Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives Book

Das, a derivatives and risk expert, takes a very snarky look at these complex products that exploded the financial world in 2008 (though he is writing in 2006). Few people understand them, but whenever investors are flush with cash, money has to end up somewhere, and it's often seeking the highest return. The quants who create them may understand the equations, but not the real world consequences. The salespeople who sell them don't really understand them, and the buyers - in a system ruled by asymmetric information, where the seller always knows more than the buyer - rarely ever do. Although not as dull or abstruse as a textbook, which Das also writes, this book does go into the weeds, and readers who have no knowledge whatsoever of derivatives will find themselves floating on a sea of mysterious acronyms, coupled with diagrams and flow charts.

Das keeps it punchy with chapterette headings such as "Rough Trade," "Bondage," "Dukes of Hazard," and "Tranche Warfare." He tells us that heading into a trial preparation as a plaintiff's expert witness, where an Indonesian noodle company that had been snookered on some derivatives was suing the issuer, he had looked up Portia's "quality of mercy" speech from The Merchant of Venice as a precaution.

The book is plagued by typos: missing apostrophes and quotation marks, and astonishingly, a consistent misspelling of Warren Buffett's name. Former Salomon head John Gutfreund is repeatedly referred to as "John Gutenfreund."