A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation

Richard Bookstaber

Inside markets, innovation, and risk Why do markets keep crashing and why are financial crises greater than ever before. As the risk manager to some of the leading firms on Wall Street-from Morgan Stanley to Salomon and Citigroup-and a member of some of the world's largest hedge funds, from Moore Capital to Ziff Brothers and FrontPoint Partners, Rick Bookstaber has seen the ghost inside the machine and vividly shows us a world that is even riskier than we think.

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Book Information

Publisher: Wiley
Publish Date: 04/01/2007
Pages: 276
ISBN-13: 9780471227274
ISBN-10: 0471227277
Language: English

What We're Saying

January 15, 2008

The day has finally arrived. After careful consideration, the winners have been determined for our first annual Business Book Awards. Nearly 300 titles were submitted which were then critiqued and reviewed by our editorial staff. READ FULL DESCRIPTION

December 02, 2015

We conclude our series of looks "inside the longlist" with a look inside this year's Finance and Economics category. READ FULL DESCRIPTION

February 26, 2010

I've not yet finished reading Scott Patterson's The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, but I'd like to go on record now in disagreement with The Economist's review of the book. I do agree that Patterson's prose can get a bit "purple" in places, but I think his focus on the quantitative models developed and used on Wall Street over the last three decades is an important one. And the way he explores the topic—through the stories of the individuals who created those models—keeps the reader engaged in a tale that might otherwise turn too academic for most. READ FULL DESCRIPTION

December 06, 2007

We've been in Chicago for the past two days for our second annual Author Pow-wow. I'll write more on that soon. There's much to share. READ FULL DESCRIPTION

September 26, 2008

Heather Green has written a wonderful review of Jeff Howe's Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business for the September 29 issue of BusinessWeek. After observing that "Books about the crowd are becoming a crowd unto themselves," Green writes: What sets Howe's book apart is his focus on business, an examination of different crowdsourcing models, and a deep dive into academic research to explain why people work together. It's a welcome and well-written corporate playbook for confusing times. READ FULL DESCRIPTION

December 13, 2007

Rebecca pointed us all to Amazon's Best Books of 2007 last month, and in light of all the other lists coming out lately, I thought it'd be a good idea to revisit that list and highlight the business titles on it. There were three business categories--Business, Business Narratives, and Finance & Investing. So without further ado, the choice of Amazon's editors were. READ FULL DESCRIPTION

December 13, 2012

Over the course of this week, we will be posting the shortlist selections for our 8 business book categories: General Business, Leadership, Management, Innovation/Creativity, Small Business/Entrepreneurship, Marketing/Sales, Personal Development, Finance. On Monday, December 17th, we'll announce the category winners, and, on Wednesday, December 19th, we'll celebrate the overall winner of the 2012 800-CEO-READ Business Book Awards! Stay tuned. READ FULL DESCRIPTION

December 10, 2008

While we're in the midst of announcing the shortlists for our annual awards, I think it behooves us to look at what others found worthy of the "best" title. Last week, BusinessWeek gave their blessing to what they see as The Best Business Books of 2008 in an article by Hardy Green. The following books made the article: The Trillion Dollar Meltdown by Charles R. READ FULL DESCRIPTION

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Inside markets, innovation, and risk

Why do markets keep crashing and why are financial crises greater than ever before? As the risk manager to some of the leading firms on Wall Street-from Morgan Stanley to Salomon and Citigroup-and a member of some of the world's largest hedge funds, from Moore Capital to Ziff Brothers and FrontPoint Partners, Rick Bookstaber has seen the ghost inside the machine and vividly shows us a world that is even riskier than we think. The very things done to make markets safer, have, in fact, created a world that is far more dangerous. From the 1987 crash to Citigroup closing the Salomon Arb unit, from staggering losses at UBS to the demise of Long-Term Capital Management, Bookstaber gives readers a front row seat to the management decisions made by some of the most powerful financial figures in the world that led to catastrophe, and describes the impact of his own activities on markets and market crashes. Much of the innovation of the last 30 years has wreaked havoc on the markets and cost trillions of dollars. A Demon of Our Own Design tells the story of man's attempt to manage market risk and what it has wrought. In the process of showing what we have done, Bookstaber shines a light on what the future holds for a world where capital and power have moved from Wall Street institutions to elite and highly leveraged hedge funds.

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