The Wrong Answer Faster: The Inside Story of Making the Machine that Trades Trillions-Wow! eBook

The Wrong Answer Faster: The Inside Story of Making the Machine that Trades Trillions book cover

The Wrong Answer Faster: The Inside Story of Making the Machine that Trades Trillions

Author(s): Michael Goodkin (Author)

Publisher: John Wiley & Sons
Publication Date: 6 Mar. 2012
Language: English
Print length: 326 pages
ISBN-10: 1118133404
ISBN-13: 9781118133408

Book Description

The fascinating story behind the machines that trade trillions of dollars every day “A Bildungsroman , one jacket blurb calls this book—and sure, it’s a traditional coming–of–age tale. But the story itself is anything but conventional. The pleasures of the book lie in the story of their bumpy path to success.” Canadian Business In 1968, Michael Goodkin is about to graduate from Columbia University. While his classmates interview for jobs, he daydreams of seeing the world as a man of independent means. Noticing that there are no computers on Wall Street and drawing on his experiences as a failed teenage investor and successful gambler, he has an epiphany: since no one knows the right price for anything, the only way to beat the market is to make a computer that comes up with the wrong answer faster than the professionals. And thus begins a journey that takes this provincial Midwesterner from nearly broke to opulent Park Avenue. The Wrong Answer Faster is the story of unintended consequences: how a technique originally created to minimize market risk spiraled into a multi–trillion dollar game with unparalleled risks. Having founded and sold a firm that changed the world, Goodkin left New York to travel and play backgammon—only to return to found another groundbreaking firm, Numerix, a software company that substituted computational physics for econometrics to better manage derivative risk. The story of the computerization of Wall Street by the man at the helm Packed with keen insights, based almost entirely on poker, backgammon and game theory Goodkin′s unique insight to the markets is that everyone has the wrong answers The solution is not to try to beat the market but to come up with the wrong answers faster The epic tale of the untold story how one man with a great idea decided not to play the market but to revolutionize the financial world for generations to come by creating the most ground breaking tool for market players since the ticker tape.

Editorial Reviews

Review

“A fascinating book that chronicles the life of this man who had the foresight to understand the potential of harnessing the power of the computer and who has thereby revolutionised the trading basis of the financial markets in his lifetime.”–FT Advisor

“Even after the 2008 crisis proved that many of the banks’ computer-based models were flawed, computers and “rocket scientists” still play a major role on Wall Street. They have pioneers like 70-year-old Michael Goodkin to thank. On paper, Goodkin was an unlikely revolutionary. . . he was one of the first to spot that computers could be used to automate trading. Goodwin made millions, but he received little public credit. . There are no trading tips or secret formulae in the book. Instead, it’s what Jordan Simm in Canadian Business calls a ‘traditional coming-of-age tale’. But, as Simm points out, ‘the story is anything but conventional’, providing a window into a time when Wall Street was a very different place. Goodkin’s blunt style makes him an engaging writer, while few others have gone from street hustler to high finance via such an interesting path.”–MoneyWeek

“A Bildungsroman, one jacket blurb calls this book–and sure, it’s a traditional coming-of-age tale. But the story itself is anything but conventional. The pleasures of the book lie in the story of their bumpy path to success.”–Canadian Business

“Michael Goodwin brought the first computer to Wall Street sparking a financial revolution–proving it isn’t what you know, but how fast you know it. Here’s how his story began…”–Hedge Magazine

From the Inside Flap

The incredible true story behind the development of computerized trading on Wall Street from the man who began it all, The Wrong Answer Faster: The Inside Story of Making the Machine that Trades Trillions offers an unprecedented, firsthand account of one of the greatest revolutions in financial history. In 1967, moving from Chicago to New York in hopes of making his mark on the world, Michael Goodkin notices by chance there are no computers on Wall Street. Drawing on his teenage trading experience that no one knows the right price for anything, he sees the opportunity to earn investors a consistent profit by joining his instinct for gambling with the expertise of future Nobel laureate economists and the speed of a computer to calculate the wrong answer faster than the professionals. From that moment onward, Goodkin′s ascent was precipitous, within one year propelling him from holes in the soles of his shoes to a Park Avenue penthouse, and in The Wrong Answer Faster, he tells the remarkable story for the first time. Goodkin changed the financial world with one company, left to travel the globe and play backgammon, and eventually returned to Chicago once again to found a second groundbreaking business that has cemented his reputation as an innovation genius. The untold story of how one man with a great idea decided not to play the market but to revolutionize the financial world by creating the most vital trading tool since the ticker tape, The Wrong Answer Faster goes inside one of the most remarkable stories of our time. From strategizing with his team of eminent economists, almost crashing in a plane with Carl Icahn, and playing backgammon with Bernie Cornfeld to being shown the door by Sir Sigmund Warburg who thought the idea of using a computer to trade the market was utterly preposterous, the book details the inspiring journey of a man who literally revolutionized the way the money game is played.

From the Back Cover

Praise for The Wrong Answer Faster “In 1968, no one on Wall Street used computers for trading. Now, no one trades without them. The Wrong Answer Faster is Michael Goodkin′s compelling and previously untold story of how he created the first computerized trading system, before anyone thought of doing so.” — Emanuel Derman , author of Models.Behaving.Badly. and My Life as a Quant “Michael Goodkin provides us with a lively account of events in his life, including many that involve notable persons in the theory and practice of modern finance. I was particularly fascinated by his account of aspects of his and my own collaboration about which I had never inquired, namely, how he as a young man of modest means conceived the idea of hiring John Shelton, Paul Samuelson, and me as consultants to an enterprise that would manage money using Shelton′s arbitrage model; and how he raised investment capital for this enterprise, recruited the targeted individuals, and later signed up clients in part by learning how to hobnob with the rich and famous.” — Harry Markowitz , Nobel Laureate in Economic Sciences “In this tautly written mini–bildungsroman, not only does the author come of age, but in a well–questioned sense, so too does Wall Street. As the reader′s heart beats faster, his sense that ′I too am racing into my dreams′ will rapidly propel him through its pages. It is a wonderful read.” — Mitchell J. Feigenbaum , Toyota Professor, Rockefeller University “A Horatio Alger story for our times . . .This book is both an exciting story and a morality play.” — Leo Kadanoff , recipient of the National Medal of Science (U.S.) ” The Wrong Answer Faster shows the irrational underpinnings of the money game. Merging genius with entrepreneurship, Michael Goodkin sparked a Wall Street revolution by proving it isn′t what you know but how fast you know it.” — Reese Schonfeld , cofounder of CNN

About the Author

Michael Goodkin , a successful gambler, failed investor, and mediocre student, was advised by his high school guidance counselor to become a plumber. Eight years later, in 1968 he combined his knack for gambling and lessons learned as a failed investor with the expertise of future Nobel laureate economists to found the company that introduced computerized trading to Wall Street. After seeing the world as a professional backgammon player, in 1996 he founded the software company that pioneered the application of computational physics to financial derivatives. A lecturer at forums including the University of Chicago and the Office of the Comptroller of the Currency, Goodkin holds a JD from Northwestern University and an MBA from Columbia University. The author of Paper Gold , a bestselling novel of financial intrigue, he lives in Chicago.

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