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."
Professor of Finance, UC Berkeley
"He understands the inner workings of the financial markets. . . . A liberal sparkling of juicy stories from the trading floor."
"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."
About the Author xix
CHAPTER 1 ∼ Introduction: The Paradox of Market Risk 1
CHAPTER 2 ∼ The Demons of ’87 7
CHAPTER 3 ∼ A New Sheriff in Town 33
CHAPTER 4 ∼ How Salomon Rolled the Dice and Lost 51
CHAPTER 5 ∼ They Bought Salomon, Then They Killed It 77
CHAPTER 6 ∼ Long–Term Capital Management Rides the Leverage Cycle to Hell 97
CHAPTER 7 ∼ Colossus 125
CHAPTER 8 ∼ Complexity, Tight Coupling, and Normal Accidents 143
CHAPTER 9 ∼ The Brave New World of Hedge Funds 165
CHAPTER 10 ∼ Cockroaches and Hedge Funds 207
CHAPTER 11 ∼ Hedge Fund Existential 243
Conclusion: Built to Crash? 255