Nerds on Wall Street: Math, Machines, and Wired Markets

Part IV: Nerds Gone Wild

Wired Markets in Distress

The original plan for this book stopped after the three parts that you've just read. These parts are about how markets became machines, and about using more machines to pick stocks and trade them electronically, bringing in an assortment of nifty ideas from finance and computer science along the way.

By the fall of 2008, it was clear that stopping there would have made for a book that seemed quaint. How could any financial author ignore what has happened since then? The problem was that I had spent my entire financial career in the stock markets, and the stock market was a victim, not a cause, of the Great Mess of '08.^[] The causes came not from the stock side of Wall Street, but from a mix of abuses, greed, and sheer stupidity from the people who created, repackaged, and sold overly complex derivatives that started with mortgage loans that should never have been made, and were assembled into an overleveraged financial house of cards that is still collapsing today.

^[] Jon Stewart has a much better non–politically correct name for what has transpired lately. It begins with "Cluster." But everyone tells me I can't put it in the book or use it at conferences. I think you need to watch the Daily Show to pick up on its continuing economic coverage. Stephen Colbert, whose show follows Stewart's, says the financial markets are like ...