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The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
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The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It

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3.77 of 5 stars 3.77  ·  rating details  ·  4,233 ratings  ·  232 reviews
“Beware of geeks bearing formulas.”
--Warren Buffett

In March of 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, but those numbers meant nothing to them. They were accustomed to risking billions.

At the card table that night was Peter Muller, an eccentric, whip-
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Hardcover, 352 pages
Published February 2nd 2010 by Crown Business (first published 2010)
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David
The author of this book makes a big deal of the fact that the major players in his story treated stock price time series like Gaussian random variables. And they lost big time in 2008. Two of the minor players in the book, Nassim Taleb (author of The Black Swan: The Impact of the Highly Improbable) and Benoit Mandelbrot (of fractal fame, and author of The (Mis)Behavior of Markets and Fractals and Scaling In Finance) had an entirely different concept. They treat stock prices as distributions with ...more
Szplug
Meh. The pervasive Poker Theory forces Patterson into a straightjacket as regards his casting decisions—colourful though these depicted characters prove to be—and he assigns the label Quant to those who do not seem to merit it and blame for the economic crisis of 2008 to these same Quants in what, in my humble opinion, is a mostly erroneous and misplaced determination of guilt. The background story itself is quite intriguing, as is the proliferation of mathematical modeling in financial markets, ...more
Joy
I'm a bit naive when it comes to the Wall Street world of statistical arbitrage and collateralized debt obligations, so I learned something new on every page of this book. I'm not sure I followed all of the different players and why exactly my mortgage is more expensive than my house, but this was definitely an interesting (and mostly accessible read) about how our economy ended up in the dumps and whet my appetite for more. Also, perhaps the stock market wasn't really a good idea in the first p ...more
Bryan Kibbe
As someone that does not normally traffic in world of high finance or the jargon associated with it, I found this book to be fascinating and eye-opening. Patterson crafts a compelling narrative about the rise and fall of an extremely talented set of mathematicians and economists that came to dominate stock markets with quantitative modeling, sophisticated computer algorithms, and rapid fire computer based trading. Indeed, Patterson's grim conclusion suggests that perhaps the recent stock market ...more
Andy
(Disclaimer: I worked in derivatives on Wall Street for several years, though this book is more focused on stat arb, not my area.)

This book reminded me of When Genius Failed, not only in content matter but in style. This isn't a great thing, as I thought both books were hampered by some corny dramatics. In both cases the authors picked an inherently exciting topic; let the excitement tell itself and spend your energy telling us things we don't know rather than trying to inject more adrenaline i
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Ob-jonny
This book describes some of the causes of the financial crisis at the most fundamental level. It's an oversimplification to state that the financial crisis was caused by the banks behaving badly. It's more satisfying to know the details and the human interaction and decision making that went into it. The hedge funds weren't the only cause of the financial crisis which was more due to the housing bubble, merging of big banks, and excessive leveraging. But the hedge funds were the guys who did muc ...more
Max Stone
Jeebus this book was pretty bad. I felt compelled to read it because I know some large fraction of the characters involved, but I don't really recommend it for anyone.

For starters, a lot of the facts are not overly factual.

Next, if you already know about the quant kerfuffle, there is very very little you will learn from this book. And if you don't know about the quant kerfuffle, why on earth would you want to?

He takes random potshots at people (e.g. what does he have against Eugene Fama (effici
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Phil Simon
I've read more than a few books on Wall Street's latest fiasco. Much like [[ASIN:0393338827 The Big Short: Inside the Doomsday Machine]], The Quants makes what would be a dry narrative more interesting by focusing on characters as much as arcane stock market theories. While I liked Lewis' book a bit more, the Quants more than holds its own. I enjoyed learning more about the history the sub prime mess.

At times, I had a hard time keeping track of the characters. Patterson is a gifted writer and I
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Simmoril
As my study of the global financial meltdown continues, the subject of quantitative finance has continued to fascinate me, and in particular the quantitative analysts themselves; these brilliant, multiple PhD holding geniuses who have focused their tremendous brainpower on finding new ways to try and beat the market.

