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

Overview

An intriguing look at how technology is changing financialmarkets, from an innovator on the frontlines of thisrevolution

Nerds on Wall Street tells the tale of the ongoingtechnological transformation of the world's financial markets. Theimpact of technology on investing is profound, and author DavidLeinweber provides readers with an overview of where we were just afew short years ago, and where we are going. Being a successfulinvestor today and tomorrow—individual or ...

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Overview

An intriguing look at how technology is changing financialmarkets, from an innovator on the frontlines of thisrevolution

Nerds on Wall Street tells the tale of the ongoingtechnological transformation of the world's financial markets. Theimpact of technology on investing is profound, and author DavidLeinweber provides readers with an overview of where we were just afew short years ago, and where we are going. Being a successfulinvestor today and tomorrow—individual or institutional—involvesmore than stock picking, asset allocation, or market timing: itinvolves technology. And Leinweber helps readers go beyond thenumbers to see exactly how this technology has become moreresponsible for managing modern markets. In essence, the financialgame has changed and will continue to change due entirely totechnology. The new "players," human or otherwise, offer investorsopportunities and dangers. With this intriguing and entertainingbook, Leinweber shows where technology on Wall Street has been,what it has meant, and how it will impact the markets of tomorrow.

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Editorial Reviews

From the Publisher
Praise for Nerds On Wall Street

"Leinweber leads his readers through a largely unexploredforest, turning over ordinary-looking rocks to reveal hiddencolonies of peculiar creatures that feed on moldering mounds ofnumbers 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 applyingadvanced technologies in the capital markets. This book is avirtual tour de force survey of many of the key innovations overthe past two decades, with key insights for the future. It is ahighly engaging, insightful, and entertaining book for allinvestors who want to understand the increasingly important role oftechnology in the financial markets."
Blake Grossman, CEO, Barclays Global Investors

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

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

"Finally, a book that rightly honors the pocket-protected,RPN-loving, object-oriented, C-compatible, self-similar Wall Streetquant! This is a delightfully entertaining romp across the tradingfloors and through the research departments of major financialinstitutions, told by one of the early architects of automatedtrading and a self-made nerd."
Andrew W. Lo, Professor of Finance, MIT Sloan Schoolof Management

"David Leinweber is one of the great financial innovators of ourtime. David possesses a unique combination of expertise in thefields of money management, artificial intelligence, and computerscience."
Blair Hull, Founder, Hull Trading & MatlockTrading

"An important, accessible, and humorous guide to today'selectronic markets. Like Capital Ideas mixed with Being Digital, astold 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 wellafter a team from the old National Football League wins the SuperBowl. . . The "Sell in May and go away" rule advises investors toget out of the market after April and get back in after October. .. hundreds — of Web sites hawk "proprietary trading tools" andanalytical "models" . . . There is no end to such rules. But thereisn't much sense to most of them either. An entertaining new book,"Nerds on Wall Street," by the veteran quantitative money managerDavid Leinweber, dissects the shoddy thinking that underlies mostof these techniques."
Jason Zweig, The Wall Street Journal

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

"Where technology will take investing and trading in the futureis anyone's guess. Yet, David J. Leinweber in his newly publishedbook, "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 hastransformed investing and trading through the people that developedideas and pioneered applications, most famously in indexing,optimization and quantitative investing. . . The book makes one ofthe best reads of the summer — suitable for the beach as wellas for a serious reader in suit and tie at the office."
—Pensions & Investments

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

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Product Details

  • ISBN-13: 9780471369462
  • Publisher: Wiley
  • Publication date: 6/9/2009
  • Edition number: 1
  • Pages: 353
  • Product dimensions: 6.30 (w) x 9.10 (h) x 1.40 (d)

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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Table of Contents

Foreword by Ted Aronson.

Acknowledgments.

Introduction.

Part One 1: Wired Markets.

Chapter 1: An Illustrated History of Wired Markets.

Chapter 2: Greatest Hits of Computation in Finance.

Chapter 3: Algorithm Wars.

Part Two: Alpha as Life.

Chapter 4: Where Does Alpha Come From?

Chapter 5: A Gentle Introduction to Computerized Investing.

Chapter 6: Stupid Data Miner Tricks.

Part Three: Artificial Intelligence and IntelligenceAmplification.

Chapter 7: A Little AI Goes a Long Way on Wall Street.

Chapter 8: Perils and Promise of Evolutionary Computation onWall Street.

Chapter 9: The Text Frontier: AI, IA, and the New Research.

Chapter 10: Collective Intelligence, Social Media, and WebMarket Monitors.

Chapter 11: Three Hundred Years of Stock Market Manipulations:From the Coffeehouse to the World Wide Web.

Part Four:  Nerds Gone Wild: Wired Markets inDistress.

Chapter 12: Shooting the Moon: Stupid Financial TechnologyTricks.

Chapter 13: Structural Ideas for the Economic Rescue: FractionalHomes and New Banks.

Chapter 14: Nerds Gone Green: Nerds on Wall Street, off WallStreet.

Index.

About the Web Site.

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