Nerds on Wall Street: Math, Machines, and Wired Markets

Nerds on Wall Street: Math, Machines, and Wired Markets

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by David J. Leinweber
     
 

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An intriguing look at how technology is changing financial markets, from an innovator on the frontlines of this revolution

Nerds on Wall Street tells the tale of the ongoing technological transformation of the world's financial markets. The impact of technology on investing is profound, and author David Leinweber provides readers with an overview of

Overview

An intriguing look at how technology is changing financial markets, from an innovator on the frontlines of this revolution

Nerds on Wall Street tells the tale of the ongoing technological transformation of the world's financial markets. The impact of technology on investing is profound, and author David Leinweber provides readers with an overview of where we were just a few short years ago, and where we are going. Being a successful investor today and tomorrow—individual or institutional—involves more than stock picking, asset allocation, or market timing: it involves technology. And Leinweber helps readers go beyond the numbers to see exactly how this technology has become more responsible for managing modern markets. In essence, the financial game has changed and will continue to change due entirely to technology. The new "players," human or otherwise, offer investors opportunities and dangers. With this intriguing and entertaining book, Leinweber shows where technology on Wall Street has been, what it has meant, and how it will impact the markets of tomorrow.

Editorial Reviews

From the Publisher
Praise for Nerds On Wall Street

"Leinweber leads his readers through a largely unexplored forest, turning over ordinary-looking rocks to reveal hidden colonies of peculiar creatures that feed on moldering mounds of numbers teeming with trailing zeroes. His book is absorbing, instructive, and very, very funny."
David Shaw, Founder, D. E. Shaw & Co.

"David Leinweber has been a pioneer in developing and applying advanced technologies in the capital markets. This book is a virtual tour de force survey of many of the key innovations over the past two decades, with key insights for the future. It is a highly engaging, insightful, and entertaining book for all investors who want to understand the increasingly important role of technology in the financial markets."
Blake Grossman, CEO, Barclays Global Investors

"Leinweber isn't half as crazy as people said! He foresaw the profound change that wired technology would bring to markets (robots trading millions of shares in six milliseconds). Now he nails the Stupid Financial Engineering Tricks that dumped the markets, and offers his patented, sound insights on how the nerds will help bring us back."
Jane Bryant Quinn, Financial columnist, Bloomberg.com and Newsweek

"Through the lenses of finance 'nerds,' Dave Leinweber recounts the quantitative and technological revolution in equity trading. The book is humorously written but it is serious and insightful. It makes an important contribution to our understanding of financial innovation and the evolution of the capital markets."
Andre F. Perold, George Gund Professor of Finance and Banking, Harvard Business School

"Finally, a book that rightly honors the pocket-protected, RPN-loving, object-oriented, C-compatible, self-similar Wall Street quant! This is a delightfully entertaining romp across the trading floors and through the research departments of major financial institutions, told by one of the early architects of automated trading and a self-made nerd."
Andrew W. Lo, Professor of Finance, MIT Sloan School of Management

"David Leinweber is one of the great financial innovators of our time. David possesses a unique combination of expertise in the fields of money management, artificial intelligence, and computer science."
Blair Hull, Founder, Hull Trading & Matlock Trading

"An important, accessible, and humorous guide to today's electronic markets. Like Capital Ideas mixed with Being Digital, as told by Steve Martin."
Frank Fabozzi, Yale School of Management, Editor, Journal of Portfolio Management

"Slicing and dicing data to predict the future can get dicey. The Super Bowl market indicator holds that stocks will do well after a team from the old National Football League wins the Super Bowl. . . The "Sell in May and go away" rule advises investors to get out of the market after April and get back in after October. . . hundreds — of Web sites hawk "proprietary trading tools" and analytical "models" . . . There is no end to such rules. But there isn't much sense to most of them either. An entertaining new book, "Nerds on Wall Street," by the veteran quantitative money manager David Leinweber, dissects the shoddy thinking that underlies most of these techniques."
Jason Zweig, The Wall Street Journal