Patterson's book follows the stories of four quants who took their impressive CVs and used them to create behemoth hedge funds that, for a short time, were essentially billion-dollar
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Kevin P Webb
The cast of characters and their interactions with each other at specific points in time and their connections with each other through time make for a fascinating story. The historical framework provided in the back story with Ed Thorp lays the framework for understanding where young gun hedge fund managers both originated and went astray.
However, some of my favorite quotes had nothing to do with the back story and everything to do with the hubris of the belief in certainty (something Kenneth
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Luaba
one of the most comprehensive book on the most recent financial collapse, written in an exciting way. And one does not have to be a ph.d to understand it.
Dev Scott Flores
I don't think I've ever witnessed the reviews of a book which more pointedly reflect the personal biases/grievances/et al of the reviewers as this one does ... I worked a floor down from one of the main "characters" in this book from 2002-2007, so I know lots of these "types" in the real world and I don't think my experience has colored my perception of this as being an engaging & entertaining narrative. Some of these concepts could have been explained more easily - others, more thoroughly - ...more
Deepak
I found this book extremely exciting to read, - not only did it give me an insight into the secretive world of Quantitative Trading, but the setting for Renaissance Tech (New York and Long Island - East Setauket and Port Jefferson) is places where I have lived when I was a Graduate student at Stony Brook University. I would guess that this will make a very interesting read for someone who is not into quant finance but is familiar with the mathematics involved - to know that some people used the ...more
Bunnyjadwiga
Read this as an audiobook. I definitely feel I know more about the economics of modern financial trading, and some of the history-- though as a Main Streeter myself, I find myself appalled that, really, when you come down to it, the majority of our economy is a big blackjack/poker game. :) On the other hand, I keep reminding myself that Patterson clearly disapproves of the financial antics that were going on with the help of quanitative math and fast computers before 2009, holding them responsib ...more
Janet
It’s intended for readers of all industries, so if you work in Finance, you’ll have bear with some tedious textbook reading (i.e. defining bps, P/E ratio, etc.). However it was so interesting learning about the history of the industry dating back to the 50’s with Ed Thorp and his statistical discoveries from games of roulette and blackjack. How his theories were the foundation of which the quantitative trading strategies were built upon, using algorithms and formulas instead of fundamentals. Pre ...more
Wes Devauld
As a book that reads as a narrative of the growth of mathematics in finance, as well as a who's who of the largest players in the industry, this book deserves 4 out of 5 stars. The book is easy to read and the author is very capable in making his point. The friendly narrative reads almost as a planned fiction with a well planned and executed story. It would probably be an enjoyable if read by someone that does not have a hard science background.

The reason for the low rating is two fold: The auth
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Aleeda
Aug 11, 2011 Aleeda added it
Scott Patterson deftly takes a subject that has always fascinated me: how engineering and physics Ph.Ds wound up taking over Wall Street, and makes it a fascinating read.

Patterson made me understand that being able to solve math equations that very few people in the world can will not make you smart enough to understand that these formulas and hypotheses that work in the math world won't run so smoothly in the financial world. Why? Surprise! People are sometimes IRRATIONAL.

The book's research i
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Supernova1987agmail.com Wang
Apr 13, 2010 Supernova1987agmail.com Wang rated it 5 of 5 stars
Recommends it for: people who are keen to understand the nature of modern finance
I read this book while I was on a multi-country trip in Europe. It provided endless entertainment to my long train and plane rides between cities. Sure, blackbox trading is a heavy subject, but Patterson did a masterful job of explaining a rather complex history of the quants. His narritive is precise and personal, his tones collected and unbiased. It provides a rare insight into the the shadowy world of hedge funds and the role of finnancial engineering in today's market.

Perhaps I'm the one who
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Andrew
An excellent account of the development of financial derivatives during the 1990s and first decade of the new century. It follows some of the leading academics who did much of their foundation work on derivatives in the 1970s and 1980s at the University of Chicago when I was there -- but only really started to act in the market later.

There are many aspects of the derivative trade to come under examination: the different instruments (collateralized debt obligations, credit default swaps, bond def
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Ilya
Modern quantitative finance was invented by Edward Oakley Thorp, a mathematician who in the early 1960s developed a card-counting scheme in blackjack that made him money in Las Vegas, a story also told in William Poundstone's Fortune's Formula. In 1964 during a game of baccarat, somebody offered Thorp a cup of coffee spiked with drugs; he heeded this warning, and left for Wall Street, the biggest casino of all, finding market anomalies and betting that they would right themselves. Through the 19 ...more
Devin
Some reviews that I read before I started the book suggested the the best parts lay in the first half of the book, followed by an overly technical second. Although I very much enjoyed the first several chapters in which you're introduced to several of the key quantitative fund managers, I actually found the most interesting read in chapters 10 - 13 of the 14 chapter book. 10 - 13 takes you through the events of the financial market collapse from their perspective which I found very insightful an ...more
David
This is a very interesting account of how a relatively small cadre of mathematically-trained investment gurus started large hedge funds, and ultimately played a role in the financial collapse of 2007 and 2008. It has a special interest for me, because I personally know some of the people involved (professional colleagues, not personal friends).

