In March of 2006, four of 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.
On that night in 2006, these four men and their cohorts were the new kings of Wall Street. Muller, Griffin, Asness, and Weinstein were among the best and brightest of a new breed, the quants. Over the prior twenty years, this species of math whiz--technocrats who make billions not with gut calls or fundamental analysis but with formulas and high-speed computers--had usurped the testosterone-fueled, kill-or-be-killed risk-takers who’d long been the alpha males the world’s largest casino. The quants 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 unprecedented machine, men like Muller, Griffin, Asness and Weinstein had sowed the seeds for history’s greatest financial disaster.
Drawing on unprecedented access to these four number-crunching titans, The Quants tells the inside story of what they thought and felt in the days and weeks when they helplessly watched much of their net worth vaporize--and wondered just how their mind-bending formulas and genius-level IQ’s had led them so wrong, so fast.
With the immediacy of today’s NASDAQ close and the timeless power of a Greek tragedy, The Quants is at once a masterpiece of explanatory journalism, a gripping tale of ambition and hubris, and an ominous warning about Wall Street’s future.
From Publishers Weekly
In a fast-moving narrative, Wall Street Journal reporter Patterson explores the coterie of mathematicians behind the Wall Street crash of 2008. The story's stars are "an unusual breed of investors" called quants, who "used brain-twisting math and super-powered computers to pluck billions in fleeting dollars out of the market." Following the first quant, Beat the Market author Ed Thorp, from his graduate school days in 1955, and introducing others like Peter Muller and Ken Griffin as they established funds at major investment firms, Patterson spins a fascinating story of riches amassed for a few and, inevitably, lost for many: a collapsing hedge fund, "imploding under the weight of toxic subprime assets," took down the system "like a massive avalanche started by a single loose boulder." Though his narrative is interesting and easy to follow, Patterson's explanations of investment terms are not for novices; a glossary would have helped. As he puts the excesses and failures of Wall Street into perspective, however, Patterson also offers evidence that Wall Street hasn't learned its lesson: as of spring 2009, "several banks reported stronger earnings numbers... in part due to clever accounting tricks... and other potentially dangerous quant gadgets being forged in the dark smithies of Wall Street."
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
*Starred Review* Journalist Patterson proves Mark Twain’s point that “truth is stranger than fiction.” Patterson’s recounting of the events leading up to and including the global financial meltdown in 2007 and 2008 features the Quants, a new breed of investor, a corps of elite math geniuses who exchanged the hunches of risk-taking traders for advanced mathematical tools, including complicated algorithms and supercomputers. These new titans of Wall Street set off a chain of events for a financial catastrophe beginning in August 2007, which nearly destroyed the world’s financial markets. This is primarily the story of four main “characters”—Morgan Stanley’s Peter Muller, Citadel hedge fund’s Ken Griffin, Cliff Asness of AQR hedge fund, and Boaz Weinstein of Deutsche Bank. These and other number-crunching wizards amassed multibillion-dollar war chests and then the numbers turned against them. Their ascendancy to the heights and then extraordinary fall to near extinction is a remarkable story, as is the possibility that they all will rise from the ashes. This is a must-read, excellent book. --Mary Whaley
“Scott Patterson has the ability to see things you and I don’t notice. In The Quants he does an admirable job of debunking the myths of black box traders and provides a very entertaining narrative in the process.”
--Nassim Nicholas Taleb, New York Times bestselling author of Fooled by Randomness and The Black Swan
“Fascinating and deeply disturbing…Patterson gives faces and personalities to the quants, making their saga accessible and intriguing…[he’s] onto a big story that begs follow-up.”
--New York Times
“Valuable…makes [the quants’] secretive world comprehensible…the story radiates with hubris, high stakes and expensive toys.”
“A riveting account…there are many dramatic moments and a good dose of schadenfreude in Scott Patterson’s THE QUANTS.”
“Read this book if you want to understand how the collapse of the global financial system was at its core a failure of modern financial theory and its most ardent disciples. Patterson is able to gracefully explain the complex ideas underpinning our financial system through an extraordinarily engaging and insightful story.”
--Mark Zandi, Chief Economist of Moody’s Economy.com and author of Financial Shock
"Enlightening and enjoyable...Patterson masterfully recounts how brilliant mathematicians and technologists ignored the human element...If you're serious about understanding the financial meltdown, you need to read this book."
--David Vise, Pulitzer Prize Winner, author of The Google Story, and Senior Advisor, New Mountain Capital
"A compelling tale of greed and conceit, The Quants tells the inside story of the Wall Street rocket scientists who could couldn’t resist playing with numbers and nearly blew themselves up.”
--Michael J. Panzner, author of Financial Armageddon and When Giants Fail
"The Quants will keep hedge fund managers on the edge of their Aeron chairs, while the rest of us read in horror about their greed and their impact on the wider economy. A gripping tale right until the last page...but I fear this is perhaps not yet the end of the story."
--Paul Wilmott, Oxford Ph.D., founding partner of Caissa Capital, and author of Paul Wilmott Introduces Quantitative Finance
“A character-rich tale of how quirky geniuses cut their teeth on gambling, then moved on to the biggest casino of all, Wall Street. From blackjack to black swans, The Quants tells how we got where we are today.”
--William Poundstone, author of Fortune’s Formula
From the Hardcover edition.
Most helpful customer reviews
4 of 4 people found the following review helpful.
Highly entertaining but not much else
By Money Honey
"The Quants" is a highly entertaining read that seems to have been written under the guise of non-fiction. Scott Patterson seeks to link the actions of those highly mysterious Wall Street types called "Quants" to the credit crisis of 2008, linking their riches and egos to the demise of the market, the problem is it's simply not true. The problem with the book is that it seems to want to place blame on the quants so much that it narrowly focuses on specific events and character flaws that would support the argument. Did quants play a part in the meltdown? Yes, but not all quants and not even the notable people highlighted in the book, there were many factors that led to the crisis. Quants practice a specific type of investment strategy, just like fundamental investors do, it isn't necessarily a big mechanism for group-think like the author would like you to believe. If the reader's underlying goal is to understand the events that culminated with the 2008 credit crisis, they will not find insight here. If the reader's underlying goal is to be highly entertained with a fast paced, well constructed story then they will be delighted with this book.
0 of 0 people found the following review helpful.
Interesting look at Hedge Funds
By Erwin C. Pantel
An interesting look inside and the some of the key individuals involved with hedge funds over the past 20-30 years. Very interesting examination of the foundation for their work.
0 of 0 people found the following review helpful.
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A Nice Primer with History
By Jonathan Medina
It does a good job of surveying the history of the Quant industry and the key players without getting bogged down in the details. Many key books and articles are referenced here for further reading.