"One of the best reads that I have picked up in some time. It stimulated me about things in the market that I didn't know.... A wonderful book"
Vince Rowe Radium, Biz Radio

"Where technology will take investing and trading in the future is anyone's guess. Yet, David J. Leinweber in his newly published book, "Nerds on Wall Street: Math, Machines and Wired Markets," provides a glimpse of the direction. In his lively — alternately raucous and reverent, deriding and respectful — Mr. Leinweber recounts the history of how technology has transformed investing and trading through the people that developed ideas and pioneered applications, most famously in indexing, optimization and quantitative investing. . . The book makes one of the best reads of the summer — suitable for the beach as well as for a serious reader in suit and tie at the office."
—Pensions & Investments

“Explains complex financial instruments in relatively simple terms, and the same goes for complex trading techniques. . . The average reader will learn a lot here. I recommend the book to those that want to dig into how the equity markets became more computerized.
— Seeking Alpha

Product Details

ISBN-13:
9780471369462
Publisher:
Wiley
Publication date:
06/09/2009
Pages:
353
Product dimensions:
6.30(w) x 9.10(h) x 1.40(d)

What People are saying about this

From the Publisher
Additional Praise for Nerds on Wall Street

"Most new technologies are exploited first by "alpha geeks," the folks with the skills to push the envelope. This is as true on Wall Street as it was on the web. David Leinweber was one of those alpha geeks, but is also the first to chronicle the innovation process from early adopter to mainstream acceptance."
Tim O'Reilly, Founder & CEO O'Reilly Media

"Nerds on Wall Street is a thoughtful, funny, and comprehensive history of the overlooked role geeks have played in our financial markets from the earliest days of telegraph, to risk management systems in the current credit crisis. The book is an irreverent "I Was There" chronicle of how our financial markets were formed from silicon, savvy and software. Highly recommended."
Paul Kedrosky, Infectious Greed, Ten Asset Management and Kauffman Foundation

"For decades Dave has not only understood more investment technology than anyone, but with patience and a great sense of humor, he has made the effort to explain it to his less tech savvy friends. Nerds on Wall Street is a home run for us all."
Richard Rosenblatt, CEO, Rosenblatt Securities

"Nerds on Wall Street is a wild, funny ride though the technological changes that underpin modern financial markets. You will find yourself laughing out loud at what could otherwise be a dry subject. And, if you’re not careful, you might even learn something!"
Richard R. Lindsey, Chairman, International Association of Financial Engineers; Principal, Callcott Group LLC

"If you're interested in what computers are doing with your money, then this book is for you."
Richard Peterson, MD, Managing Director MarketPsy Capital LLC; Author, Inside the Investor's Brain

"In David’s words, the stock market is a "victim not a cause" of the great mess of 2008. It’s refreshing to read a book with such insight during these difficult times. I applaud David Leinweber for this timely masterpiece."
Bill Aronin, Co-founder Quantitative Analytics, Inc; Sr. Manager, Thomson Reuters

"Clear, light language and wry humor mask David Leinweber’s exhaustive compendium of technological innovations for and impacts on asset trading. Leinweber brings an entrepreneur’s experience and an academic’s perspective to financial technology; and has produced the definitive work, as up-to-date as it is encyclopedic."
David K. Whitcomb, Founder and Chairman Emeritus, Automated Trading Desk and Professor of Finance Emeritus, Rutgers University

"Dr. Leinweber continues to be a patron saint of any nerd who stumbles onto Wall Street. Many of his most insightful ideas are here in this book, the utility of which are only matched by the humor of their presentation. As the markets have changed in 2008, the need to collect, process, and understand novel information sources has never been greater."
Jacob Sisk, Infoshock, Yahoo

"Thoughtful insights covering trading, investment practice and system design encased in humor by an expert in all four: a good and practical read."
Evan Schulman, Founder, Tykhe, LLC.