The author clearly has a finely honed skill for casting pictures of these people, capturing both their background and education as well as personal idiosy
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Remo
Este libro explica un montón de cosas sobre la crisis de 2008, entrando tras un montón de puertas que yo creía que siempre habían estado cerradas. Es una lectura muy interesanet y muy bien llevada sobre cómo afectó el crack a los hedge funds, fondos de inversión sin reglas escritas sobre cómo invertir el dinero. Fondos de inversión discrecionales, podríamos llamarlos. En ellos, los más afamados traders se llevan cada año el 2% de lo que gestionan y el 20% de lo que ganan, operando en mercados gu ...more
Craig
This book was both inspiring and appalling. Inspiring, because I wish I had been smart enough and motivated enough to make the millions (nay, billions) of $ some of the subjects of this book made at playing the market with complex financial models. (I could have done that. Really. I think.) It also inspires me to become a card counting blackjack player. (Many of them started this way.)
But mainly I am appalled by unmitigated greed. By a willingness to do anything to make money. By how much money
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Ken
I read over half of this book, and skimmed the final part. It was rather technical, but I think I understood the basic points. The stock market is impossible to accurately predict, but this collection of computer nerds and math geniuses thought that it might be possible, and for many years, they were able to do the impossible. The greatest financial minds in world of finance were convinced that the secrets of the market had been cracked . I don't think that there was any criminal intent, in fact ...more
judy
Personally, any book that keeps me turning pages even though I barely understand it should get 5 stars. Since I don't do Wall Street or finance, I was completely ignorant that there were a whole bunch of Ph.D. mathematicians who had started up quantitative hedge funds. What that really means is mega-math brains (known as Quants) armed with tons of data on how the markets have responded over the years and super-fast supercomputers. Interestingly, most of them started young with a fascination for ...more
Joe S
In this book, Scott Patterson follows the rise of Wall Street's "quants", the mathematicians and financial modeling "experts" who were responsible for some of the enormous sums of money pocketed by hedge funds in the late 90's and first half of the 00's. Patterson seems to give the quants the rock-star treatment, with plenty of gushing about cars, money, supermodel girlfriends and the like. In some ways, he seems to idolize the quants, using terms like "Mathlete" and "Guru". This is where I disa ...more
Chris
I wanted to know something about the subprime crash. This seemed to be the place to look. I found it hard to follow. I put it down thinking I wasn't in the right frame of mind. I refreshed myself with some light fiction and came back and read a bit more. I tried and tried and got about 60% through before I decided I was wasting my time. I haven't learned anything and reading this is just a time sink. I give up. Here's the spoiler: a bunch of too-smart people made mathematical models of financial ...more
Erik Ferragut
If you like to read about millions and billions of dollars (and also a significant supporting role by the Japanese Yen), then you may like this book. There are a large number of personality profiles, too. For my tastes, I found it a bit monotonous. The subtitle is the story, although it is not well substantiated in my view. The book really admits that the quantitative trading was not the cause of the meltdown; it was only the cause of the quants themselves losing billions. The real cause of the ...more
Mike Stubel
I struggled in deciding whether to give this book three or four stars. If you want a blow-by-blow analysis of the financial crisis and it's major players on both Wall Street and in Washington, read Andrew Ross Sorkin's "Too Big to Fail." This book is a historical survey of the complicated quantitative models that came to dominate the financial sector in the years before the late-2000s credit crisis. I appreciated Patterson's easy-to-understand explanations of credit default swaps, collateralized ...more
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I'm the author of a new book called Dark Pools, as well as a New York Times best-seller called The Quants. I'm a reporter for The Wall Street Journal, covering financial regulation from Washington, D.C. I've also written for the New York Times, Rolling Stone and Mother Earth News. I have a masters of arts degree from James Madison University and currently live in Alexandria, Virginia.
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“Insiders say the pressure to succeed at Renaissance can be brutal. One mathematician at the fund may have succumbed to the pressure on March 1, 2006. That’s when Alexander Astashkevich, a thirty-seven-year-old MIT graduate who worked at Renaissance, shot and killed his estranged wife in the small town of Port Jefferson, Long Island, before turning the shotgun on himself. He left behind a six-year-old son named Arthur.” 0 likes
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