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

Read for Yourself

I read Patterson's book awhile ago and enjoyed the combination of its pace and illuminating details. I do not work on Wall Street so the context of this foreign land with its exquisite creatures resembled something almost fictional. Unfortunately this strange world GAMBLES with our retirements. After reading reviews here and elsewhere I have found an interesting reaction. Those with a vested interest (or simply want a cheap kindle version) have bashed the book with knee jerk that if nothing else shows it has struck a cord with those in the know.

Squelch is an obvious industry insider trying to limit the truth in the book

4 out of 5 people found this review helpful.

Quite an accomplishment

While the cast of characters is hard to follow at times, overall this is an excellent analysis of the "quants" and their dubious contributions to world financial markets. The explanations and defininitions of the mechanisms used by the "quants" and their role in our financial crisis should be required reading to any investor who doesn't spend eight hours a day working in the real financial world.

2 out of 2 people found this review helpful.

Great read....

Very insightful and informative. Lots of info that makes you appreciate the near disaster we saw in 2008!

2 out of 4 people found this review helpful.

Complements the "The Big Short" by Michael Lewis

Read a review of the "The Big Short" which ended with the question of whether "The Quants" was better, or complementary. I think it's complementary. Whether one calls it math, blind luck, strategy, or tactics, it's not too different. In this case, the traders relied on math to filter, then deliver "crucial" information to their attention, or the attention of the computer doing the trading unattended. "The Big Short" also mentions the ratings agencies, while "The Quants" does not. Probably because it follows a different theme. Seems like ratings agencies should be considered, because many trades were based upon ratings. From the "The Quants", I was exposed to more of the different types of trades, and some of the economic theory in which they live. "The Quants" focus on the role of the math whizzes and the effects of their trading on Wall Street. "The Big Short" follows the stories of a handful of traders as well, but with less history or economic theory or ripple effect. I liked the dialog in the "The Big Short" better. In the long run, I'm happy to have read both.

1 out of 1 people found this review helpful.

Highly Recommended

Highly Recommended

A grest read

Though some of the words are foreign to nonconomics persons like myself, this book still dors a pretty good job of explaining the eco meltdown.

Highly Recommended! Very relevant to today's debt crises

Very well written account of the subprime mortgage crisis that led us to the situation we are in today.

What did you get from The Quants?

If you want to learn the drama of the "Great Recession", there are bunches of books you can read. I believe most of the fans of "The Quants" are particularly interested in Mathematics and finding out how it could help nearly destroy the entire financial system.

From digging into this book, what I got are:

Outstanding Quants are excellent porker players and most of them are good at counting the cards at Black Jack Tables. The first time I went into the casino was back 1988 in Paradise Island, Bahamas when I was in early twenties. If you had a little bit sense of math, you could easily figure out that the overall probability of 10 points being dealt is more than 30% no matter if the dealers keep shuffling.

Most of quantitative models are based on EMH. True, no matter how complex are the models, the simple concept is that traders believe prices of all of the securities will eventually reflect the impact of all information. The key is if you can immediately quantify the outcome of a piece of valid information amongst all rumors. If you have fond of modeling, you may pick a stock to quantify all information and rumors into a model, then predict the trend.

Before the crisis, it had been considered that all risks in the market were well managed and controlled through sophisticated hedging strategies and solutions, even Greenspan agreed. People kept thinking that: "Oh, I hedge my position, someone else will take the risks, I am fully covered." But they forgot who someone else is, he is not God with unlimited power. He could leave the table without delivering the promise.

As we understand, market is random, except a handful of black swans, most of the stocks will be up and down within a range. Buy Low/Sell High + Short Sell High/Buy Back Low should be the key factors in a model for speculators.

Back 1988, one day in Paradise Island Casino & Resort, the predecessor of Atlantis, General Manager, an Italian, educated me: "Pat, you know as a legal business, casino doesn't cheat with tricks. We win over the gamblers because of time." What he meant is Casino has relatively unlimited cash individual gamblers can't match. In theory, Casino keeps running perpetually as long as it is not shut down. Probability will ensure it winning.

So, as an individual or small institutional trader, don't try to beat the giant players. Building your model to follow them"

0 out of 2 people found this review helpful.

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