Publisher Description
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.
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“This is a solid layperson’s assessment of the effect that mathematical modeling and the creation of new types of products based on the use of computers had on Wall Street. It specifically focuses on hedge funds and their role in creating the 2007-2008 market meltdown. Some of it is highly over-simplified, but as primer for derivative trading and the use of credit swaps I recommend this book. Patterson does a good job of explaining the basics without getting bogged down in jargon. Occasionally his metaphors get to be a but much, but his grasp of the personalities involved in the hedge fund industry seems spot-on.”
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Terri (4 out of 5 stars)
