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

Bookstaber, Richard

Softcover

ISBN 10: 0470393750 ISBN 13: 9780470393758

Publisher: Wiley, 2008

Synopsis

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.

About this title

About the Author

Richard Bookstaber ran an equity hedge fund at FrontPoint Partners and was the director of risk management at Ziff Brothers Investments and at Moore Capital Management, one of the largest hedge funds in the world. He served as the managing director in charge of firm-wide risk management at Salomon Brothers and was a member of Salomon's powerful Risk Management Committee. Mr. Bookstaber also spent ten years at Morgan Stanley in quantitative research and as a proprietary trader, concluding his tenure there as Morgan Stanley's first market risk manager. He is the author of three books and scores of articles on finance topics ranging from options theory to risk management. Bookstaber received a PhD in economics from MIT. He now works at a hedge fund in Connecticut.

From the Back Cover

Named a top business book of the year by the Financial Times, Kiplinger's Personal Finance, and Library Journal

Praise for A Demon of Our Own Design

"This book is powerful stuff. When the hero of the story is a cockroach, you are assured of a controversial, illuminating, and fascinating discovery of where the financial risks really lurk and how to avoid them. Bookstaber knows whereof he speaks."
Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk

"Are you ready for the real deal? An insider, everysider view of the Wall Street calamities that have kept investing tantalizingly hot and frighteningly volatile since the crash of '87. For an in-depth, curtains-open, and coolly written exposition of Wall Street, Bookstaber is my man."
Mark Rubinstein

Professor of Finance, UC Berkeley

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

"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."
Forbes.com

From the Inside Flap

Named a top business book of the year by the Financial Times, Kiplinger's Personal Finance, and Library Journal

Praise for A Demon of Our Own Design

"This book is powerful stuff. When the hero of the story is a cockroach, you are assured of a controversial, illuminating, and fascinating discovery of where the financial risks really lurk and how to avoid them. Bookstaber knows whereof he speaks."
—Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk

"Are you ready for the real deal? An insider, everysider view of the Wall Street calamities that have kept investing tantalizingly hot and frighteningly volatile since the crash of '87. For an in-depth, curtains-open, and coolly written exposition of Wall Street, Bookstaber is my man."
—Mark Rubinstein

Professor of Finance, UC Berkeley

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

"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."
—Forbes.com

Edition details

• Publisher: Wiley
• Publication date: 2008
• Language: English
• ISBN 10: 0470393750
• ISBN 13: 9780470393758
• Binding: Paperback
• Edition number: 1
• Number of pages: 304