Was just thinking the same thing. I remember that they went through a long time period to get their algorithms to work, so maybe that's what OP means. I also remember that they found some algorithms that work but they don't know why, but they keep running them anyways.
I definitely do not remember anything about Simon making trades based on 'hunches'
I recall Simons saying that early on in his trading career with his partners, they traded on hunches as opposed to purely statistically. He said later on they did not, it was purely algorithmic later on.
Page 59: "Even as Simons and his colleagues were uncovering Soviet secrets, Simons was nurturing one of his own. Computing power was becoming more advanced by securities firms were slow to embrace the new technology.... Simons decided to start a company to electronically trade and research stocks, a concept with the potential to revolutionize the industry."
Page 79: "In 1978, Simons left academia to start his own investment firm focusing on currency trading."
Page 99: "In the following days, Simons emerged from his funk, more determined than ever to build a high-tech trading system guided by algorithms, or step-by-step computer instructions, rather than human judgment. Until then, Simons and Baum had relied on crude trading models, as well as their own instincts, an approach that had left Simons in crisis."
Page 101: "The regulators somehow missed the humor in Simons's misadventure. They closed out his potato positions, costing Simons and his investors millions of dollars. Soon, he and Baum had lost confidence in their system. They could see the Piggy Basket's trades and were aware when it made and lost money, but Simons and Baum weren't sure why the model was making its trading decisions. [...] In 1980, Hullender quit..."
Page 102: "With Hullender gone and the Piggy Basket malfunctioning, Simons and Baum drifted from predictive mathematical models to a more traditional trading style."
Page 105: "Their traditional trading approach was going so well that, when the boutique next door closed, Simons rented the space... Simons came to see himself as a venture capitalist as much as a trader."
[Various things happen. Renaissance makes and then loses a bunch of money. It is now 1985]
Page 114: "Simons wondered if the technology was yet available to trade using mathematical models and present algorithms, to avoid the emotional ups and downs that come with betting on markets with only intelligence and intuition."
Page 201: "By 1990, Simons had high hopes Frey and Kepler might find success with their stock trades. He was even more enthused about his own Medallion fund and its quantitative-trading strategies... Competition was building, however, with some rivals embracing similar trading strategies. Simons's biggest competition figured to come from David Shaw."
So my timeline was a little off: Renaissance was largely a traditional fund from 1978 until AxCom in 1985, with D.E. Shaw only in 1990.
