*NOW A NEW YORK TIMES BESTSELLER*
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.
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/
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How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
By Scott Patterson
OnSale: February 2, 2010; Hardcover; 352 pages
ISBN: 978-0-307-45337-2; Price: $27.00
Published by Crown Business, an imprint of the Crown Publishing Group,
a division of Random House, Inc.
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For more information about THE QUANTS or to schedule an interview with Scott Patterson, please contact Rachel Rokicki at 212-782-8455 or firstname.lastname@example.org.
**PLEASE SEND A TEARSHEET OF ANY REVIEW OR MENTION**
Praise for THE QUANTS by Scott Patterson
“Scott Patterson has the ability to see things you and I don’t notice. In The Quants he does an admirable job of debunking the myths of black-box traders and provides a very entertaining narrative in the process.”
—Nassim Nicholas Taleb, New York Times bestselling author of FOOLED BY RANDOMNESS and THE BLACK SWAN
“Read this book if you want to understand how the collapse of the global financial system was, at its core, a failure of modern financial theory and its most ardent disciples. Scott Patterson is able to gracefully explain the complex ideas underpinning our financial system through an extraordinarily engaging and insightful story. He shows how even the best and brightest can get caught up in their own hubris, resulting in the worst crisis since the Great Depression.”
—Mark Zandi, chief economist of Moody’s Economy.com and author of FINANCIAL SHOCK
“Enlightening and enjoyable . . . Patterson masterfully recounts how brilliant mathematicians and technologists ignored the human element. . . . If you’re serious about understanding the financial meltdown, you need to read this book.”
—David Vise, Pulitzer Prize winner, author of THE GOOGLE STORY, and senior adviser of New Mountain Capital
“A compelling tale of greed and conceit, The Quants tells the inside story of the Wall Street rocket scientists who couldn’t resist playing with numbers and nearly blew themselves up.”
—Michael J. Panzner, author of FINANCIAL ARMAGEDDON and WHEN GIANTS FALL
“THE QUANTS will keep hedge-fund managers on the edge of their Aeron chairs, while the rest of us read in horror about their greed and their impact on the wider economy. A gripping tale right until the last page . . . but I fear this is perhaps not yet the end of the story.”
—Paul Wilmott, Oxford Ph.D., founding partner of Caissa Capital and author of PAUL WILMOTT INTRODUCES QUANTITATIVE FINANCE
“Do the laws that govern poker apply to the markets? This simple question lies behind the successes and meltdowns of quantitative finance—and we’re all in the game. Scott Patterson weaves a character-rich tale of how quirky geniuses cut their teeth on gambling, then moved on to the biggest casino of all, Wall Street. From blackjack to black swans, The Quants tells how we got where we are today.”
—William Poundstone, author of FORTUNE’S FORMULA
“Ever wonder where the quants who rule modern Wall Street came from and what exactly they do? Scott Patterson has the fascinating answer.”
—Justin Fox, columnist at Time magazine and author of THE MYTH OF THE RATIONAL MARKET