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addabook - The Quants
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The Quants
How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
Scott Patterson
read on May 1, 2010

This is essentially a book that tracks the careers of five or six different kids that went on to become Wall Street giants by inventing financial engineering. Essentially, these are the guys that had just the right mix of talents and interests at just the right point in history (tech revolution) to become mega millionaires. 

Straight away, I was surprised by the mention of Ed Thorp. He's the guy that wrote Beat The Dealer, the godfather of card counting and a central figure in Bringing Down The House, which I read a few months ago. Turns out Thorp followed that up by writing Beat The Markets and also became the godfather of quants! I had thought that reading about card counting was just a fun diversion - but turns out pretty much every quant on Wall Street got started counting cards and reading Thorp's books.

Anyway- not too much to say about this one except it really showed me that these guys are in a totally different class than me. When Peter Griffen was 19 he was a freshman at Harvard. By that age he had already read Thorp's book, and convinced people to give him 200K to invest in warrant-convertible bond arbitrage strategies. He put a satellite dish on the top of his dorm to be able to run a real-time trading office from his freaking dorm room. He flew himself to New York on weekends to meet up with the Wall Street traders he "met" making trades over the phone. My freshman year I was still intimidated by girls. I mean, holy hell.

So yeah, the book describes about five other people pretty much just like that, who are both gifted and motivated and ambitious beyond any reasonable standard, and their not-improbable rise to success. It also mentions how their automated and high frequency trading schemes almost broke Wall Street during the previous crises, but that wasn't really the focus.

All in all, a great book to motivate an aspiring 12 year old, or depress an aspiring 26 year old.

Author Bio:

Scott Patterson is author of The Quants and is currently a reporter for The Wall Street Journal, where he covers financial regulation from Washington, D.C. He has also written for the New York Times, Rolling Stone and Mother Earth News. He has a masters of arts degree from James Madison University. He lives in Alexandria, Virginia.