{"product_id":"red-blooded-risk-isbn-9781118043868","title":"Red-Blooded Risk","description":"\u003cb\u003eAn innovative guide that identifies what distinguishes the best financial risk takers from the rest\u003c\/b\u003e  \u003cp\u003eFrom 1987 to 1992, a small group of Wall Street quants invented an entirely new way of managing risk to maximize success: risk management for risk-takers. This is the secret that lets tiny quantitative edges create hedge fund billionaires, and defines the powerful modern global derivatives economy. The same practical techniques are still used today by risk-takers in finance as well as many other fields. \u003ci\u003eRed-Blooded Risk\u003c\/i\u003e examines this approach and offers valuable advice for the calculated risk-takers who need precise quantitative guidance that will help separate them from the rest of the pack.\u003c\/p\u003e \u003cp\u003eWhile most commentators say that the last financial crisis proved it's time to follow risk-minimizing techniques, they're wrong. The only way to succeed at anything is to manage true risk, which includes the chance of loss. \u003ci\u003eRed-Blooded Risk\u003c\/i\u003e presents specific, actionable strategies that will allow you to be a practical risk-taker in even the most dynamic markets.\u003c\/p\u003e \u003cul\u003e \u003cli\u003eContains a secret history of Wall Street, the parts all the other books leave out\u003c\/li\u003e \u003cli\u003eIncludes an intellectually rigorous narrative addressing what it takes to really make it in any risky activity, on or off Wall Street\u003c\/li\u003e \u003cli\u003eAddresses essential issues ranging from the way you think about chance to economics, politics, finance, and life\u003c\/li\u003e \u003cli\u003eWritten by Aaron Brown, one of the most calculated and successful risk takers in the world of finance, who was an active participant in the creation of modern risk management and had a front-row seat to the last meltdown\u003c\/li\u003e \u003cli\u003eWritten in an engaging but rigorous style, with no equations\u003c\/li\u003e \u003cli\u003eContains illustrations and graphic narrative by renowned manga artist Eric Kim\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eThere are people who disapprove of every risk before the fact, but never stop anyone from doing anything dangerous because they want to take credit for any success. The recent financial crisis has swelled their ranks, but in learning how to break free of these people, you'll discover how taking on the right risk can open the door to the most profitable opportunities.\u003c\/p\u003e \u003cp\u003eAcknowledgments xi\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 What This Book Is and Why You Should Read It 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRisk, Danger, and Opportunity 2\u003c\/p\u003e \u003cp\u003eRed- Blooded Risk Management 4\u003c\/p\u003e \u003cp\u003eRisk and Life 7\u003c\/p\u003e \u003cp\u003ePlay and Money 9\u003c\/p\u003e \u003cp\u003eFrequentism 11\u003c\/p\u003e \u003cp\u003eRationality 13\u003c\/p\u003e \u003cp\u003eBets 15\u003c\/p\u003e \u003cp\u003eExponentials and Culture 18\u003c\/p\u003e \u003cp\u003ePayoff 20\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Red Blood and Blue Blood 23\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Pascal’s Wager and the Seven Principles of Risk Management 29\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePrinciple I: Risk Duality 32\u003c\/p\u003e \u003cp\u003ePrinciple II: Valuable Boundary 33\u003c\/p\u003e \u003cp\u003ePrinciple III: Risk Ignition 35\u003c\/p\u003e \u003cp\u003ePrinciple IV: Money 38\u003c\/p\u003e \u003cp\u003eOutside the VaR Boundary 40\u003c\/p\u003e \u003cp\u003ePrinciple V: Evolution 45\u003c\/p\u003e \u003cp\u003ePrinciple VI: Superposition 48\u003c\/p\u003e \u003cp\u003ePrinciple VII: Game Theory 49\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 The Secret History of Wall Street: 1654– 1982 57\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePascal and Fermat 58\u003c\/p\u003e \u003cp\u003ePoker 61\u003c\/p\u003e \u003cp\u003eAdvantage Gamblers 62\u003c\/p\u003e \u003cp\u003eSports Betting 63\u003c\/p\u003e \u003cp\u003eQuants to Wall Street 66\u003c\/p\u003e \u003cp\u003eFinance People 68\u003c\/p\u003e \u003cp\u003eReal Finance 