 RICHARD BOOKSTABER is a Wall Street insider and
outspoken critic of many of today's financial practices who predicted the
current economic meltdown.
Bookstaber was named to this year's Conde Nast Portfolio list of top 25
technical innovators, joining the ranks of Steve Jobs, Jeff Bezos, Jeffrey
Katzenberg and Eric Schmidt. He has testified in the House and Senate, calling
for greater transparency and improved regulation for Wall Street long before it
was fashionable.
Called "one of Wall Street's 'rocket scientists" by The New York Times,
Bookstaber is the author of A Demon of Our Own Design: Markets, Hedge Funds, and
the Perils of Financial Innovation, a book that pinpointed the market weaknesses
that spun out of control to create today's financial crisis. A Demon of Our Own
Design ranked number one on Amazon in finance and was selected as a finalist for
the prestigious Loeb Award.
Reviews of his book include:
Bright sparks like Mr. Bookstaber ushered in a revolution that fuelled the boom
in financial derivatives and Byzantine 'structured products.' The problem, he
argues, is that this wizardry has made markets more crisis-prone, not less so.
It has done this in two ways: by increasing complexity, and by forging tighter
links between various markets and securities, making them dangerously
interdependent.
The Economist
Like many pessimistic observers, Richard Bookstaber thinks financial
derivatives, Wall Street innovation and hedge funds will lead to a financial
meltdown. What sets Mr. Bookstaber apart is that he has spent his career
designing derivatives, working on Wall Street and running a hedge fund.
The Wall Street Journal
Mr. Bookstaber is one of Wall Street's rocket scientists
mathematicians lured from academia to help create both complex financial
instruments and new computer models for making investing decisions. In the book,
he makes a simple point: The turmoil in the financial markets today comes less
from changes in the economy--economic growth, for example, is half as volatile
as it was 50 years ago--and more from some of the financial instruments
(derivatives) that were designed to control risk.
The New York Times
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. In
short, A Demon of our Own Design is a guide to the dangerous financial markets we
have created for ourselves by the clever innovations of structured finance,
derivatives, credit default swaps and other newfangled products that are a
mystery to the ordinary investor and even plenty of the sophisticates in the
investment business. To understand the demonic risks we're taking, read this
book.
Forbes.com
Timely topics include:
A Demon of Our Own Design
What is the cause of financial crisis? This will be related to the current
crisis, but provide a broader perspective as well, using my book as the starting
point.
How did risk management fail? Did the mad scientists of Wall Street blow up the
lab with their esoteric derivatives, or is the problem one of organization and
incentives?
Mapping the Market Genome
What do we need to know about the markets to avoid future crises?
What are the best regulatory approaches?
What is the future of hedge funds and innovative financial products?
BOOKSTABER recently worked at Bridgewater Associates, the world's largest hedge
fund, and before that ran the Quantitative Equity Fund at FrontPoint Partners.
He was in charge of risk management at Moore Capital Management, another hedge
fund with over $10 billion in assets. He served as the managing director in
charge of firm-wide risk management at Salomon Brothers and was a member of
Salomon's powerful Risk Management Committee. Bookstaber also spent ten years at
Morgan Stanley, first designing and marketing derivative instruments, then as a
proprietary trader, and concluding his tenure there as Morgan Stanley's first
market risk manager.
In addition to A Demon of Our Own Design (Wiley, 2007), he is the author of
three other books and scores of articles on finance topics ranging from option
theory to risk management. He has won the Graham and Dodd Scroll from the
Financial Analysts Federation and the Roger F. Murray Award from the Institute
for Quantitative Research in Finance for his research. Bookstaber has a Ph.D in
Economics from M.I.T.
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