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

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3.86  ·  Rating details ·  7,407 ratings  ·  369 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,
...more
Hardcover, 352 pages
Published February 2nd 2010 by Crown Business (first published 2010)
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Average rating 3.86  · 
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 ·  7,407 ratings  ·  369 reviews


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Andy
May 12, 2013 rated it it was ok
(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
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David
Mar 10, 2011 rated it liked it
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
Dec 29, 2011 rated it it was ok  ·  review of another edition
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
Navdeep Pundhir
Feb 19, 2019 rated it it was amazing  ·  review of another edition
Brilliant! This book is an absolute Five Star. It took me over three years after Big Short & Boomerang by Michael Lewis to rate a financial journalism book this high.
Most books which detailed the Great Recession of 2008 has basically restated the same thing, in almost the same refrain that its author knew that the world was running blindfolded towards a speeding train. In my view, this was, well, bullshit. Nobody but only a select few sensed what was happening and dared to out their money
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Joy
Mar 04, 2011 rated it really liked it
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 ...more
Dev Scott Flores
Dec 31, 2013 rated it really liked it
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
Sal Fernz
Apr 11, 2019 rated it really liked it  ·  review of another edition
Comforting to know that I can lose money with the best of them.
Stefan Bruun
Mar 01, 2019 rated it really liked it
Shelves: finance, business
A good historical account of the development of quantitative finance. The book doesn't go far in depth with the strategies but describes the players in the industry and their influence on the development. A good starting point for anyone who wants to understand the history of quants.
Brad Mills
Mar 15, 2017 rated it really liked it
This book is pretty dense. I wouldn't recommend it to a casual reader. I am starting an algorithmic trading fund, so I liked this book because I am trying to get more focused information on the history of algorithmic trading on Wall St and with traditional investment firms.

If you're looking for entertaining stories about wall st and trading, this is not really the book for you.

It's a great backstory that walks you through the original algorithmic traders on wall st and how their quantitative
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Wes Devauld
Jan 10, 2012 rated it it was ok
Shelves: finance, trading
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
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Ob-jonny
Nov 01, 2012 rated it liked it
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 ...more
Bryan Kibbe
Jun 09, 2011 rated it it was amazing
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
Max Stone
Jun 16, 2010 rated it it was ok
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
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Phil Simon
Sep 25, 2012 rated it really liked it
Shelves: business
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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Luaba
Mar 06, 2010 rated it it was amazing
Shelves: science
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.
Nicholas Nash
Nov 27, 2016 rated it it was amazing
Very well written and highly entertaining. Must read. Great real-life characters.
Rodney Harvill
Jun 15, 2018 rated it really liked it  ·  review of another edition
Shelves: economics, history
Beware of geeks bearing formulas.
Warren Buffett

You got to know when to hold 'em,
Know when to fold 'em,
Know when to walk away,
And know when to run.
Kenney Rogers, The Gambler

If I had to come up with a theme for this book, the Warren Buffett quote would be it. Quants refers to math whizzes with math, statistics and science backgrounds who founded and inhabited the world of quantitative finance, the use of statistical models to decide when to buy and sell investments, usually in high-frequency
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Lee Candilin
Aug 30, 2017 rated it really liked it
The writer makes the characters in his book sound like victims themselves at the end of the book. The writer talked about a bunch of highly intelligent math whizzes, the so-called Quants, about how they created algorithms to beat the market, and in the process earning themselves and their companies lots of money. These Quants have trusted their models and thought theirs was the ultimate 'Truth', a 'can't fail' money-making machine, until the market came crushing down on them.
If one were to
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YHC
Sep 17, 2017 rated it really liked it
"I can calculate the motion of heavenly bodies, but not the madness of people." - Isaac Newton

I took my time to read this book in a relatively slow speed because i know not much about quants and what they did, so it took me some time to actually google each quants mentioned in this book, to see how they look like and how much networth they are marked on wikipedia.

After watching " inside job", " Too big to fail", i think this book can be a good subject to make a movie.
It's basic surrounded by
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Pablo
Feb 21, 2017 rated it liked it
A great insight into the lives and businesses of some of the most important personalities of the hedge fund industry , from AQR to Citadel among others etc.. The author describes the interesting stuff the quants dealt with and the "fun" stuff they did outside of work. In the end the crisis of 2007/2008 hit their pockets hard and the account by Mr. Patterson is such it's hard to put the book down.
While I appreciate the research that came behind the book and the solemnity and robustness with
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Abeisu
Feb 11, 2018 rated it liked it
I borrowed this book from my local library.

Patterson has a good writing style and the story moves along at a decent clip. He explains the financial, mathematical and scientific concepts well enough. So a layman will not be left behind when the book veers into discussions about esoteric financial products.

