The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash Normal 1st Edition

Crowding, or too much capital, occurs in markets, industries and the broader economy. Roger Lowenstein's "The End of Wall Street", although not mentioning crowding, gives a better narrative on how crowding in the housing market affected markets, housing related industries and the broader economy than this book does, although this book describes other instances, but not so well.

The book starts with a sympathetic, insider account of the LTCM crash, with a goal of generalizing the crowding phenomena that drove that particular situation, that is genuinely excellent. There are lots of numbers, strategic details, and other excellent reporting. The following account of the 2007 quant crash, while equally sympathetic, is substantially less detailed; the idea of deleveraging-driven price changes as a common theme is strong, but there is no rigorous attempt to understand more quantitative similarities.The rest of the book, unfortunately, is a mediocre account of the financial crisis of 2008 from a right-wing-trader perspective, with little to recommend it. Banking executives are treated sympathetically, even when massively negligent or stupid (the author defends the sanity of the short-BBB, long 3x that size of AAA CDO trade that lost Morgan Stanley eight billion dollars, of course omitting that detail) while government actors get snarky footnotes, from an author who can conveniently forget that mortgages generally have a substantial recovery rate only when dealing with Fannie and Freddie (his loss calculation has zero recovery and zero equity, specially for them) and thinks Barney Frank was a senator. There is almost no new reporting in this section. If you know the schlocky Heritage foundation account of the crisis, you can skip everything after the quant crash.I came to this book looking for what the title promised: a sophisticated look at crowded trades and how to reason about them. I left with a great third of a book worth of historical reporting and two-thirds of a book worth of unoriginal ideological trash. If you need that first part, here it is; otherwise, move right along.

i really think this is a great book, I purchased this book to focus on what happened in past financial crisis .what the true reason behind the crisis, I was not disappointed--stories in this book were excellently presented. Written in clear, precise prose (no theory obfuscation) and then illustrated with rigorous formulas and copious examples. I found this book make the complicated theory to a very simple way to understand. i really enjoy the time i spend on this book,The book is well organized; individual chapters can be read on a stand alone basis or a group of chapters taken together for a more comprehensive view. It's a volume that's exceptionally well suited for individuals with a solid grasp of fundamental analysis and a strong command of basic financial theories.highly recommend this book.for financial student who also want to investigate in this area, there is another book related to this possibly also useful for you."Quantitative Equity Portfolio Management: An Active Approach to Portfolio Construction and Management (McGraw-Hill Library of Investment and Finance)"

Since 2008, I have felt really stupid any time conversations about the 2008 Financial Crisis popped up. I knew in general what happened, but I never knew enough to contribute to a conversation. What I read in this book not only helped explain it in a language I understood, but it explained it in a way that I enjoyed reading. The book is actually pretty entertaining. He paints the financial crisis as a story, instead of really boring points. And Ludwig inserts his opinion in a very humorous light.In addition, this book saved my grade in one of my classes. The book wasn't required for my International Finance class, but when I was assigned a project on Basel III, I found a couple chapters regarding the Basel Committee in this book. It was more helpful than any other website I looked at... including wikipedia! ( Wikipedia is not a legitimate source, I know. But undeniably a helpful source.) Anyways, I think I will use this book for a long time, as my primary reference for any 2008 questions that pop up.

This book illustrates clearly the the crisis of crowing while explaining useful financial concepts which are closely related to the topic. The authors managed to describe most key factors without using complicated mathematical models. There are also many practical examples and analysis which help readers apply the theoretical knowledge into real-world scenarios. Complicated ideas are explained thoroughly by well-managed tables or charts and the text itself is totally readable and easy to follow. As a reader who has a finance background, this book helped me learn lots of stuff from many stories and examples, and helped me learn critical concepts and strategies. This is a fantastic book for those who are interested in the crisis of crowding want to broaden their financial knowledge. And I also read the other book write by this author: Quantitative Equity Portfolio Management. It is also very helpful.

The author tells an excellent story about financial crisis from its background to its aftermath while educating readers about important knowledges of finance. Many details are covered, yet the concepts are straight forward. The book is nice for people who know some finance to have a good time walking through what was going on during 2008 financial crisis, and it is excellent for those who have moderate financial background to learn, improve and be surprised by how the market reacts with the crowd.The book does not simply show readers facts of the crisis or provide shallow opinions, however, it analyzes the reasons behind incidents and makes you think deeply about the market.Human behaviors are hard to predict and the crisis of crowds has not been eliminated. However, we will definitely know much more about it after reading this book and hopefully we can avoid most of the losses if similar situation happens again.I'm happy that I bought the book.

This book has as it's main thesis that crowded trades were a/the main cause of the 2008 financial crisis, and previous ones such as the collapse of LTCM. This is an interesting and important thesis, but it is not the whole story of the 2008 crisis (lot's of people buying sub-prime products was the main cause) and the author shoehorns his facts too hard, trying to make them match his main theme.I would say this book would have been better as a medium-length article - there is not enough meat here to justify a whole book, and the extra words just waste the readers' time. In addition, the book appears to be hastily slapped together, with rather annoying errors which leave the reader questioning the author's knowledge and attention to detail. Among other errors, he tells us that the 3-month Libor rate went from 17bps to 47bps in the 1998 crisis - no author or fact-checker should think this is right (maybe he is confused with the TED spread, but it is rather hard to tell).If you want to know about the topics covered here, there are much better books to read than this one.

very good reference for crisis. and huge mistake in market history a must read book, every chapter is a lesson from real life