The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (by Scott Patterson)

BookInfo

ISBN: 9780307453372	Number of Pages: 352
Publisher:  Crown Business	Book Title: The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
Publication Year: 2010	Target Audience: Trade
Author: Scott Patterson	Reading Age: 18+

Summary

The Quants is a book about the alternative life of top financial masters on Wall Street.

Since the financial crisis broke out in 2007, the author interviewed many California mortgage default owners, hedge fund managers, and top economists and financial scholars, and reported the crisis in the Wall Street Journal from all directions and angles.

This book gives an unprecedented in-depth description of the emerging dominator of Wall Street, The Quants. Among them, there are not only the outstanding new players of The Quants: Muller, Griffin, Asness, and Weinstein, but also the reclusive Jim Simmons, Alan Brown, the founder of the most successful hedge fund in history, and the different types of The Quants.

These mathematical talents are like children who break into the candy store on Wall Street – they have climbed to the top from the bottom of Wall Street, causing market collapse again and again.

The Quants is one of the Best Quantitative Trading Books for Beginners

About the Author

Scott Patterson is a senior reporter for Wall Street Journal and a financial columnist. Among the 2 million subscribers of the Wall Street Journal, 40% thought his column was a required article.

This book is the author’s first work. In the book, the author gives an unprecedented in-depth description of the emerging dominator of Wall Street, The Quants.

Among them, there are not only the outstanding new players of The Quants: Muller, Griffin, Asness, and Weinstein, but also the reclusive Jim Simmons, Alan Brown, the founder of the most successful hedge fund in history, and the different types of The Quants.

The Quants  PDF version will come as soon as possible.

Table of Contents

Catalog

Chapter 1 Start with Gambling

The participants in this event are all one in a hundred rich and talented people, who run amuck on Wall Street with divine calculation and determination.
During the day, they are elite traders, who are well-dressed to match every transaction. In the evening, they turned into fanatical gamblers.
These people are high-end financial trendsetters. They usually have secret whereabouts, and few people know them when they walk out of this hall.
But in fact, they are the leaders behind the financial market, and they determine the ups and downs of the global financial system by tens of billions of dollars.

Chapter 2 The Godfather of The Quants Thorpe

Thorpe’s 21-point winning model and Kelly’s best bet system are invincible. Despite frequent obstacles, Thorpe and Kimmel can still beat the dealer continuously.
Thorpe knew that he was the lamb who defeated the butcher. As he would later write, “The spring of the sheep has come.”
Soon, he turned his attention to Wall Street, the largest casino in the world. As the Godfather of The Quants, Thorpe opened a broad road for mathematical traders. Decades later, The Quants became the master of Wall Street and almost destroyed it.

Chapter 3 They Are Crazy Gold Miners

In practice, obvious arbitrage opportunities are very rare, often hidden in the complex financial market, like gold mixed in the vast sand sea.
And The Quants, a group of mathematical talents, is a gold digger in the financial market. In the dark corner of the warrant, Thorpe and Kasaf ran into a gold mine full of arbitrage opportunities. This strategy was later called convertible bond arbitrage. This is the most successful and profitable trading strategy in history. Thousands of hedge funds have taken advantage of this strategy to set sail.

Chapter 4 “Volatility Smile”

Nassim Taleb said that investors who believe that the market movement presents random wandering are “fools who get rich at random”.
He believes that there are far more black swan events in the world than people think. Black Monday has left an indelible mark on every corner of the market. After the disaster, the spooked traders called this extreme phenomenon “volatility smile”, which was a chilling sneer from the market.

Chapter 5 Fierce Fama Piranha

Fama said that a large number of investors are tirelessly looking for ineffectiveness, just like hungry piranhas looking for fresh meat. Whenever the market price deviates from the track, the computer-armed spaghetti piranha will pounce on the market, which generally brings the market back to order and feeds itself. High-power computers scan the global market like radar, looking for opportunities to make money. Of course, spammers are not always right, but as long as the right frequency is high enough, they can share the money.

