"Rishi Narang breaks down the complexities of quantitative investing into straightforward concepts that are accessible to a wide audience of investors, not just 'math types.' But Inside the Black Box does more than that—it provides a valuable framework for assessing any investment strategy. It's well worth reading regardless of experience level or numerical acumen."
—CRAIG DANDURAND, Portfolio Manager–Absolute Return Strategies, California Public Employees' Retirement System (CalPERS)
"Rishi provides a comprehensive overview of quantitative investing that should prove useful both to those allocating money to quant strategies and those interested in becoming quants themselves. Rishi's experience as a well-respected quant Fund of Funds manager and his solid relationships with many practitioners provide ample useful material for his work."
—PETER MULLER, founder, PDT Partners
"Quantitative trading, like all investment strategies, gets more complex yet more interesting the deeper you dig into it. Rishi deftly peels back the layers, walking readers through each building block and their combination, then providing useful chapters on evaluating model-based approaches and finally a new section surveying high-frequency trading. Anyone approaching the space will learn something from this clear, thorough, and readable book."
—ALEKSANDER WEILER, CFA, Senior Portfolio Manager, Public Market Investments, Canada Pension Plan Investment Board
"Rishi continues to demystify even more quantitative trading areas in this excellent new edition. Significant updates include several new chapters that shine much-needed light on high-speed and high frequency trading. This book continues to be a must-read for anyone interested in quantitative trading."
—STEVE EVANS, Managing Director of Quantitative Trading, Tudor Investment Corporation
"In Inside the Black Box: A Simple Guide to Quantitative and High-Frequency Trading, Rishi Narang demystifies quantitative trading. His explanation and classification of alpha will enlighten even a seasoned veteran."
—BLAIR HULL, former founder of Hull Trading Co. and founder of Ketchum Trading
"In this updated edition, Rishi again provides an insightful taxonomy of a wide range of systematic trading strategies in liquid instruments. Without the extensive use of complex formulae, this book offers intuitive explanations of some of the choices faced by quants in constructing trading systems, and is a valuable read for investors and quantitative trading practitioners alike."
—ROSS GARON, Managing Director, Quantitative Strategies, SAC Capital Advisors, LP
"Rishi takes a complicated subject and distills it down to its essentials using non-technical language and numerous concrete examples to bring concepts alive. Inside the Black Box provides readers with a valuable framework to understand the various components of quant strategies and insights on how to evaluate and interview quant managers. Inside the Black Box is a useful reference guide for any institutional allocator to quant strategies."
—DAREN SMITH, CFA, CAIA, FSA, Managing Director, Manager Selection & Portfolio Construction, University of Toronto Asset Managment
"If a car were a black box, Rishi would be the gentle voice of the navigation system. Not the one driving, but if you want to know where everyone is going: just listen."
—HAROLD de BOER, CEO, Transtrend
"Rishi presents a thorough overview of quant trading in an easy-to-read format, free of much of the hype and hysteria that has recently surrounded computerized trading. The book clearly categorizes the different types of strategies, explaining in plain English the basic ideas behind how and when they work. Most importantly, it dispels the popular notion that all quants are the same, exposing the diversity of the types of skills and thinking that are involved in quant trading and related disciplines. An excellent read for anyone who wants to understand what the field is all about."
—Shakil Ahmed, PhD, Global Head of Market Making, Citi Equities
"To look at the man, you would never know that Rishi could write so clearly and effectively about something as complex as quantitative trading and investment. But he does and does it brilliantly. And, even if you already own the first edition, you should buy this one, too. The new material on high speed trading is worth the price of admission, and you will have a chance, especially in Chapter 16, to see Rishi at his incisive and high spirited best. If you don't laugh out loud, you have no soul."
—Galen Burghardt, Director of Research, Newedge
"Quant managers will find their meetings with investors to be smoother if the investors have read this book. And even more so if the manager him or herself has read and understood it."
—David DeMers, Portfolio Manager, SAC Capital Advisors, LP
"In this second edition of Inside the Black Box Rishi highlights role of quant trading in recent financial crises with clear language and without using any complex equations. In chapter 11 he addresses common quant myths. He leads us effortlessly through the quant trading processes and makes it very easy to comprehend, as he himself is a quant trader."
—Pankaj N. Patel, Global Head of Quantitative Equity Research, Credit Suisse
“Something that every trader should aspire to, whether his eventual trading box is black or translucent. In brief, this book is not just for those who want to know what quants do (though it does an excellent job of describing their role in the investment community) but for everyone whose trading is informed by more than dart throwing or gut reactions. … The text is highly readable. No math is required, only, I would suggest, an interest in scientific inquiry and a curiosity about the world that the mathematical elite inhabit. Inside the Black Box is an enlightening and potentially enriching read.”
—Investing.com
This book is both thought-provoking and pleasurable to read. I run a quant trading operation and the book made me reflect on the performance drivers for our strategies, for other quant strategies, and for hedge fund strategies in general.
I found the following particularly insightful: (1) observations on the relationship of value trades to carry strategies; (2) discussion of order types and market microstructure; (3) conceptualization of August of 2007; (4) process for evaluating quant managers and their process; (5) brilliant taxonomy of alphas.
It's not a book one reads to mine for strategy ideas. It's a book one reads to understand the quant space. Required reading for our new hires and summer interns.
In my opinion, this book plays a valuable role in the discussion of quantitative trading.
It is not a how-to handbook, although wannabe quants would be well served by reading it.
Anyone who is not a quant but is considering investing with a quantitative manager owes their clients a duty of understanding the potential investment,
and "Inside the Black Box" does an excellent job of laying out the important issues.
It can help a quant manager understand how to effectively describe his or her process to investors,
and can help an investor understand how to probe for the right level of detail when evaluating a manager.
As a systematic manager, I would want my investors to have read this book.
I know Rishi well, and have been through his due diligence process, which is famous for its depth and focus.
The many years of deep review of many systematic managers shows its results in that he has distilled the best practices into the right (in my opinion) abstractions.
This new edition has added quite a bit of material on "high frequency trading", a topic of some importance and controversy.
He (assisted by his brother, who has deep insight into the HFT world) lays out the key issues.
I may disagree with him on interpretation, opinion and consequences, but the material here contributes to the debate.
Some minor quibbles are just a matter of the right level of inclusion and detail.
For example, in Chapter 5 (Transaction costs) there is no discussion of adverse selection and opportuniIy cost,
nor much advice on how to actually measure and model market impact.
But one could write a full book on transaction cost, and indeed, such books exist.
I recently read Mauboussin's book "The Success Equation", which provides a good explanation of the problem of distinguishing skill from luck.
In my opinion, Rishi could have added additional value by discussing how one can get a more accurate estimate of manager skill for a quant
manager than for most discretionary managers.
This is a valuable book though it will not train you to become a successful quant.
You will understand the concepts underlying investing and how quants leverage
computational power in order to develop a scientifically driven investment process.
If you invest in hedge funds, you may learn how to improve your due diligence by focusing
on the meaningful issues underlying success for systematic managers.
Product Details :
Hardcover: 336 pages
Publisher: Wiley; 2 edition (March 25, 2013)
Language: English
ISBN-10: 1118362411
ISBN-13: 978-1118362419
Product Dimensions: 6.4 x 1.1 x 9.3 inches
More Details about Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading, 2nd edition
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