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

ISBN: 0273704745
ISBN 13: 9780273704744
By: Satyajit Das

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About this book

Warren Buffett once memorably described derivatives as "financial weapons of mass destruction". Read this sensational and controversial account of the often dazzling business of derivatives trading, and see if you agree.No money is ever really made in financial markets. Markets merely transfer wealth. As to how to make money? Well, it is basically theft, misrepresentation, lies, cheating, deception or force. It is impossible to make the staggering amounts made in derivatives in good years honestly.Traders, Guns & Money is a wry and wickedly comic exposé of the culture, games, and pure deceptions played out every day in trading rooms around the world, usually with other people's money. Whether you move in the financial world yourself, know people who do, or have money invested in stocks, shares or derivatives, this is a fascinating read guaranteed to make you think.

Reader's Thoughts


Definitely not one of the better books on the subject. There are two major faults with this one:First, the writing is all over the place, with the author jumping hither and thither every other paragraph, with almost no cohesion.Second, there are a great deal of technical bits that are not explained well at all, and some times they don't even need to be that technical.Some interesting anecdotes and case studies, all marred by these downsides.


It's not as memorable as other books that use the "three nouns, one of which is 'guns'" structure for their titles. However, it's an enjoyably cynical introduction to the dangers of derivatives, which is prophetic since it was published in 2006. This features the best explanation of Black-Scholes that I've ever read, and it's in-text translations of bankerese are amazing.


Well having some interest in derivatives, I choose to read this book. So I picked up a copy n just started reading this book and as a first word, it has really captured by attention. The prologue is magnificently written and makes you want to read more. So far so good, will be updating as I read more.**a little advise for those who don't know what derivatives are, this book might not interest you**


Provides a very comprehensive, tongue-in-cheek survey of the financial industry and thus provides a useful roadmap of where we have been and how we got here. Das' style tends to be a bit stocatto and the latter half of the book was a much slower read especially once Das gets into structured products. I wouldn't recommend this book to anyone who doesn't already have a decent grasp of derivatives.


Very complex, textbook-type descriptions of derivatives in the financial world. I read this following the completion of "The Trillion Dollar Meltdown". It's far too complex for someone (like me) who is not involved in the financial industry. Interesting stuff, however.


Despite what some reviewers say about the book bringing derivatives to the masses and making the understanding of them easier, it is still better to have some experience with them through working or studying derivative courses previously to be more appreciative of Satyajit Das' writing. This is in no fault Das' but rather the complicated nature of derivatives. It's actually not an easy topic to write about but Das does this with finesse, ease and candour. It gets a wee bit complicated and maybe boring towards the last few chapters because of the large amount of information. But yes, it's a very informative book, written by an experienced banker that takes the stance of the anti-establishment. Also a bit ironic yes?

Bernard Chen

After reading this book, I learned how one of my annuities manages to guarantee the lesser of 6% per year or the actual market growth of my investments. (Zero coupon bond worth 106%, call option on my portfolio purchases, they keep a percentage for themselves.) I also learned that I was a sucker for buying into this annuity - except that I was lucky and did it a year before the market drop of 2008. Now if I can just get my 106% out...I was a big fan of Frank Portnoy's Fiasco and this is the geekier version with more finance than most people want to read. The author, Das, also includes stories of derivatives deals which drive home how outmatched most purchasers, no matter how sophisticated they think they are (Fortune 500 CFO's et al), compared to the folks who spend their entire days thinking of novel financial vehicles.


I picked this up from the library after hearing Satyajit Das on Planet Money. It was so refreshing to hear someone who has worked in derivatives trading since literally my birth (March 1977) say that there's no way to make money in it without theft and deception. Das's book is now seen as somewhat prophetic, apparently, as it was published in 2006 right before the economy went to hell. Looking forward to yet another expose of what is outright crime in financial markets.


This is a good book, but I felt it oversimplified the explanations of what derivatives and structured financial products are and how they are put together. An entertaining read, but for me the technical aspects were presented at too high a level - glossed over. I didn't come away with the understanding of derivatives that I had hoped to obtain.


This book gives you a realistic picture of the lucrative world of derivatives trading, you know, the enigmatic 'financial stuff' wall street types do to make staggering amounts of money. I'm pro-capitalism mind you, but this rather cynical book paints a not-so-glamorous picture. Three stars just cause it was a bit dry and I thought longer than necessary. And perhaps a bit too cynical, I think there are at least a few positive things to say about the contributions derivatives make to the functioning of the world economy.

