by Satyajit Das
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3 of 3 people found the following review helpful:
 Top Notch book. great companion read to David Roche's New Monetarism, 2008-09-06
I picked up this book after finished reading David Roche's New Monetarism. What a GEM!!!! First of all, of all the economic commentators on the scene, nobody, I repeat NOBODY got it right about the cause of the current U.S/W.Europe economic problem (hint: subprime is NOT the cause). David Roche's New Monetarism accurately pointed out "derivatives" which created the asset bubble is the cause of our present economic turmoil. Problem is, David Roche's New Monetarism can be difficult for most reader to follow unless you were part of the "landscape" of the derivative industry. For example, concept like Yen Carry Trade or CDS (Credit Default Swap) were flying in and out in New Monetarism without detailed explanation or definition. Readers may be left behind without truly getting the education they deserved. However, in Guns, Traders... Mr. Das used common English to explain to the readers the basic concept of the complicated derivative industry, he even went on to provide math formulae and swap structures. I am just so thankful to Mr. Das for doing this. The title of this book may give a wrong impression that this is a sexy tabloid writing, less economic and more "National Enquirer" (nothing wrong with National Enquirer as I consider they are a better newspaper than New York Times). This is a serious finance book about capital markets, be prepared to study some maths and financial fundamentals. For capital markets professional, especially those with an experience in derivatives, this book brings you extra joy as you felt like "hey! I was there!!!". For regular reader, this book allows you onto the trading floor, the sale call conference and even place you in front of the computer screens of structuring specialists. If you read David Roche's New Monetarism and did not understand many of the concepts, this book is a must. However, this book is studying derivatives at the ground level, micro economic level. You still need to go back to David Roche's New Monetarism to get an understanding from the Macro, 50,000 feet level.
Finally, allow me to make one political comment. The present economic problem in U.S. has nothing to do with mortgage or subprime. There is nothing the government, federal or local can do. Just like your dying of aging the government cannot do anything to "fix". McCain and Obama may be making a lot of political statements as how to "fix" this economy, the reality is, the economy is way beyond the government's ability and "intellect" can deal with, this book offer the reasons.
0 of 0 people found the following review helpful:
A must for anyone with money that you may know what the teller in your local bank is selling you, 2008-07-02
I had very high expectation of it because of Frank Partnoy's praise in the back cover. Partnoy's Fiasco "was" the most interesting read of this topic, about how derivatives traders and salesmen reap the face off their customers. I love it so much that I search on Google in order to have a look of the Indian author and to know him more, which I found on the Publisher's site an interview with the author and his photo. Below please find some shortcut for your reference. Hope you like them.
"It's not a technical book. It is part thriller, part expose. It a fun read but it teaches you something about the business. It will show how these markets work. It's also satiric, irreverent and black in its humour...It is a collection of lots of stories. Here's a few:
Story 2
Around 1999, I met an ERM (Enterprise Risk Management) advocate,. Dudley , the head of risk for an investment bank. He wanted to meet me. I had no idea why. I soon discovered that Dudley had reached ERM. It was the "new", best-est thing. It was revolutionary. Dudley was at the forefront. He would give me an example of the problems he was trying to model.
"Let's say our head trader has a complex trading strategy only he understands, yes". I nodded. I didn't think any strategy could be that complex, at least if a trader had put it on. But it was quite likely that no one knew about it. The trader may have not told anyone. "Let's say the trader bicycles to work". I did not think this likely. Traders prefer Porsches. Not wishing to prolong the discussion, I did not disagree.
"On the way to work, he is hit by a bus. His mobile phone is knocked away from him and damaged. He is unconscious. Assume that simultaneously market prices move due to surprise news. This news is vital to the trader's position. He does not know. Nobody knows what to do with his position". I nodded. "That's not all. Assume simultaneously, there is fraud in another bank". I nodded in real agreement. That was very likely. "This bank goes into bankruptcy. It creates a financial crisis. This of course affects the trader's position. He doesn't know of course. He's unconscious". I was hoping he would get to the point soon.
"At the same time, assume there is an accident at a power plant. There is a blackout. The bank's back-up generator fails. The mechanic forgot to check the fuel tank. The bank's computer system goes down. The trader can't get prices or model the risk on his position". I reminded Dudley that the trader was unconscious, maybe deceased. "Exactly", he replied cheerily. It went on.
Eventually after a tragedy of biblical proportions had been outlined, Dudley reached the end. "I am modeling the probability that such an event could occur". For me, it was one step too far in the search for "holistic risk". Risk management seemed to have completed its transformation into pure entertainment. Dudley seemed the epitome of a risk manager who would drown crossing a river that was 12 inches in depth on average.
Story 3
Nero and I marketed together a fair bit. I provided the technical bits. He smoozed the clients. Nero and I were making a pitch for a new structured product with a portfolio manager from an overseas fund over dinner. Dinner was a 3 martini, 2 bottles of French red wine and cigar and brandy affair. I kept looking for a moment to interject and explain the structure and benefits of the trade. I didn't get a chance.
Towards the end of the evening, the fund manager turned to Nero and said: "The girls are coming up to my room, right?" I looked at Nero surprised. "You didn't forget the stuff, it drives the girls wild?" Nero muttered something and carefully steered the conversation in a different direction. After dinner, Nero and I left the hotel. Nero stopped and drew his hand in a cutting motion across his throat. "Remember IBGYBG," he said. "I be gone, you be gone. Got it kid." A week later the portfolio manager was on the phone. "Been thinking about your deal. Like it a lot. Send me a term sheet. I think we can do something there." We closed a juicy trade for $200 million booking profits of over $2 million.
Years later, one of Nero's boys was pitching a deal to a client. Coincidentally, I happened to be a consultant to the customer. During the presentation, I asked some questions. Nothing personal, I was doing my job. The presentation wasn't going to plan. Eventually, the salesman stood up and said: "The product is unsuitable for you. It is intended for someone less sophisticated." I rang and told Nero. He killed himself laughing. True lies, all of them.
0 of 0 people found the following review helpful:
Great for finance people, 2008-03-11
Just enough quantitative stuff to be dangerous, and enough humor and anecdotal info to make this a page turner from start to finish.
0 of 0 people found the following review helpful:
Make a difficult subject an attractive reading, 2008-02-29
For me the world of derivatives are a known unknown and after reading the book, it remains like that. Derivatives are complex indeed if you don't have experience or are involve in it, but this book helps to provide an idea about the mechanics of the financials markets. The author guides you in this book telling real stories, some from his own experience, about how derivatives have evolved since its beginnings, covering the whole range of derivatives from futures, options, swaps and credit.
Reading the newspaper today, it said that some companies had made some good profits from our country currency valuation against the dollar, thanks to swaps and futures operations --- at least now I have an idea on what they are talking about. I liked this book, I laughed in some parts of it, and for sure I am eager to read more about the subject.
1 of 1 people found the following review helpful:
Fantastic!, 2008-01-21
After reading this you wont trust a banker/broker ever again (not that you should have before).
The book is written like a set of short stories. They just flow smoothly and along the way you get to learn about how the world of modern finance has become the creature that it is today. Want to know more about how the sub-prime crisis came about? Read the last section. Wonder how Goldman Sachs got out of it without so much of a scratch? The "tone" of the book will let you know. Just a really insightful and pleasurable read if you like the exciting world of high finance.
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