The Quants by Scott Patterson
How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It

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“Beware of geeks bearing formulas.”
--Warren Buffett
In March of 2006, the world’s richest men sipped champagne in an opulent New York hotel.  They were preparing to compete in a poker tournament with million-dollar stakes, but those numbers meant nothing to them.  They were accustomed to risking billions.  
At the card table that night was Peter Muller, an eccentric, whip-smart whiz kid who’d studied theoretical mathematics at Princeton and now managed a fabulously successful hedge fund called PDT…when he wasn’t playing his keyboard for morning commuters on the New York subway.  With him was Ken Griffin, who as an undergraduate trading convertible bonds out of his Harvard dorm room had outsmarted the Wall Street pros and made money in one of the worst bear markets of all time.  Now he was the tough-as-nails head of Citadel Investment Group, one of the most powerful money machines on earth. There too were Cliff Asness, the sharp-tongued, mercurial founder of the hedge fund AQR, a man as famous for his computer-smashing rages as for his brilliance, and Boaz Weinstein, chess life-master and king of the credit default swap, who while juggling $30 billion worth of positions for Deutsche Bank found time for frequent visits to Las Vegas with the famed MIT card-counting team.  
On that night in 2006, these four men and their cohorts were the new kings of Wall Street.  Muller, Griffin, Asness, and Weinstein were among the best and brightest of a  new breed, the quants.  Over the prior twenty years, this species of math whiz --technocrats who make billions not with gut calls or fundamental analysis but with formulas and high-speed computers-- had usurped the testosterone-fueled, kill-or-be-killed risk-takers who’d long been the alpha males the world’s largest casino.  The quants 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.  And they helped create a digitized money-trading machine that could shift billions around the globe with the click of a mouse.  
Few realized that night, though, that in creating this unprecedented machine, men like Muller, Griffin, Asness and Weinstein had sowed the seeds for history’s greatest financial disaster.  
Drawing on unprecedented access to these four number-crunching titans, The Quants tells the inside story of what they thought and 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, fool’s gold, 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?
In The Quants, Scott 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.  
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.

From the Hardcover edition.

About Scott Patterson

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SCOTT PATTERSON is a staff reporter at The Wall Street Journal covering the latest cutting-edge technological advances on Wall Street. This is his first book.From the Hardcover edition.
Published January 29, 2010 by Crown Business. 354 pages
Genres: Business & Economics. Non-fiction

Unrated Critic Reviews for The Quants

The New York Times

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Mr. Patterson may soon be writing a sequel: “The Quants Strike Back.” More Articles in Business » A version of this article appeared in print on February 21, 2010, on page BU7 of the National edition.

Feb 20 2010 | Read Full Review of The Quants: How a New Breed o...

New York Journal of Books

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Here is Scott Patterson with a terrific subject to write about—how the Quants stole Wall Street, and then helped to nearly destroy it in the financial crisis—and, instead of simply presenting it, he has to try to hype it desperately with painfully written descriptions and ludicrous references to ...

Feb 02 2010 | Read Full Review of The Quants: How a New Breed o...


He details the impact in his book The Quants - a highly readable, very entertaining look at the new breed of mathematicians and financial engineers who got caught in the middle of it all - it was one of my favorite books of the financial crisis.

Dec 08 2010 | Read Full Review of The Quants: How a New Breed o...


Scott Patterson described Ed Thorp as “the God Father” of the Quant movement.

Feb 16 2010 | Read Full Review of The Quants: How a New Breed o...

Huntington News

Leopold, in his Jan. 21 AlterNet piece, questions the logic of paying financial people like the quants the kind of money they've become accustomed to: " Let's try a back-of-the envelope calculation of Wall Street's net social value.

Jan 23 2011 | Read Full Review of The Quants: How a New Breed o...

Seeking Alpha

Professor Fama's hypothesis presents the notion of market equilibrium, where the market's various participants in hunting for inefficiency collectively create efficiency and balance.

Feb 15 2010 | Read Full Review of The Quants: How a New Breed o...

Seeking Alpha

The Quants is one of the rare books that not only did I finish, but upon reaching the last page, I wanted to keep going.

Feb 24 2011 | Read Full Review of The Quants: How a New Breed o...

Seeking Alpha

With the strategies successfully lined out by Muller, PDT posted “a gain of about 25 percent for the year,” giving Muller “north of $20 million.” I bet that one day this book will be turned into a fantastic movie for future generations to remember the Great Recession as one of the major episodes...

Apr 11 2010 | Read Full Review of The Quants: How a New Breed o...

Management Today

'Beware geeks bearing formulas,' warned Warren Buffett, but American investors and banks (soon followed by many of their European counterparts) ignored this and funds under hedge management - many using quant-style techniques - grew from around $40bn in 1990 to $2trn by 2007.

May 01 2011 | Read Full Review of The Quants: How a New Breed o...

Harvard Political Review

The professors are the new barons of Wall Street, and they appear poised to accrue even more power.

May 29 2010 | Read Full Review of The Quants: How a New Breed o...

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