Book Review: "The Quants"

There's few things that I enjoy more than being able to spend some time at my local bookstore and browse through the latest titles in the business & finance sections. I flip through many books, but there's a relatively few number that I actually decide to buy and invest time in. Scott Patterson's "The Quants" caught my eye right away because it started with a little bit of history and a chapter on Ed Thorp.

If the name does not ring a bell, Ed Thorp is considered to be the Godfather of card-counters and other folks that consistently beat blackjack (or "21") in casinos. What's more important that his theory on casinos, is his approach to numbers and the way the statistics plays a role in most situations that involve investing for returns, like the stock market. 

The Quants provides a very insightful look into the world of traders that apply sophisticated statistics and modeling software to the securities and futures markets. In particular, it focuses on the quant hedge funds that are largely responsible for the financial meltdown of the US economy in 2007 and 2008. Patterson is a writer for the Wall Street Journal and after reading this book, with the very exclusive and in-depth interviews it contains, it's clear that Patterson is one of the few writers that could have written this book and I'm glad he did.

Make no mistake about it, there are no heroes in this book. The Quants provides a series of steps of what not to do with your investments. If you really want to understand the driving forces behind the economic meltdown and how it applies to your portfolio, I'd recommend this book.