The Banks of the Charles
I'm now going to take a chance. If you're still reading this far into the book, maybe you will give me the benefit of the doubt for these next four sections. I know I will sound like a crackpot, but I believe deeply in what I'm about to say. It explains why I fled to the company of gamblers rather than get a job, and why I came back eager to beat the Street, not to join the Street. It's also the reason that risk management is so important—and so revolutionary.
I'm going to start with my freshman year in college. I was supporting myself by playing poker and by working at various mathematical analysis and computer odd jobs. The first such job was for a small computer company in Cambridge that had agreed to provide player rankings for a well-known tennis association. I got a call from the company CEO one Thursday afternoon. He explained he needed someone to come in and “finish up” the project because the association was having its annual banquet the next day, and needed the rankings to give out awards.
I showed up at the company around 5:00 P.M. The CEO showed me cardboard boxes full of tennis score reports that had been sent in throughout the season. None had been opened. He told me he needed the rankings by tomorrow, and left for the night. I was alone in the offices.
I started going through the score sheets and immediately hit upon problems. Some were illegible, and some listed what seemed to be impossible results. Names were often just a first initial ...
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