Preface to the Second Edition

History is a relentless master. It has no present, only the past rushing into the future. To try to hold fast is to be swept aside.

—John F. Kennedy

Within the investment management business, a wildly misunderstood niche is booming, surely but in relative obscurity. This niche is populated by some of the brightest people ever to work in the field, and they are working to tackle some of the most interesting and challenging problems in modern finance. This niche is known by several names: quantitative trading, systematic trading, or black box trading. As in almost every field, technology is revolutionizing the way things are being done, and very rarely, also what is being done. And, as is true of revolutions generally (in particular, scientific ones), not everyone understands or likes what's happening.

I mentioned above that this is a technological revolution, which may have struck you as being strange, considering we're talking about quant trading here. But the reality is that the difference between quant traders and discretionary ones is precisely a technological one. Make no mistake: Being good at investing almost always involves some math, whether it's a fundamental analyst building a model of a company's revenues, costs, and resulting profits or losses, or computing a price-to-earnings ratio. Graham and Dodd's Security Analysis has a whole chapter regarding financial statement analysis, and that bible of fundamental value investing has more formulae ...

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