Jamie Rodrigues

Overall this book wasn't too bad. Was probably a fairly accurate assessment of what it was like working on a sell-side trading floor, however things have changed somewhat as banks de-risk and shed some of their bad habits. I enjoyed reading about some of the various derivative structures that banks used to do, such as the inverse floater and the exotic currency stuff with the Japanese banks in the 1990s. The downside to this book is that is has a lot of 'filler' topics that people who work in or follow the industry will already know and will get bored reading, such as the downfall of LTCM, drawn out explanations of how derivatives work, etc. At times felt like I was reading a Wikipedia page. The book can feel disjointed, like a hodgepodge of disparate topics that have been put together into a book about derivatives.If I didn't work in the industry I wouldn't bother with this book, there are much more entertaining and informative books out there that talk about the dangers of derivatives and trading with leverage and problems they can cause without adequate regulation and risk management (The Big Short for example). However if you work on a trading floor or work with derivatives and other structured products, you will get something out of it, and might even really enjoy it.


Excellent book about the world of high finance. Shows how it's full of con artists and salesmen and people willing to do anything for a piece of the (huge) pie out there in the financial world. Definitely recommend this along with Frank Partnoy's book.


An accesible and wryly funny book on derivatives and their historical uses such as hedging risk, making bets, avoiding regulations of forbidding investors from certain types of investments, avoiding taxes, hiding losses / creating paper profits,etc.

Byron Wright

This book is a very cynical (yet I suspect highly accurate) account of derivatives trading from a guy that's been there and done that. You do not need to be a financial geek to appreciate this book. It is written in a very entertaining way. For those that are interested you can expend some mental effort and get a basic understanding of derivatives, but you can ignore the details and still enjoy the story. The chapter on credit derivatives is particulary entertaining given the recent meltdown.The moral of the story: Everyone in the financial industry is at least a little bit corrupt and they're interested in their bonus money more than helping you or their company.


And you thought a book on derivatives and option trading would be boring. WRONG! How can wiping out the global economy ever be boring? Oh sure, Option Trading is a wonky subject, and I’ve read many a dry book on the subject, but this one breaks the mold. It really does help you understand the mechanics of the derivative world as well as show you real world applications in a hilarious manner. Well, hilarious if you weren’t the one losing all your money in the deal. Or if somehow you weren’t part of the global economy within the last decade. Let me step back at this point. Options. Basically, they’re for farmers. You plant a crop, spend all year tending to it, and need to be certain of a profit. Rather than relying on the weather and gods, you enter a contract. You limit your maximum profit, but put a floor on the downside. The baker does the same… he needs to ensure the price of flour stays low enough to keep his business going down the line. He enters into a buy contract for the farmer’s goods. Simple enough. And sure, why not scale that concept into new industries as well? Think fuel costs for a transportation company… now you’re getting the idea. But here’s the thing. Why shouldn’t Wall Street take advantage of such a simple thing? I mean, little risk and profits from the sale of the contracts. How could these masters of the universe fuck that up? Just like everything else they touch, it’s gotta turn to gold for them. And that’s why this book shines. When you seriously get to the causes behind all the messes caused by these guys, you’ll laugh so hard that you’ll cry. Mostly because a little part of you died on the inside and you were already crying to begin with. But you’ll laugh too! Now, I work on the ass end of this machine, but I’m still an insider. The book made me look around my office and laugh. Then cry. You see, the formula is the same no matter where you go in this industry. A bunch of young know nothings running around selling crap that even their PhD financial quant engineers can’t understand. It’s perfect, the kids, most all who are in their 20s, peddle weapons of mass destruction to anyone dumb enough to buy their bomb. I see it every day at work. Kids ruining client’s people’s retirements because they’re just too stupid to…. Nah, wait, not stupid. They just don’t care. Either way, the stupid/not caring allows them rack in major paychecks. Wealth is not created by the financial industry, it is simply moved about. Now you’re thinking, “Hey, great idea… let’s get smart people in there instead?” Wrong again, my friend. See, knowing ‘stuff’ in this industry is a bad thing. If you know stuff, you make the salesman feel bad about what they’re doing. This goes up the chain of command too. The author points out how management is based on hitting sales goals instead of skill or experience, because obviously this is a way to run the global economy. But it is. Sure, not everyone is horrid asshole when it comes to this industry, but we’ll never get far enough in this corporate climate to change things. Given the fact that this book was written pre Great Recession, one could almost say it serves as a witty warning of things to come. Too bad that I’m writing this follow up in 2014… because I can tell you first hand that nothing has changed. And it’s not the industries fault. It’s yours. Yep, you know that boring guy you ignored when you tried to talk finance…? Remember how you brought all your money over to the 20 year old who kept blowing smoke up your ass instead?

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