The quants: how a new breed of math whizzes conquered wall street and nearly destroyed it by Scott Patterson

Author:Scott Patterson [Scott Patterson]
Language: eng
Format: epub
Tags: Roman
ISBN: 9780307453372
Published: 2010-09-15T21:03:26+00:00

A few onlookers tossed some spare coins into the instrument’s case splayed beside him—with no idea the sandy-haired singer was a hotshot trader for one of the most powerful Wall Street firms in the world.

Muller, who never actually rode the subway, didn’t see many of his fellow investment bankers in the subway system. But one evening a colleague from Morgan walked by and glanced at Muller hunched over his keyboard.

He did a double take.

“Pete, what are you doing down here?” he said, shocked, looking Muller up and down. Recovering slightly, he added, “I guess you’ve done well enough—you can do whatever you want.”

But he didn’t toss any money in the piano case.

Everyone thought Muller was cracking up. A man who made money controlling the chaotic flow of the market through mind-bending math seemed to be losing control of his own life. Eyebrows were raised, but who cared? Muller’s group made money, buckets of money. That was all that mattered. Let him crack up. He deserves it.

All the success seemed to weigh on Muller, who thought of himself as a carefree California child of the sun, a collector of crystals, singer of songs, lover of women and complex algorithms, not a ruthless, self-absorbed banker. He began to disappear from the office for weeks at a time, then months, only to pop up one day with a sweeping critique of PDT’s operations before vanishing again just as abruptly. One PDT trader labeled it seagull management: swoop by every now and then, shit all over everything, and fly away.

Around 2000, Shakil Ahmed took over the reins. Muller became a paid advisor, though he remained a partner at Morgan. He traveled the world, visiting the most exotic locales he could find: Bhutan, New Zealand, Hawaii. He sang during regular gigs in Greenwich Village cabarets and grungy lounges such as the Cutting Room and Makor Cafe. Old colleagues from PDT would swing by for the performances from time to time and wonder: What the hell happened to Pete?

Muller stayed in touch with his fellow quants, however, and often spoke at industry events. In May 2002, he attended the wedding of Neil Chriss, one of his poker buddies whom he’d met at Morgan Stanley in the 1990s. One of the most respected mathematical minds in quantdom, Chriss was marrying a stunning, tall blonde named Natasha Herron, who was on the verge of completing a medical degree in psychology at Cornell University. The wedding was held at Trout-beck, a tony, aging resort in the Berkshire foothills that in its heyday had seen guests from Ernest Hemingway to Teddy Roosevelt.

At the reception, Chriss’s quant friends were seated together. They included John Liew of AQR, whom Chriss knew from his days at Chicago; Muller; and Nassim Nicholas Taleb, a New York University professor and hedge fund manager who’d just published a book, Fooled by Randomness, which claimed that nearly all successful investors were more lucky than skilled.

Stocky, balding, with a salt-and-pepper beard, Taleb had little patience for quants and their fine-tuned models.

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