long-term investors from those who remain perpetually dissatisfied with their returns.
Chasing alpha becomes particularly dangerous for retail investors because it encourages exactly the wrong behaviours. Instead of accepting that their portfolios will naturally contain significant beta exposure, they should recognise that this is perfectly acceptable. They begin chasing sophisticated strategies they don’t understand, often paying higher fees to portfolio managers for the privilege of underperforming simple mutual funds.
It’s worth remembering that Simons built Renaissance by hiring hundreds of PhDs and developing proprietary algorithms, guarded like state secrets. The idea that retail investors can recreate this by tweeting about alpha and beta is laughable.
The real lesson from Simons isn’t in the Greek letters but in the distinction between what works for institutions and what works for individuals. His public funds carried significant beta exposure. And that’s no bad thing. For most investors, simply capturing broad market performance efficiently is the smartest, most sustainable strategy.
Dhirendra Kumar is founder and chief executive officer of Value Research, an independent advisory firm