"David is one of the top practitioners in the fields of textual analysis and sentiment and its application to trading. Leveraging "smart" machines to parse and extract signal from massive quantities of textual data is hard, and David’s work has put him at the vanguard of the next wave of alpha generation."
Roger Ehrenberg, Information Arbitrage, and IA Capital Partners

Meet the Author

David Leinweber is a Haas Fellow in Finance at the Haas School of Business at UC Berkeley, and founding Director of the Center for Innovative Financial Technology at Berkeley. He is the founder of two pioneering financial technology firms and successfully managed multibillion-dollar institutional portfolios for many years. Dr. Leinweber has consulted, published, and lectured widely on the use of advanced technology, artificial intelligence, and intelligence amplification in finance-always in an easy and accessible way-and has earned the reputation as "class clown of the quantitative investing industry." He received BS degrees in physics and electrical engineering from the Massachusetts Institute of Technology and a PhD in applied mathematics from Harvard University.

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Nerds on Wall Street: Math, Machines, and Wired Markets 4 out of 5 based on 0 ratings. 2 reviews.
Anonymous More than 1 year ago
NerdOnWallStreet More than 1 year ago
I wanted to share some extra information about the book. Reviews: "Slicing and dicing data to predict the future can get dicey... Hundredsof Web sites hawk "proprietary trading tools" and analytical "models" . . . There is no end to such rules. But there isn't much sense to most of them either. An entertaining new book, "Nerds on Wall Street," by the veteran quantitative money manager David Leinweber, dissects the shoddy thinking that underlies most of these techniques." - Jason Zweig, The Wall Street Journal "One of the best reads that I have picked up in some time. It stimulated me about things in the market that I didn't know.... A wonderful book" -Vince Rowe Radium, Biz Radio "Where technology will take investing and trading in the future is anyone's guess. In his lively style - alternately raucous and reverent, deriding and respectful - Mr. Leinweber recounts the history of how technology has transformed investing and trading... The book makes one of the best reads of the summer - suitable for the beach as well as for a serious reader in suit and tie at the office." --Pensions & Investments And some endorsements from the back cover and inside: "Leinweber leads his readers through a largely unexplored forest, turning over ordinary-looking rocks to reveal hidden colonies of peculiar creatures that feed on moldering mounds of numbers teeming with trailing zeroes. His book is absorbing, instructive, and very, very funny." -David Shaw, Founder, D. E. Shaw & Co. (Legendary Top Quant Fund) "David Leinweber has been a pioneer in.. technologies in the capital markets. This book is a virtual tour de force survey of many of the key innovations over the past two decades, with key insights for the future. It is a highly engaging, insightful, and entertaining book for all investors who want to understand the increasingly important role of technology in the financial markets." -Blake Grossman, CEO, Barclays Global Investors (World's Largest Investment firm) "Leinweber isn't half as crazy as people said! He foresaw the profound change that wired technology would bring to markets (robots trading millions of shares in six milliseconds). Now he nails the Stupid Financial Engineering Tricks that dumped the markets, and offers his patented, sound insights on how the nerds will help bring us back." -Jane Bryant Quinn, Financial columnist, Bloomberg.com and Newsweek "Through the lenses of finance 'nerds,' Dave Leinweber recounts the quantitative and technological revolution in equity trading. The book is humorously written but it is serious and insightful. It makes an important contribution to our understanding of financial innovation and the evolution of the capital markets." -Andre F. Perold, Professor of Finance, Harvard Business School "This is a delightfully entertaining romp across the trading floors and through the research departments of major financial institutions, told by one of the early architects of automated trading and a self-made nerd." -Andrew W. Lo, Professor of Finance, MIT "David is one of the great financial innovators of our time. David possesses a unique combination of expertise in the fields of money management, artificial intelligence, and computer science." -Blair Hull, Founder, Hull Trading & Matlock Trading