The Quants

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

Hardcover edition
Author Scott Patterson
Country United States
Language English
Subject Finance, trading, investing
Genre Non-fiction
Publisher Crown Business
Publication date
 February 2, 2010
Media type Print, e-book
Pages 352 pp.
ISBN 0-307-45337-5
Followed by Dark Pools

The Quants is the debut New York Times best selling book by Wall Street journalist Scott Patterson.[1][2] It was released on February 2, 2010 by Crown Business. The book describes the world of quantitative analysis and the various hedge funds that use the technique.[3][4] Two years later, Patterson followed up The Quants with Dark Pools: High Speed Traders, AI Bandits and the Threat to the Global Financial System, an investigative journey into the history of high-frequency trading and the spread of artificial intelligence in today’s markets.[5][6]

Background

Patterson began writing The Quants in 2008. He was first exposed to the quantitative analysis investment strategies while covering the financial industry for the Wall Street Journal.[7] As he became more acquainted with the players involved, he found that many of the most successful quants knew each other and carried similar eccentric qualities.[7] Realizing this was a world that the average investor knew little of, Patterson wrote the book to shed light on the strategies, players, and related risks of such trading strategies.[7]

Synopsis

The introduction to The Quants describes the real-life, annual, high-stakes poker match between Wall Street's hedge fund managers and compares their trading styles to their poker strategies.[8] It focuses on, among other things, the 2007 subprime mortgage crisis and how it helped trigger a sudden and massive unwind of complex, highly leveraged quantitative strategies. The book also delves into critical short-comings of many quantitative strategies, such as their tendency to lead to crowded trades and their underestimation of the likelihood of chaotic, volatile moves in the markets.[9]

The book also delves into the background of the various vanguards of quantitative analysis. It tells the history of Beat the Market & Beat the Dealer author Ed Thorp; Peter Muller from Morgan Stanley's hedge fund; Ken Griffin from Chicago's Citadel LLC; James Simons from Renaissance Technologies; Clifford S. Asness and Aaron Brown from AQR Capital Management; and Boaz Weinstein from Deutsche Bank.[10][11]

Reception

The Quants debuted on The New York Times bestseller list.[1] Jon Stewart featured Patterson as a guest on The Daily Show and described the book as "unbelievable."[4] Patterson was a guest on NPR, and Ed Thorp, one of the book's main characters, joined Patterson for a live interview.[10] The New York Times profiled the book, calling it "fascinating and deeply disturbing."[2] The Quants received additional profiles in Bloomberg, BusinessWeek, Scientific American, Financial Times, and Minyanville.[2][3][4][7][8][9][10][11][11]

See also

References

  1. 1 2 "Hardcover Business Best Sellers". New York Times. March 5, 2010.
  2. 1 2 3 Hurt III, Harry (February 20, 2010). "In Practice, Stock Formulas Weren't Perfect". New York Times.
  3. 1 2 Pressley, James (February 18, 2010). "How Quants Made a Killing—and Made a Mess". BusinessWeek.
  4. 1 2 3 Stewart, Jon (March 4, 2010). "Scott Patterson". The Daily Show.
  5. ↑ Cendrowski, Scott (June 22, 2012). "Reasons to fear Wall Street's high-tech traders". CNN Money.
  6. ↑ "High Speed Threats to Global Financial Systems". CNBC.
  7. 1 2 3 4 Collins, Greg (April 13, 2010). "The Quants: Q&A With Scott Patterson". Minyanville.
  8. 1 2 Patterson, Scott (September 22, 2011). "How Math Whizzes Helped Sink the Economy]". Scientific American.
  9. 1 2 Sender, Henny (February 11, 2010). "Wall St maths geniuses whose models did not add up". Financial Times.
  10. 1 2 3 "'The Quants': It Pays To Know Your Wall Street Math". NPR. February 1, 2010.
  11. 1 2 3 Pressley, James (February 10, 2010). "Citadel's Griffin Skirts Disaster, Taleb Fumes: Books (Update1)". Bloomberg L.P.
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