The Money Formula: Dodgy Finance, Pseudo Science, and How Mathematicians Took Over the Markets

ISBN-13: 9781119358619 / Angielski / Miękka / 2017 / 264 str.

David Orrell

Opis

Explore the deadly elegance of finance's hidden powerhouse The Money Formula takes you inside the engine room of the global economy to explore the little-understood world of quantitative finance, and show how the future of our economy rests on the backs of this all-but-impenetrable industry. Written not from a post-crisis perspective - but from a preventative point of view - this book traces the development of financial derivatives from bonds to credit default swaps, and shows how mathematical formulas went beyond pricing to expand their use to the point where they dwarfed the real economy. You'll learn how the deadly allure of their ice-cold beauty has misled generations of economists and investors, and how continued reliance on these formulas can either assist future economic development, or send the global economy into the financial equivalent of a cardiac arrest. Rather than rehash tales of post-crisis fallout, this book focuses on preventing the next one. By exploring the heart of the shadow economy, you'll be better prepared to ride the rough waves of finance into the turbulent future.

• Delve into one of the world's least-understood but highest-impact industries
• Understand the key principles of quantitative finance and the evolution of the field
• Learn what quantitative finance has become, and how it affects us all
• Discover how the industry's next steps dictate the economy's future

How do you create a quadrillion dollars out of nothing, blow it away and leave a hole so large that even years of -quantitative easing- can't fill it - and then go back to doing the same thing? Even amidst global recovery, the financial system still has the potential to seize up at any moment. The Money Formula explores the how and why of financial disaster, what must happen to prevent the next one.

Recenzje

"Anyone interested in investment theory (and that should be everyone working in financial services) would find it worth reading."  (International Investment, June 2017)

"Irrevent and fun, it is at the same time very rigorous in explaining how soem fairly basic mathematics has hijacked the world of finance."  (Marketing Moving, June 2017)

a great description of what has happened, a thorough explanation of what is currently going on, and a solid argument for what should be done in the future.  (Significance, April 2018)

Spis treści

Contents

Acknowledgements ix

About the Authors xi

Introduction xiii

Chapter 1 Early Models 1

Chapter 2 Going Random 15

Chapter 3 Risk Management 35

Chapter 4 Market Makers 61

Chapter 5 Deriving Derivatives 83

Chapter 6 What Quants Do 109

Chapter 7 The Rewrite 135

Chapter 8 No Laws, Only Toys 149

Chapter 9 How to Abuse the System 169

Chapter 10 Systemic Threat 189

Epilogue: Keep it Simple 207

Bibliography 227

Index 237

 

O autorze

PAUL WILMOTT is a researcher, best–selling author, and consultant in most things quantitative, and has been a fund manager and academic. He is author of numerous books, including Paul Wilmott on Quantitative Finance and Frequently Asked Questions in Quantitative Finance.

DAVID ORRELL is an applied mathematician, best–selling author and founder of Systems Forecasting, a scientific consultancy. He is the author of many books, including The Future of Everything and Economyths.

Blurb

PRAISE FOR THE MONEY FORMULA

"This book has humor, attitude, clarity, science and common sense; it pulls no punches and takes no prisoners."
Nassim Nicholas Taleb, Scholar and former trader

"There are lots of people who′d prefer you didn′t read this book: financial advisors, pension fund managers, regulators and more than a few politicians. That′s because it makes plain their complicity in a trillion dollar scam that nearly destroyed the global financial system. Insiders Wilmott and Orrell explain how it was done, how to stop it happening again and why those with the power to act are so reluctant to wield it."
Robert Matthews, Author of Chancing It: The Laws of Chance and How They Can Work for You

"Few contemporary developments are more important and more terrifying than the increasing power of the financial system in the global economy. This book makes it clear that this system is operated either by people who don′t know what they are doing or who are so greed–stricken that they don′t care. Risk is at dangerous levels. Can this be fixed? It can and this book full of healthy skepticism and high expertise shows how."
Bryan Appleyard, Author and Sunday Times writer

"In a financial world that relies more and more on models that fewer and fewer people understand, this is an essential, deeply insightful as well as entertaining read."
Joris Luyendijk, Author of Swimming with Sharks: My Journey into the World of the Bankers

"A fresh and lively explanation of modern quantitative finance, its perils and what we might do to protect against a repeat of disasters like 2008–09. This insightful, important and original critique of the financial system is also fun to read."
Edward O. Thorp, Author of A Man for All Markets and New York Times bestseller Beat the Dealer