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Book Review: The Quants

This book is mostly about a bunch of boneheads who happened to make a lot of money running hedge funds. I got really annoyed by the author calling these guys "geniuses". The only two guys with serious brains in this book are Ed Thorp and Jim Simons. Emanuel Derman, who is briefly discussed, is also very intelligent, with a classy personality. The rest are not worth discussing. I did like Ken Griffin's diversity. He was into everything. But his ego really makes me barf.

What I found worthwhile about this book was its description of how several quantitative hedge funds operate. My conclusion is that the quant hedge funds are, by and large, a herd of cows. All thinking the same, and acting the same. Benefitting together on the way up, and suffering together on the way down. The exception is Renaissance Technologies, and Ed Thorp, back when he was in the game.

My favorite quotes from this book:

Any good investment, sufficiently leveraged, can lead to ruin. (Ed Thorp, pg 300)
Time, and reality, had overtaken stupidity. (pg 173)
What is wrong with these people? They are so monumentally stupid. Their stupidity is killing me. (Cliff Asness, 1999, pg 170)

© 2010-2012 Stefan Hollos and Richard Hollos

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