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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“Peterson’s perspective combines a compelling narrative of recent financial events while telling a history of contributions of some really amazing intellectuals (Thorpe, Mandelbrot, et. al,). In a way, the main subjects of the book, hedge funds and the people who ran them, can be summed up by a quote Peterson passes on from Paul Wilmott, “Banks and hedge funds employ mathematicians with no financial-market experience to build models that no one is testing scientifically for use in situations where they were not intended by traders who don’t understand them.””
—
Keith (4 out of 5 stars)
