With the immediacy of today’s NASDAQ close and the timeless power of a Greek tragedy, The Quants is at once a masterpiece of explanatory journalism, a gripping tale of ambition and hubris . . . and an ominous warning about Wall Street’s future.THE QUANTS How A New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It By Scott Patterson Staff Reporter, The Wall Street Journal
“…a riveting account.”—Financial Times, Henry Sender
A “valuable book…Most investors know little about the quants’ intellectual zealotry, arcane models and power to pump money into–and out of—the system. Patterson, a Wall Street Journal reporter, makes their secretive world comprehensible.”—Bloomberg, James Pressley
“Fascinating and deeply disturbing…Mr. Patterson gives faces and personalities to the quants, making their saga accessible and intriguing.”—The New York Times, by Harry Hurt III
The Quants “radiates with hubris, high stakes and pricey toys.”—Business Week
Twenty-five years ago, the quintessential Wall Street trader was a brash, ballsy risk taker whose actions were motivated by gut instinct and social connections. But in the decades since, the proverbial “gut trader” has been supplanted by a new breed of investor, elite math geniuses—ex-cryptographers, physicists, and game theorists—who’ve swapped old-style hunches for complicated algorithms and supercomputers. Scott Patterson’s forthcoming book: The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It (Crown Business; On sale: February 2, 2010) chronicles the story of the quants’ rise, their near-death experience, and their possible against-all-odds resurgence. The “quants” have become the masters of the Wall Street universe, although their grip on power has grown precarious due to their role in setting off a chain of events that nearly destroyed the world’s financial markets.
In the 1960s, nobody thought of the market as a system that could be gamed. Nobody, that is, except for an eccentric math professor– turned- blackjack god named Ed Thorp. Where other traders saw only the market’s fickle whims, Thorp saw vast reams of data that a clever person could analyze for patterns and profit from. Little by little, Thorp’s once-heretical theories were adopted by others. Computer nerds, math geniuses, and other brilliant eccentrics began to migrate to Wall Street, armed with advanced mathematical tools crafted in Cold War think tanks, the halls of academe, and Las Vegas’s blackjack dens. THE QUANTS profiles the incredible upward ascent of four of the quant elite’s most swashbuckling figures—Peter Muller, Ken Griffin, Cliff Asness, and Boaz Weinstein—men who believed that a dizzying, indecipherable-to-mere-mortals cocktail of differential calculus, quantum physics, and advanced geometry held the key to reaping riches from the financial markets. These men also created a digitized money-trading machine that could shift billions around the globe with the click of a mouse. For a while it seemed as though they’d continue earning gargantuan paydays forever. Then came the day the numbers turned against them. . . .
Drawing on unprecedented access to these four number-crunching titans, Patterson tells the inside story of what these men felt in the days and weeks when they helplessly watched much of their net worth vaporize—and wondered just how their mind-bending formulas and genius-level IQ’s had led them so wrong, so fast. Had their years of success been dumb luck, a good run that could come to an end on any given day? What if the Truth they sought—the secret of the markets—wasn’t knowable? Worse, what if there wasn’t any Truth?
Patterson tells the story not just of these men, but of Jim Simons, the reclusive founder of the most successful hedge fund in history; Aaron Brown, the quant who used his math skills to humiliate Wall Street’s old guard at their trademark game of Liar’s Poker, and years later found himself with a front-row seat to the rapid emergence of mortgage-backed securities; and gadflies and dissenters such as Paul Wilmott, Nassim Taleb, and Benoit Mandelbrot. A gripping narrative of brilliance and hubris, THE QUANTS examines, like no other book has, the economic collapse on a panoramic level.
ABOUT THE AUTHOR:Scott Patterson is a staff reporter at The Wall Street Journal, covering the latest technological advances on Wall Street. This is his first book. Visit: http://scottpattersonreports.com/