69\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 When Harry Met Kelly 73\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKelly 74\u003c\/p\u003e \u003cp\u003eHarry 76\u003c\/p\u003e \u003cp\u003eCommodity Futures 79\u003c\/p\u003e \u003cp\u003eIf Harry Knew Kelly 84\u003c\/p\u003e \u003cp\u003eInvestment Growth Theory 88\u003c\/p\u003e \u003cp\u003eeRaider.com 92\u003c\/p\u003e \u003cp\u003eMPT Out in the World 96\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Exponentials, Vampires, Zombies, and Tulips 101\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTypes of Growth 102\u003c\/p\u003e \u003cp\u003eThe Negative Side 105\u003c\/p\u003e \u003cp\u003eTulips 106\u003c\/p\u003e \u003cp\u003eTulip Propaganda 108\u003c\/p\u003e \u003cp\u003eQuantitative Tulip Modeling 111\u003c\/p\u003e \u003cp\u003eMoney 112\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Money 117\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 The Story of Money: The Past 125\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eProperty, Exchange, and Money 126\u003c\/p\u003e \u003cp\u003ePaleonomics 128\u003c\/p\u003e \u003cp\u003eTransition 131\u003c\/p\u003e \u003cp\u003eWhat Money Does 134\u003c\/p\u003e \u003cp\u003eRisk 135\u003c\/p\u003e \u003cp\u003eGovernment and Paper 138\u003c\/p\u003e \u003cp\u003ePaper versus Metal 142\u003c\/p\u003e \u003cp\u003e1776 and All That 145\u003c\/p\u003e \u003cp\u003eAndrew Dexter 147\u003c\/p\u003e \u003cp\u003eA Short Digression into Politics and Religion 150\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 The Secret History of Wall Street: 1983– 1987 155\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEfficient Markets 157\u003c\/p\u003e \u003cp\u003eAnomalies 159\u003c\/p\u003e \u003cp\u003eThe Price Is Right Not! 161\u003c\/p\u003e \u003cp\u003eEfficiency versus Equilibrium 162\u003c\/p\u003e \u003cp\u003eBeating the Market 165\u003c\/p\u003e \u003cp\u003ePaths 170\u003c\/p\u003e \u003cp\u003eSharpe Ratios and Wealth 174\u003c\/p\u003e \u003cp\u003e1987 177\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 The Story of Money: The Future 179\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eFarmers and Millers 180\u003c\/p\u003e \u003cp\u003eMoney, New and Improved 183\u003c\/p\u003e \u003cp\u003eA General Theory of Money 185\u003c\/p\u003e \u003cp\u003eValue and Money 189\u003c\/p\u003e \u003cp\u003eNumeraire 191\u003c\/p\u003e \u003cp\u003eClearinghouses 196\u003c\/p\u003e \u003cp\u003eCash 197\u003c\/p\u003e \u003cp\u003eDerivative Money 200\u003c\/p\u003e \u003cp\u003eThe End of Paper 203\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Cold Blood 207\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 What Does a Risk Manager Do?—Inside VaR 213\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eProfessional Standards 213\u003c\/p\u003e \u003cp\u003eFront Office 215\u003c\/p\u003e \u003cp\u003eTrading Risk 217\u003c\/p\u003e \u003cp\u003eQuants on the Job 218\u003c\/p\u003e \u003cp\u003eMiddle Office 222\u003c\/p\u003e \u003cp\u003eBack Office 225\u003c\/p\u003e \u003cp\u003eMiddle Office Again 227\u003c\/p\u003e \u003cp\u003eLooking Backward 228\u003c\/p\u003e \u003cp\u003eRisk Control 230\u003c\/p\u003e \u003cp\u003eBeyond Profit and Loss 232\u003c\/p\u003e \u003cp\u003eNumbers 234\u003c\/p\u003e \u003cp\u003eThe Banks of the Charles 236\u003c\/p\u003e \u003cp\u003eWaste 238\u003c\/p\u003e \u003cp\u003eThe Banks of the Potomac 241\u003c\/p\u003e \u003cp\u003eThe Summer of My Discontent 245\u003c\/p\u003e \u003cp\u003eValidation 247\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 VaR of the Jungle 251\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 The Secret History of Wall Street: 1988– 1992 255\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSmile 256\u003c\/p\u003e \u003cp\u003eBack to the Dissertation 258\u003c\/p\u003e \u003cp\u003eThree Paths 262\u003c\/p\u003e \u003cp\u003eAn Unexpected Twist 265\u003c\/p\u003e \u003cp\u003eSurprise! 267\u003c\/p\u003e \u003cp\u003eComputing VaR 271\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Hot Blood and Thin Blood 277\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 What Does a Risk Manager Do?