$39.95 USA / $47.95 CAN
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echnology has transformed global markets,
but this is nothing new. Markets have been
shaped by machinery for hundreds of years,
and this continues at a rapid pace today.
Author David Leinweber—a computer scientist who
accidentally stumbled upon Wall Street and became
an innovator in the application of modern information
technology in trading and investing—is a well-qualifi ed
guide to the nerds of greater Wall Street. And now, in
this engaging and entertaining new book, he tells the
tale of the ongoing technological transformation of the
world’s fi nancial markets.
The impact of technology on investing is profound,
and Leinweber provides an intriguing look at where
technology on Wall Street has been, what it has meant,
and how it will impact the markets of tomorrow, and its
role in the multifaceted crises of today. In essence, the
fi nancial game has changed and will continue to change
due entirely to technology. Throughout these pages,
Leinweber takes a detailed look at the new “players,”
human or otherwise, that offer both unprecedented
opportunities and debilitating dangers in this ever-
evolving environment.
Divided into four parts, this lively exploration of markets
and machines:
• Illustrates the history of technology upheavals in markets
and d
eals with electronic markets and algorithmic
trading in Part One: Wired Markets
• Explores the use of wired markets, and anything else
you can fi nd, to outperform market averages in Part Two:
Alpha as Life
• Examines how humans and machines can work together
to extract useful information for investment and
trading from textual sources in Part Three: Artifi cial
Intelligence and Intelligence Amplifi cation
• Considers the roles of technology in contributing to the
crisis of 2008, as well as its use to avoid future mishaps
in Part Four (Epilogue): Nerds Gone Wild? Wired
Markets in Distress
Being a successful investor—whether individual or
institutional—involves more than stock picking, asset
allocation, or market timing: it involves technology.
And through this story, Leinweber helps you go beyond
the numbers to see exactly how advanced technology
has become a bigger part of modern markets.
It’s getting harder every day to see the difference between
fi nancial markets and computer networks. Hopefully,
after reading this book, you’ll have a better sense of how
technology shapes today’s markets, and how to best
participate in the future of electronic fi nance.
DAVID LEINWEBER is a Haas Fellow in
Finance at the Haas School of
Business at UC Berkeley, and founding
Director of the Center for Innovative
Financial Technology at Berkeley. He
is the founder of two pioneering fi nancial technology
fi rms and successfully managed multibillion-dollar
institutional portfolios for many years. Dr. Leinweber
has consulted, published, and lectured widely on the
use of advanced technology, artifi cial intelligence, and
intelligence amplifi cation in fi nance—always in an easy
and accessible way—and has earned the reputation
as “class clown of the quantitative investing industry.”
He received BS degrees in physics and electrical
engineering from the Massachusetts Institute of
Technology and a PhD in applied mathematics from
Harvard University.
(continued from front flap)
(continued on back flap)
Math,
Machines
and Wired Markets
David Leinweber
FOREWORD BY TED ARONSON
NerdsNerds
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Wall StreetWall Street
Praise for
Nerds Nerds
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Wall StreetWall Street
Jacket Design: Paul McCarthy
Jacket Illustration: © Satoshi Kambayashi
Leinweber
Math,
Machines
and
Wired
Markets
Nerds Nerds
ONON
WallWall StreetStreet
Photo: Yossi Beinart
“ Leinweber leads his readers through a largely unexplored forest, turning over ordinary-looking rocks to reveal
hidden colonies of peculiar creatures that feed on moldering mounds of numbers teeming with trailing zeroes.
His book is absorbing, instructive, and very, very funny.”
—David Shaw, Founder, D. E. Shaw & Co.
“ David Leinweber has been a pioneer in developing and applying advanced technologies in the capital markets.
This book is a virtual tour de force survey of many of the key innovations over the past two decades, with key
insights for the future. It is a highly engaging, insightful, and entertaining book for all investors who want to
understand the increasingly important role of technology in the fi nancial markets.”
—Blake Grossman, CEO, Barclays Global Investors
“ Leinweber isn’t half as crazy as people said! He foresaw the profound change that wired technology would
bring to markets (robots trading millions of shares in six milliseconds). Now he nails the Stupid Financial
Engineering Tricks that dumped the markets, and offers his patented, sound insights on how the nerds will
help bring us back.”
— Jane Bryant Quinn, Financial columnist, Bloomberg.com and Newsweek
“ Through the lenses of finance ‘nerds,’ Dave Leinweber recounts the quantitative and technological
revolution in equity trading. The book is humorously written but it is serious and insightful. It makes an
important contribution to our understanding of fi nancial innovation and the evolution of the capital markets.”
—André F. Perold, George Gund Professor of Finance and Banking, Harvard Business School
“ Finally, a book that rightly honors the pocket-protected, RPN-loving, object-oriented, C-compatible,
self-similar Wall Street quant! This is a delightfully entertaining romp across the trading floors and
through the research departments of major financial institutions, told by one of the early architects
of automated trading and a self-made nerd.”
— Andrew W. Lo, Professor of Finance, MIT Sloan School of Management
“ David Leinweber is one of the great financial innovators of our time. David possesses a unique
combination of expertise in the fields of money management, artificial intelligence, and computer
science.”
— Blair Hull, Founder, Hull Trading & Matlock Trading
“ An important, accessible, and humorous guide to today’s electronic markets. Like Capital Ideas
mixed with Being Digital, as told by Steve Martin.”
— Frank Fabozzi, Yale School of Management, Editor, Journal of Portfolio Management