David E. Shaw

David Elliot Shaw (born March 29, 1951 ) is an American computer scientist and bioinformatician, billionaire and hedge fund manager.

life and work

Shaw grew up in Los Angeles . His father was a theoretical physicist studying plasma physics and hydrodynamics, his mother an artist and teacher, and his stepfather was Irving Pfeffer , a professor of finance at UCLA, who believed that financial markets would work effectively. Shaw himself later based his career in the financial industry on finding anomalies in the markets. He graduated from the University of California, San Diego , with a bachelor's degree summa cum laude . At first he wanted to study marine biology, dealt with cognitive psychology and was fascinated by neural networks. He studied from 1973 at Stanford University, from which he received his doctorate in 1980. His fellow students included Leonard Bosack , Andy Bechtolsheim , James H. Clark and Jerry Kaplan . He then worked in the computer science department at Columbia University until 1986 . He was an assistant professor and worked there on massive parallel computers with a tree-like structure that were adapted to the structure of relational databases.

From 1986 he worked for Morgan Stanley as a specialist in computer programs for securities trading. At that time, the financial industry began to attract more computer experts from universities. At that time he expanded the pair trading process with computers , which was used if a share (or another security or other financial object) A was correlated with another share B (for example two automobile shares). If stock B outperformed A, the strategy was to sell B and buy A ( market-neutral trading ). With the help of a computer, this was extended to the most varied of influencing factors (stochastic control theory). In 1988 he founded DE Shaw & Co. , a hedge fund that owes its success primarily to the algorithms for securities trading developed there. It initially consisted of a small office in Greenwich Village and three employees, with $ 28 million in seed money (funded by Donald Sussman, the hedge fund manager at Paloma Partners and three of his friends). The company was a pioneer in quantitative trading and algorithmic trading . Small price differences ( ineffectiveness of the markets), which constantly exist between the worldwide markets (often only for a short time), are exploited with computer help. In 2019, Forbes estimated his net worth at $ 7.3 billion. Just eight years after its founding (1996) it had 400 employees worldwide, capital of 800 million dollars and an average annual return of 20 percent. Even then, he was considered the star of Wall Street, who turned the financial industry up until then. He considered the structures of Wall Street to be outdated and, in his own words, the financial industry was a pure information processing game and could just as easily be handled by computers rather than by overpaid stock market traders. He himself coined the term Phynance for the new algorithmic orientation of the financial industry . He kept the computer algorithms strictly secret, also within the company and from his own dealers. His fund managed around $ 50 billion in 2019. One of his employees was Amazon founder Jeff Bezos .

He has been working full-time with bioinformatics since 2001 and handed over the management of his fund. In his own laboratory (DE Shaw Research, New York), as chief scientist, he develops algorithms and special computers for calculations in biochemistry and molecular biology (molecular dynamics simulations of proteins and application to computer-aided drug design). As a venture capitalist, he has been investing in ideas for rational drug design since the 1990s. He is also a Senior Research Fellow at the Center for Computational Biology and Bioinformatics at Columbia University and an Adjunct Professor of Biomedical Informatics at their Medical School.

He is a member of the American Academy of Arts and Sciences (2007), the National Academy of Engineering (2012) and the National Academy of Sciences (2014). In 1994 he was on the Scientific Advisory Board of President Bill Clinton and again in 2009 on that of Barack Obama . Shaw received the Gordon Bell Prize twice. From 2000 he was on the council of the American Association for the Advancement of Science .

In 2018 he received the Seymour Cray Computer Engineering Award for the design of special computers for biomolecular simulation (laudation).

He also acts as a philanthropist through extensive donations. He is married to the journalist Beth Kobliner and has three children with her.

Web links

• Seymour Cray Prize for Shaw , Inside HPC 2018
• DE Shaw Research

Individual evidence

1. ↑ ^{a b c d} Thomas A. Bass, The Phynancier, Wired , January 1, 1996, online
2. ↑ Entry on Forbes , Retrieved October 18, 2019