— Outside VaR 283\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eStress Tests 283\u003c\/p\u003e \u003cp\u003eTrans-VaR Scenarios 287\u003c\/p\u003e \u003cp\u003eBlack Holes 289\u003c\/p\u003e \u003cp\u003eWhy Risk Managers Failed to Prevent the Financial Crisis 290\u003c\/p\u003e \u003cp\u003eManaging Risk 296\u003c\/p\u003e \u003cp\u003eUnspeakable Truth Number One: Risk Managers Should Make Sure Firms Fail 299\u003c\/p\u003e \u003cp\u003eUnspeakable Truth Number Two: There’s Good Stuff beyond the VaR Limit 305\u003c\/p\u003e \u003cp\u003eUnspeakable Truth Number Three: Risk Managers Create Risk 309\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17 The Story of Risk 313\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 18 Frequency versus Degree of Belief 323\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eStatistical Games 324\u003c\/p\u003e \u003cp\u003eThorp, Black, Scholes, and Merton 329\u003c\/p\u003e \u003cp\u003eChange of Numeraire 333\u003c\/p\u003e \u003cp\u003ePolling 336\u003c\/p\u003e \u003cp\u003eThe Quant Revolution 341\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 19 The Secret History of Wall Street: 1993– 2007 345\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhere Did the Money Come From? 348\u003c\/p\u003e \u003cp\u003eWhere Did They Put the Money? 359\u003c\/p\u003e \u003cp\u003eWhere Did the Money Go? 364\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 20 The Secret History of Wall Street: The 2007 Crisis and Beyond 369\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePostmortem 379\u003c\/p\u003e \u003cp\u003eA Risk Management Curriculum 387\u003c\/p\u003e \u003cp\u003eOne Hundred Useful Books 393\u003c\/p\u003e \u003cp\u003eAbout the Author 401\u003c\/p\u003e \u003cp\u003eAbout the Illustrator 403\u003c\/p\u003e \u003cp\u003eIndex 405\u003c\/p\u003e  \u003cp\u003e\"Wickedly original, one of the most fascinating accounts I have ever seen. A rollicking and highly opinionated read.\" (\u003ci\u003eRisk Professional\u003c\/i\u003e, October 2011)\u003cbr\u003e \u003cbr\u003e “No one who reads \u003ci\u003eRed-Blooded Risk: The Secret History of Wall Street\u003c\/i\u003e will ever again regard risk management as a necessary but unproductive appendage of the financial industry. Other authors have chronicled how quantitative finance influenced investment management, but Aaron Brown has made a compelling case for a far more profound economic impact. . . If \u003ci\u003eRed-Blooded Risk: The Secret History of Wall Street\u003c\/i\u003e dealt with nothing more than the inadequacy of models used in highly important activities, it would represent a valuable contribution to financial economics. Brown’s book, however, covers a great deal more than econometric malpractice. Probably no other book offers as much insight into the process with so little resort to mathematical notation. Especially valuable are Brown’s discussions of middle-office risk management and value at risk, comparatively recent innovations that are essential to understanding modern financial institutions. Readers of \u003ci\u003eRed-Blooded Risk\u003c\/i\u003e should be prepared to have many of their assumptions challenged\u003cb\u003e. \u003ci\u003eRed-Blooded Risk\u003c\/i\u003e is one of the most original and thought-provoking books reviewed in these pages in the past 20 years.\u003c\/b\u003e No one who reads it will ever again regard risk management as a necessary but unproductive appendage of the financial industry. Other authors have chronicled how quantitative finance influenced investment management, but Aaron Brown has made a compelling case for a far more profound economic impact.”\u003cbr\u003e —\u003ci\u003e\u003cb\u003eMartin S. Fridson\u003c\/b\u003e\u003c\/i\u003e, CFA Institute Publications Book Reviews\u003cbr\u003e \u003ci\u003e\u003cbr\u003e “Red-Blooded Risk\u003c\/i\u003e mixes risk history and philosophy nimbly and provides a perspective that can be both refreshing and challenging (often on the same page). While the book is not without weaknesses, it is also brimming with original perspectives and controversial opinions. Those who work in risk management or quantitative finance will enjoy Brown’s story-telling and expert perspectives, even if they do not share his views, while non-quants will find his insights and confessions to be a useful glimpse into the psyche and ethos of an influential group of early quantitative risk takers.