Summary of Scott Patterson's The Quants

Everest Media

Description

Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 The Wall Street Poker Night Tournament was held on March 8, 2006. More than a hundred well-heeled players attended the event, including elite traders and buttoned-down dealmakers. The small, private affair was a gathering of a select group of wealthy and brilliant individuals.
#2 By the early 2000s, quants had come to dominate Wall Street, using brain-twisting math to pluck billions in fleeting dollars out of the market. They couldn’t care less about a company’s fundamentals.
#3 The quants ran a private poker game, but traditional investment titans joined in. Carl Icahn, the billionaire financier who’d gotten his start on Wall Street with $4,000 in poker winnings, was a regular.
#4 The players got down to business. A melodic chime summoned stragglers into the main room, where vested dealers waited behind scattered rows of card tables. The game was Texas Hold’em. The action was cordial on the surface, but cutthroat between the lines.

Sujets

• Economic History
• Economics
• Business

Informations

• Publié par: Everest Media LLC
• Date de parution: 25 juillet 2022
• Nombre de lectures: 0
• EAN13: 9798822546332
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Insights on Scott Patterson's The Quants
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5 Insights from Chapter 6 Insights from Chapter 7 Insights from Chapter 8 Insights from Chapter 9 Insights from Chapter 10 Insights from Chapter 11 Insights from Chapter 12 Insights from Chapter 13 Insights from Chapter 14
Insights from Chapter 1

#1

The Wall Street Poker Night Tournament was held on March 8, 2006. More than a hundred well-heeled players attended the event, including elite traders and buttoned-down dealmakers. The small, private affair was a gathering of a select group of wealthy and brilliant individuals.

#2

By the early 2000s, quants had come to dominate Wall Street, using brain-twisting math to pluck billions in fleeting dollars out of the market. They couldn’t care less about a company’s fundamentals.

#3

The quants ran a private poker game, but traditional investment titans joined in. Carl Icahn, the billionaire financier who’d gotten his start on Wall Street with $4,000 in poker winnings, was a regular.

#4

The players got down to business. A melodic chime summoned stragglers into the main room, where vested dealers waited behind scattered rows of card tables. The game was Texas Hold’em. The action was cordial on the surface, but cutthroat between the lines.

#5

The quants were constantly competing with one another, and when they were not trading, they were playing poker. They were obsessed with the game, and it became their life.

#6

The Truth was a secret about the market that could only be discovered through mathematics. The quants built giant machines to search for the Truth, and to deploy it in their quest to make untold fortunes.

#7

The final three players were Muller, a portfolio manager for Citadel, Asness, a quant, and Andrei Paraschivescu, a portfolio manager who worked for Griffin at Citadel. The action got more intense as the hour grew late. Around 1:30 A. M. , only three players were left: Muller, Asness, and Paraschivescu.

#8

The Great Hedge Fund Bubble was a true bubble, and it was the most frenzied gold rush of all time. Thousands of hedge fund jockeys became wealthy beyond their wildest dreams.

#9

The quants were brilliant, and they knew it. They had spent years studying the market, and yet they failed to see the train wreck coming.
Insights from Chapter 2

#1

Thorp’s system, based on complex mathematics and hundreds of hours of computer time, relied on counting the number of ten cards that had been dealt. In blackjack, all face cards count as tens, along with the four natural tens in every deck of fifty-two cards.

#2

Thorp was always a troublemaker. While in college, he thought about how to beat roulette, a popular casino game at the time. He believed it was possible to beat roulette even without help from flaws in the wheel. The key was to determine the position and velocity of the ball and rotor.

#3

Thorp dreamed of a wearable computer that could predict the motion of a roulette wheel. He believed he could create a machine that would statistically forecast the seemingly random motion of a roulette wheel.

#4

By 1960, Thorp had developed a blackjack system that could beat the dealer. He submitted a paper to the prestigious Proceedings of the National Academy of Sciences, but Shannon suggested that he change the title to A Favorable Strategy for Twenty-One.

#5

The law of entropy states that everything in the universe will eventually turn into a homogenous, undifferentiated goop. In information theory, Shannon used entropy to discover order within the apparent chaos of strings of seemingly random numbers.

#6

Thorp and Shannon designed a computer that could predict which octant of the roulette wheel the ball would land in. If they bet on all four or five numbers in that octant and their method was accurate, they could win. However, they were still cheating, and if they were caught, they would be punished.

#7

In 1961, Thorp presented his blackjack paper to the American Mathematical Society. It was titled Fortune’s Formula: A Winning Strategy for Blackjack. It described how a gambler could cause his money to grow exponentially while avoiding the curse of gambler’s ruin.
Insights from Chapter 3

#1

Thorp began testing his blackjack strategies on the Vegas Strip, and soon after began testing his betting strategies on Wall Street. He saw a vision of millions.

#2

The idea that the market moved in a random fashion was first postulated in 1827 by a Scottish botanist who observed pollen grains dancing in a frenetic manner. It was believed to be completely random until Einstein discovered in 1905 that the strange movement was caused by millions of microscopic particles buzzing around in a frantic dance of energy.

#3

The key to Bachelier’s analysis was his observation that bond prices move in a way identical to the phenomenon first discovered by Brown in 1827. Bonds trading on the Paris stock exchange followed a pattern that, mathematically, moved just like those randomly oscillating pollen particles.

#4

The law of large numbers states that the more observations you have, the more accurate your prediction will be. Thorp applied this to the stock market, and found that by plugging in the formula for Brownian motion, the random walk model, he could predict the future movement of a stock better than almost anyone else.

#5

Thorp and Kassouf were investing in all kinds of warrants using their scientific system, and raking in piles of cash.