My main complaint is that the majority of the characters that Patterson wrote about are very dull people. Aside from having the ability to make a lot of money for themselves and their
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Geoff
Oct 02, 2018 rated it really liked it
the quants- hedge funds guys with high level phd's in mathematics built financial models; spectacular gains (especially Ken Griffen of Citadel) at first, then everything fell apart during the credit crunch and great recession. High leverage and sub-prime crisis erased years of gains. The underlying philosophy of a rational and efficient market provided a foundation for the quants to model their trading and arbitrage strategies. When to market behaved less rational, the flaws in their models ...more
Adrian Mora
Nov 24, 2018 rated it liked it
In 2008 I was fortunate enough to work at a Foreign Currency Exchange company in San Francisco and got a crash course on global economics and the influence on currency. At the time, I didn't understand the magnitude of the situation and thought 2008 was just another typical "recession". After reading the Big Short (Michael Lewis) and living thru the experience I felt like I had a decent understanding what had happened with subprime CDO's, CDS's, tranches, Moody's AAA Gold Ratings, shorting ...more
Bea
Nov 22, 2017 rated it liked it
This started off with real interesting stories and I learned a little about hedge funds, then it retold the stories of each hedge fund or aribitrage manager with all their systems and methods and formulas using quantitative analysis (a lot of them started as gamblers, some even writing gambling how to books) and how they all made millions in the stock market, even as it went down. I still don't really understand how these quants caused the fall in 2008. There were other factors at work, such as ...more
Byrne
Mar 21, 2017 rated it it was ok
This book is an OK summary of the careers of a couple quants. Mostly things you'd get from reading extensive profiles of them, but with a couple vignettes I hadn't seen elsewhere.

What drove me batty was the author's motif of the search for The Truth.

Here's how he describes it:

>Regardless of which signature trade each man favored, they had something far more powerful in common: an epic quest for an elusive, ethereal quality the quants sometimes referred to in hushed, reverent tones as the
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Waffles
May 05, 2018 rated it it was ok
This is an interesting topic made less so by repeatedly highlighting that some of these guys (yes that is gender specific) have big egos. Not all math Ph.Ds are geniuses. The ability to crunch numbers in your head does not make you a genius - very bright and capable, but not a genius. The exception to this complaint is Jim Simons. He is a genius. I could have played a drinking game to the number of times that Wall Street is referred to as a "the world's biggest casino".

page 37 " ... delta is a
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Dani
May 10, 2019 rated it really liked it
Shelves: to-read-and-own
Interesting story about the history of quants on Wall Street. This history lesson is a good modern day example of all quote “models are wrong but some are useful” - George E P Box. Would have liked more description about the math behind this industry, however still an enjoyable read. I can understand all the readers from a math background being annoyed by how Patterson treats the math discussions like some mystical higher power but for some reason it didn’t bother me too much. I just didn’t take ...more
Heidi Foster
Oct 12, 2018 rated it really liked it
This book is compelling and intriguing in its exploration of the players and their practices through the Great Recession. I found it insightful and helpful in gaining a deeper understanding of some of what happened in the financial markets leading up to and during the Great Recession. I was disappointed with the ending; I suppose good books sometimes leave you hungry for more. The story continues and my job is to try to figure out what the other players are doing, how to protect my clients and ...more
Geraldine
Sep 02, 2018 rated it really liked it
I don't go out of my way to read finance related books but this one is close to my heart since I have done some graduate studies in quant finance and met some of the renowned people mentioned in the book. It was well-written in language understandable for anyone not in finance to comprehend. Patterson has a knack for appealing to the masses and is able to do so quite well in this book. I don't necessarily recommend this book to everyone, unless they're really curious about math and finance and ...more
Jon Angell
Nov 23, 2017 rated it really liked it
Shelves: 2017
I came across this rather worn book at a garage sale (or a used book store maybe) this passed year. If you enjoyed the movies Margin Call or The Big Short you have a good idea of what this book was about... it goes player by player over the Top Quantitative Investment wizards that were at the help of the the financial melt down.... the book did a good job describing the key players, their shops, some of their assumptions and how things unfolded during that 2006 thru 2009 Wall St. shake up. Very ...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.
“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.” 1 likes
“Regulators lent a helping hand. On a spring afternoon in late April 2004, five members of the Securities and Exchange Commission gathered in a basement hearing room to meet a contingent of representatives from Wall Street’s big investment banks to talk about risk. The banks had asked for an exemption for their brokerage units from a regulation that limited the amount of debt they could hold on their balance sheets. The rule required banks to hold a large reserve of cash as a cushion against big losses on those holdings. By loosening up these so-called capital reserve requirements, the banks could become more aggressive and deploy the extra cash in other, more lucrative areas—such as mortgage-backed securities and derivatives.” 0 likes
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