\u003cbr\u003e —\u003ci\u003e\u003cb\u003eRoger M. Stein\u003c\/b\u003e\u003c\/i\u003e, Research and Academic Relations, Moody’s Corporation, as reviewed in \u003ci\u003eQuantitative Finance\u003c\/i\u003e (August 6, 2012)\u003c\/p\u003e   \u003cp\u003e\u003cb\u003eAARON BROWN\u003c\/b\u003e is risk manager at AQR Capital Management and the author of \u003ci\u003eThe Poker Face of Wall Street\u003c\/i\u003e (Wiley), selected one of the ten best books of 2006 by \u003ci\u003eBusinessWeek\u003c\/i\u003e, and \u003ci\u003eA World of Chance\u003c\/i\u003e with Reuven and Gabrielle Brenner. In his thirty-year Wall Street career, he has been a trader, portfolio manager, head of mortgage securities, and risk manager for institutions including Citigroup and Morgan Stanley. He also served a stint as a finance professor and was among the top poker players in the world during the 1970s and 1980s. He holds degrees in applied mathematics from Harvard and in finance and statistics from the University of Chicago.      \u003c\/p\u003e\u003cp\u003eEveryone talks about risk, but few people give serious thought to what risk is. It's hard to describe it without expressing an opinion—we like things that are innovative, daring, creative, and bold; but those are exactly the same things that are reckless, speculative, risky, and irresponsible. \u003c\/p\u003e\u003cp\u003eThis book is the story of a group of young math whizzes who unleashed a revolution—one that reshaped our financial system and continues to echo through the halls of government, universities, and corporations today. In the 1970s, disillusioned with the sorry state of quantitative analysis, these young mathematicians (soon to be known as \"quants\") invented a new way of looking at probability and set out to prove it in the ultimate testing ground of odds-making: Las Vegas. \u003c\/p\u003e\u003cp\u003eOnce there, the quants turned conventional wisdom about gambling on its head. People said you can't beat the house, yet the quants managed to beat blackjack and other casino games. People said you needed a lifetime to learn poker, yet the quants' aggressive mathematical tactics swept the table against the best players in the world. Then the quants turned to sports betting, overturning the business model and squeezing out local bookies with a global organization that matched bets without taking risk. \u003c\/p\u003e\u003cp\u003eArmed with their theories and experience, the quants raised their sights and headed to Wall Street, determined to replicate their success. Finance was a tougher challenge than gambling, but by the mid-1990s, the quants had remade Wall Street as thoroughly as they had remade Las Vegas. That transformation went unnoticed by the bond salesmen and investment bankers who ran Wall Street, as well as by academics, regulators, journalists, and investors; yet these changes caused both the greatest wealth creation event in the history of the world, and the financial disasters we have witnessed in its wake. \u003c\/p\u003e\u003cp\u003eThere's more here than just a lesson in recent financial history, however. Brown's story goes beyond the headlines to explore basic questions of economics, like the meaning of property and the nature of exchange. Along the way, it reveals secrets about the building of the pyramids, the glory of ancient Athens, the force that built the Roman Empire, a world-changing invention from medieval Italy, a secret in a mysterious letter written in 1654 and not decoded until the 1990s, and an essential aspect of the American Revolution left out of history books. \u003c\/p\u003e\u003cp\u003eThis book will change the way you think about everything from history, risk, and money to vampires, zombies, and tulips. It offers a fascinating and thrilling account of great events that have never before been described in an easily accessible form. There are bold ideas, colorful characters, and, most important, the keys to understanding the modern financial world and how its inner workings affect our daily lives.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989927346405,"sku":"NP9781118043868","price":37.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781118043868.jpg?v=1761785937","url":"https:\/\/k12savings.com\/es\/products\/red-blooded-risk-isbn-9781118043868","provider":"K12savings","version":"1.0","type":"link"}