A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation 1st Edition

4.1 out of 5 stars 112 ratings
ISBN-13: 978-0471227274
ISBN-10: 0471227277
Why is ISBN important?
ISBN
This bar-code number lets you verify that you're getting exactly the right version or edition of a book. The 13-digit and 10-digit formats both work.
Scan an ISBN with your phone
Use the Amazon App to scan ISBNs and compare prices.
Have one to sell?
<Embed>
Loading your book clubs
There was a problem loading your book clubs. Please try again.
Not in a club? Learn more
Amazon book clubs early access

Join or create book clubs

Choose books together

Track your books
Bring your club to Amazon Book Clubs, start a new book club and invite your friends to join, or find a club that’s right for you for free.
Buy new:
$7.98
Only 1 left in stock - order soon.
Ships from and sold by mylittlebooktique.
Arrives: Jan 28 - Feb 2
List Price: $27.95
Save: $19.97 (71%)
11 new from $7.98
+ $4.99 shipping



Books with Buzz
Discover the latest buzz-worthy books, from mysteries and romance to humor and nonfiction. Explore more
click to open popover

Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.

  • Apple
    Apple
  • Android
    Android
  • Windows Phone
    Windows Phone
  • Click here to download from Amazon appstore
    Android

To get the free app, enter your mobile phone number.

kcpAppSendButton

Frequently bought together

  • A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation
  • +
  • The Big Short: Inside the Doomsday Machine
  • +
  • When Genius Failed: The Rise and Fall of Long-Term Capital Management
Total price: $39.86
Buy the selected items together

Special offers and product promotions

Editorial Reviews

Review

"A risk-management maven who's been on Wall Street for decades…Bookstaber's book shows us some complex strategies that very smart people followed to seemingly reduce risk—but that led to huge losses." (Newsweek)

"Mr. Bookstaber is one of Wall Street's 'rocket scientists'--mathematicians lured from academia to help create both complex financial instruments and new computer models for making investing decisions. In the book, he makes a simple point: The turmoil in the financial markets today comes less from changes in the economy--economic growth, for example, is half as volatile as it was 50 years ago--and more from some of the financial instruments (derivatives) that were designed to control risk." (The New York Times)

"Bright sparks like Mr Bookstaber ushered in a revolution that fuelled the boom in financial derivatives and Byzantine 'structured products.' The problem, he argues, is that this wizardry has made markets more crisis-prone, not less so. It has done this in two ways: by increasing complexity, and by forging tighter links between various markets and securities, making them dangerously interdependent." (The Economist)

"He understands the inner workings of financial markets...A liberal sparkling of juicy stories from the trading floor..." (The Economist)

"…smart book…Part memoir, part market forensics, the book gives an insider's view…" (Bloomberg News)

"Like many pessimistic observers, Richard Bookstaber thinks financial derivatives, Wall Street innovation and hedge funds will lead to a financial meltdown. What sets Mr. Bookstaber apart is that he has spent his career designing derivatives, working on Wall Street and running a hedge fund." (The Wall Street Journal)

"Every so often [a book] pops out of the pile with something original to say, or an original way of saying it. Richard Bookstaber, in A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation, accomplishes both of these rare feats." (Fortune)

"a must-read amidst the current market chaos" (BusinessWeek.com)

"Bookstaber is a former academic who went on to head risk management for Morgan Stanley and now runs a large hedge fund. He knows the subject and has written a lucid and readable book. To his aid he calls mathematics (from Bertrand Russell to Godel's theorem); physics (particularly Heisenberg's uncertainty principle); and even -- meteorology." (Financial Times)

"The book covers a lot about risk management that is relevant to capital markets conditions today and the liquidity crisis." (Financial Times, Saturday 25th August)

"...an insider's guide to markets, hedge funds and the perils of financial innovation.  We saw plenty of those in 2007."  (The Sunday Telegraph, Sunday 25th November 2007)

"I cannot recommend this book too highly. It is a clear exposition of what the combination of derivatives, leverage and hedge funds can do to the markets.