Chapter 6 The Wolf is at the Door

The huge pressure made Simmons smoke three packs of cigarettes every day. Although the Grand Medal Fund can always turn things around and get back on track, Simmons will have stomach cramps every time he sees the fund loses money. Behind the dazzling aura of the fund is endless pressure: every moment, the myth may suddenly end, and the magic of the grand medal may fail at any time and anywhere, just like the spirit in the bottle, it will disappear with a whoosh. Every moment, the truth may no longer be the truth.

Chapter 7 Money Is Digitized

In the late 1990s, Griffin traded convertible bonds in the skyscrapers of Chicago; Simmons established his own The Quants empire in East Sitokit; Weinstein trades derivatives in front of Deutsche Bank’s computer; Muller buys and sells stocks at Morgan Stanley; Asness measures value and momentum at QAR. They have all earned wealth that they never thought of. With the click of a mouse, billions of dollars can be transferred from one corner of the earth to another in an instant.

Chapter 8 Four Musketeers

Muller, Weinstein, Asness, and some other top quants and hedge fund managers get together several times a month to play their private card games in luxury hotels in New York.
The initial bet is said to be $10000, but in fact, it is far more than that. Money is not the key for them, but the important thing is to win or lose: they value who is the best at raising and covering cards, and who is the best at bluffing. The card game between the roomies often lasts until late at night, sometimes even until dawn.

Chapter 9 “God Bless, the Future Will Be Better”

Brown found that the current financial system is no longer the original quiet world, but has become a monster full of derivatives and debt shredders.
Major banks are mired in the strangest financial derivatives. However, like all Wall Street people, Brown was blinded by beautiful figures and only wanted to make endless profits with sophisticated trading strategies. In fact, except for a few insincere guys, the entire broadband community is cheering for the explosive growth of the derivatives market.

Chapter 10 Detonating a Supernova

Asness pointed the finger at his imitators: “Our stock selection investment has been invincible for a long time, but recently it has caused serious losses to us and all those who adopt similar strategies. This is because our successful strategy has attracted too many investors.”
On that Wednesday, a series of previous events that seemed to be just minor failures of the quantitative model turned into a disaster. Almost all quantitative strategies and the most sophisticated investment concept in people’s eyes were destroyed, and the deleveraging supernova exploded.

Chapter 11 For Whom the Bell Tolls

Less than three years ago, on the Wall Street Poker Night at the St. Regis Hotel, the roomers were so proud to sit on the throne of Wall Street, but now they have been knocked down by the crazy market.
The world financial system is like a spider web, which looks beautiful, but if you tear one corner away, other parts will be involved, and even the whole web will be destroyed.
As Luo Wenquan, a professor of finance, predicted, the death knell of the world financial system is about to ring.

Chapter 12 The dominoes fall down

In the past 20 years, Griffin had only one annual loss, and now his fund has reached the critical point of survival. At this moment, the stronghold, one of the most mysterious hedge funds in the world, is completely exposed to the public.
The panic wave caused by the collapse of Lehman and the near bankruptcy of AIG was like a great earthquake sweeping the entire financial system.
At first, the earthquake wave seemed to be able to be controlled, but before long, what Griffin called the undercurrent turned into a towering billow, tearing the ship to pieces.

Chapter 13 The Devil Standing at the Entrance of Heaven

In 2009, Buffett warned: beware of geeks who concoct formulas. His long-term partner, the wise Charlie Munger, also said: “People think that they can be gods with more advanced mathematics and more powerful computer models, but they are demons.”.
You should know that in the chaotic world of finance, there is no single truth. Here, the panic, manic and turbulent crowd is enough to destroy any rational expectation, and the unscrupulous guest is the culprit of this collapse.

Chapter 14 Dark Pool, the New Favorite of The Quants Trading

The toxic asset market that triggered the Great Crash is shrinking dramatically, but the dangerous gadgets on Wall Street are like weeds that can’t be burned out, and the spring breeze is blowing again. A new type of stock trading mechanism, the dark pool, has begun to rise.
While the originally dark derivatives have been placed under the bright sky step by step, the stock trading is stepping into the dark kingdom step by step. Hedge funds are like submarines in the dark pool, constantly sending electronic signals to search for prey – liquidity.