The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
Written by Scott Patterson
Narrated by Mike Chamberlain
4/5
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Currently unavailable
Currently unavailable
About this audiobook
In March 2006, the world's richest men sipped champagne in an opulent New York hotel. They were preparing to compete in a poker tournament with million-dollar stakes. At the card table that night was Peter Muller, who managed a fabulously successful hedge fund called PDT. With him was Ken Griffin, who was the tough-as-nails head of Citadel Investment Group. There, too, were Cliff Asness, the sharp-tongued, mercurial founder of the hedge fund AQR Capital Management, and Boaz Weinstein, chess "life master" and king of the credit-default swap.
Muller, Griffin, Asness, and Weinstein were among the best and brightest of a new breed, the quants. Over the past twenty years, this species of math whiz had usurped the testosterone-fueled, kill-or-be-killed risk takers who'd long been the alpha males of the world's largest casino. The quants believed that a cocktail of differential calculus, quantum physics, and advanced geometry held the key to reaping riches from the financial markets. And they helped create a digitized money-trading machine that could shift billions around the globe with the click of a mouse. Few realized that night, though, that in creating this extraordinary system, men like Muller, Griffin, Asness, and Weinstein had sown the seeds for history's greatest financial disaster.
Scott Patterson
Scott Patterson has been a reporter for more than two decades, mostly at The Wall Street Journal in New York City, Washington, DC, and London. His 2010 New York Times bestseller The Quants was about the rise of mathematical traders and their near destruction of the financial system. His second book, Dark Pools, which exposed how high-frequency trading had rigged the stock market, was lauded by a pantheon of financial writers. A winner of the Loeb Breaking News Award, Patterson has made frequent appearances in the media, including on CNBC, The Daily Show, and Fresh Air. He lives in Alexandria, Virginia, with his wife and son.
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Reviews for The Quants
103 ratings6 reviews
- Rating: 4 out of 5 stars4/5Seemed very well researched and thorough. These were the major players who took the sophisticated world of financial trading and made it vastly more complicated. Products under trade and market models required teams of PhD's in math, physics, engineering, etc. After years of success they eventually grew too confident to recognize the massive risks they were buried in. When the market stumbled, the house of cards collapsed.
Not many of these characters were sympathetic. They enjoyed their absurd wealth and took great pleasure in macho competition and juvenile indulgence. They were a younger generation that took over the world of good old boys by following the lessons they learned in academia. The story follows early pioneers like Ed Thorpe in the 1960s, to the age of Quant hedge funds, all the way through the 2007-08 financial collapse.
My only complaints: There were a lot of players in the story and I didn't always remember who was who. And the explanations could get a bit technical, not being a financial person myself. But I understand this is a complicated marketplace and some things can't be boiled down beyond a certain point. - Rating: 5 out of 5 stars5/5An in depth look into the 2007/2008 credit meltdown, incorporating the history of quantitative finance. The author reiterates many of the concepts and conclusions, which I found beneficial especially because this is an audiobook. Worth a listen if you're interested in finance.
- Rating: 4 out of 5 stars4/5Very captivating read. A tad repetitive but that can actually be helpful to understand and remember the information.
- Rating: 4 out of 5 stars4/5Contains a lot of historical information with careful explanations of the complex securities that were so much a part of our recent (and continuing) economic mess, as well as the quantitative trading strategies that also contributed so much. Mr. Patterson organizes his narrative around the people--not a bad idea, but the lack of a clear, continuous narrative caused me to struggle placing events in their proper historical context. That's too bad, because this is a danged good book, otherwise.
- Rating: 3 out of 5 stars3/5A lot of profiles of various math types who thought that they could profit by detecting inefficiencies in the market and arbitraging them, and for a while largely did, but also were essential in generating the skewed risk-taking that brought the whole thing down. While the personal stories are interesting portraits of hubris, and I understand Nassim Taleb much better now (no wonder he’s such a jerk if this is what he was up against), the focus on personality also means that the story jumps back and forth in time and ultimately is not a coherent account of what happened, which is why I at least read these books.
- Rating: 3 out of 5 stars3/5The one consistently recurring theme in The Quants is gambling. Ed Thorp, who according to Scott Patterson is the godfather of a quantitative based approach to investing is alos the author of the Blackjack card counting classic, Beat the Dealer and the subsequent primer on a quantitative approach to investing - Beat the Market. Scott Patterson is a staff reporter at The Wall Street Journal and in The Quants he tells the story of several different men (and a couple of women) who used their incredible quantitative skills to build some of the most powerful hedge funds of our times. The book begins (and ends) with what looks and sounds like a set piece, the Wall Street Poker Night Tournament, starring the kings of the quantitative universe - Peter Muller of PDT, Ken Griffin of Citadel Investment Group, Cliff Asness of AQR Capital Management and Boaz Weinstein of Saba. Each of these men has made hundreds of millions of dollars on Wall Street using their mathematics backgrounds and each has a fascination bordering on obsession with poker. The way the book is set up, you get the impression this story will be told through this selected cast of characters, much like how in The Big Short Michael Lewis focuses his attentions on a small group of hedge funds managers to tell the story of the financial crisis of 2007 and 2008. Unfortunately, Mr. Patterson is not quite as skillful a story teller as Mr. Lewis. I quickly lost track of the main characters, as Mr. Patterson moves the spotlight to a long list of supporting cast members. There is Ed Thorp as I already mentioned, Jim Simons of Renaissance Technologies, Aaron Brown, Paul Wilmott, Benoit Mandelbrot, Bill Gross and others who are given attention is such a way as to interfere with the flow of the narrative. Another flaw of Mr. Patterson's style is that he does not seem to maintain a consistent style - there are some chapters where all the main protagonists are covered, there are some focused on a specific person and then there are some that are descriptive of a situation without focusing on any one character. This muddled style leads to an unsatisfying reading experience. Since I'm on a roll here, let me add one more criticism - The Quants manages to give only glimpses of the mechanics of how money is made by the Citadels of the world. It does not get technical, unfortunately.In spite of my overall disappointment with the book, I recommend reading it. It is a good introduction to the stars of the quantitative hedge fund world and at about 300 pages not irksome in length.