In short, A Demon of our Own Design is a guide to the dangerous financial markets we have created for ourselves by the clever innovations of structured finance, derivatives, credit default swaps and other newfangled products that are a mystery to the ordinary investor and even plenty of the sophisticates in the investment business. To understand the demonic risks we're taking, read this book."--Forbes.com

From the Inside Flap

It's Wall Street's most painful paradox. Investors are more sophisticated than ever, are enabled by unprecedented technology, and protected by more government oversight and regulation than at any other time in history. Yet Wall Street is becoming a riskier and riskier place. Crashes and catastrophic losses seem commonplace. Hedge funds wreck on the financial shoals with a disturbingly familiar pattern. Worse, today's financial crises do not arise from economic instability or acts of nature, but from the very design of the financial markets themselves.

In A Demon of Our Own Design, Richard Bookstaber paints a vivid picture of a financial world that is ever edging toward disaster. As a hedge fund 'rocket scientist,' Bookstaber provides an insider's perspective to the tumultuous management decisions made by some of the world's most powerful financial figures from Warren Buffett to Sandy Weill to John Meriwether,as well as recounting his own contribution to market calamities. He designed some of the complex options and derivatives that, combined with the globalization of the world's markets and the ever-increasing speed of transactions, allow markets to slide out of control. And he explains why the best efforts of institutions on the front lines to create safeguards, manage risk, and regulate the markets may end up contributing to instability. Bookstaber argues that many of the financial innovations and regulations that are supposed to level the playing field instead make the markets more dangerous for all the players, big and small.

Drawing on his intimate knowledge of such infamous disasters as the 1987 Crash and the demise of Long-Term Capital Management, Bookstaber identifies the key areas that make markets vulnerable: liquidity that begets greater leverage; innovation that creates greater complexity; and a structure that demands a nonhuman level of rationality. The twofold solution he suggests—reducing complexity and breaking the tight coupling of transactions—goes against the prevailing winds of Wall Street, but will lead to a more robust and survivable market.


Product details

  • Publisher : Wiley; 1st edition (April 6, 2007)
  • Language : English
  • Hardcover : 276 pages
  • ISBN-10 : 0471227277
  • ISBN-13 : 978-0471227274
  • Item Weight : 1.07 pounds
  • Dimensions : 6.3 x 1.06 x 9.3 inches
  • Customer Reviews:
    4.1 out of 5 stars 112 ratings

Customer reviews

4.1 out of 5 stars
4.1 out of 5
112 global ratings
How are ratings calculated?

Top reviews from the United States

Reviewed in the United States on June 7, 2014
Verified Purchase
2 people found this helpful
Report abuse
Reviewed in the United States on March 10, 2019
Verified Purchase
Reviewed in the United States on November 17, 2012
Verified Purchase
12 people found this helpful
Report abuse
Reviewed in the United States on October 2, 2013
Verified Purchase
2 people found this helpful
Report abuse

Top reviews from other countries

K. Moss
4.0 out of 5 stars Still a very good read
Reviewed in the United Kingdom on May 27, 2011
Verified Purchase
Dutch
1.0 out of 5 stars One star but worth every penny if you're interested in car-crash Wallstreet trash.
Reviewed in the United Kingdom on November 24, 2012
Verified Purchase
4 people found this helpful
Report abuse
James-philip Harries
5.0 out of 5 stars fascinating and timely
Reviewed in the United Kingdom on January 15, 2009
Verified Purchase
6 people found this helpful
Report abuse
Bernhard Koenig
2.0 out of 5 stars Author strays to often and stays on the surface
Reviewed in Germany on November 19, 2017
Verified Purchase
One person found this helpful
Report abuse
Trading Central
5.0 out of 5 stars This is a very good book well worth adding to a traders library as ...
Reviewed in Canada on February 16, 2015
Verified Purchase
Pages with related products. See and discover other items: design management