The Wrong Answer Faster: The Inside Story of Making the Machine that Trades Trillions

Overview

Praise for The Wrong Answer Faster

"In 1968, no one on Wall Street used computers for trading. Now, no one trades without them. The Wrong Answer Faster is Michael Goodkin's compelling and previously untold story of how he created the first computerized trading system, before anyone thought of doing so."
Emanuel Derman, author of Models.Behaving.Badly. and My Life as a Quant

"Michael Goodkin provides us with a lively account of events in his ...

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Overview

Praise for The Wrong Answer Faster

"In 1968, no one on Wall Street used computers for trading. Now, no one trades without them. The Wrong Answer Faster is Michael Goodkin's compelling and previously untold story of how he created the first computerized trading system, before anyone thought of doing so."
Emanuel Derman, author of Models.Behaving.Badly. and My Life as a Quant

"Michael Goodkin provides us with a lively account of events in his life, including many that involve notable persons in the theory and practice of modern finance. I was particularly fascinated by his account of aspects of his and my own collaboration about which I had never inquired, namely, how he as a young man of modest means conceived the idea of hiring John Shelton, Paul Samuelson, and me as consultants to an enterprise that would manage money using Shelton's arbitrage model; and how he raised investment capital for this enterprise, recruited the targeted individuals, and later signed up clients in part by learning how to hobnob with the rich and famous."
Harry Markowitz, Nobel Laureate in Economic Sciences

"In this tautly written mini-bildungsroman, not only does the author come of age, but in a well-questioned sense, so too does Wall Street. As the reader's heart beats faster, his sense that 'I too am racing into my dreams' will rapidly propel him through its pages. It is a wonderful read."
Mitchell J. Feigenbaum, Toyota Professor, Rockefeller University

"A Horatio Alger story for our times . . .This book is both an exciting story and a morality play."
Leo Kadanoff, recipient of the National Medal of Science (U.S.)

"The Wrong Answer Faster shows the irrational underpinnings of the money game. Merging genius with entrepreneurship, Michael Goodkin sparked a Wall Street revolution by proving it isn't what you know but how fast you know it."
Reese Schonfeld, cofounder of CNN

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Product Details

  • ISBN-13: 9781118133408
  • Publisher: Wiley, John & Sons, Incorporated
  • Publication date: 2/21/2012
  • Edition number: 1
  • Pages: 326
  • Product dimensions: 6.30 (w) x 9.10 (h) x 1.30 (d)

Meet the Author

Michael Goodkin, a successful gambler, failed investor, and mediocre student, was advised by his high school guidance counselor to become a plumber. Eight years later, in 1968 he combined his knack for gambling and lessons learned as a failed investor with the expertise of future Nobel laureate economists to found the company that introduced computerized trading to Wall Street. After seeing the world as a professional backgammon player, in 1996 he founded the software company that pioneered the application of computational physics to financial derivatives. A lecturer at forums including the University of Chicago and the Office of the Comptroller of the Currency, Goodkin holds a JD from Northwestern University and an MBA from Columbia University. The author of Paper Gold, a bestselling novel of financial intrigue, he lives in Chicago.

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Table of Contents

Prologue 1

Chapter 1 High School Hustler 9

Older Doesn’t Mean Smarter, and Bigger Doesn’t Mean Better 10

My First Bank Account 15

Working in the Off-Season 16

The Bill Collector 20

Sundays on Maxwell Street 24

Birth of a Banker 26

Graduation Day 31

Chapter 2 The Late Bloomer 35

Harvard on the Rocks 39

Home for the Holidays 41

The Rat Practical 43

Developing a New Perspective 45

Politics Is Politics 50

Moving to the Downstate Campus 54

Leaving on a Jet Plane 58

Chapter 3 Leading a Double Life 75

In the Mayor’s Office 79

The Best of the Worst 82

Preparing for the Worst 86

Becoming a New Yorker 89

Chapter 4 A Big Idea 91

Still Daydreaming after All These Years 95

The Wrong Answer Faster 97

Mispriced Merchandise 100

Chapter 5 Chasing Venture Capital 109

Shelly Likes the Horse 112

The Problem Is with the Jockey 120

Shelly Takes a Flyer 121

The Guy without the Money 123

Negotiating My Terms 125

Chapter 6 Banking the Venture Capital 127

A Phone with a View 128

Recruiting Shelton 132

Meeting an Investor 141

Quitting Time 143

Hiring Lawyers and Accountants 145

Money by a Nose 147

Miles to Go 153

Chapter 7 Stepping Out in the World 157

Recruiting the Brain Trust 163

I Can’t Even Give It Away 172

Worth More Dead than Alive 174

Chapter 8 Making the Impossible 177

One Door Closes and Another Door Opens 178

Turning Luck into a Craft 182

Changing Jockeys in Midstream 185

Conducting a Symphony Orchestra 186

Person-to-Person Call for Dr. Shelton 187

Turning on the Lights 189

Targeting the Wrong Market 191

Chapter 9 If I Were a Rich Man 195

Rich People Play Backgammon 201

Entering a Parallel Universe 203

The New York Circuit 204

Stretching Rubber Bands 206

The King and I 208

Looking in All the Wrong Places 211

Fishing in Seattle 217

The Best Execution in the Business 220

Chapter 10 Too Good to Be True 223

Snagging an Invitation to London 225

An American Capitalist in Sir Sigmund’s Court 229

The Swiss Connection 233

Closing the Deal 237

Creating a Competitive Bid 244

Graduation Ceremony 248

The Year of Transition 249

Chapter 11 Breaking Away 251

Backgammon and Business 253

Not the Man I Used to Be 259

Chapter 12 Does God Play with Loaded Dice? 269

Back to the Futures 271

Accessing the World of Master Physicists 272

Examining the Dice 277

Chapter 13 Making Physics into a Business 283

Home Alone 289

Seed Money 292

The Russians Are Coming, the Russians Are Coming 296

A Made Man 300

If You Build It They Will Come 301

Running on Empty 306

Entering the Big Leagues 311

Everything Is Connected 312

Time to Get Out of the Way 315

Epilogue 317

Acknowledgments 319

Index 321

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