4 ms·

What should the layperson read to learn more about the inner-workings of financial systems? Any good books?

tibbon 17y ago
This article actually does a shockingly good job. I'm not an economist, but I understood everything that was happening there. Speaking of economists, reading The Economist is a pretty good way to get your feet wet initially. It's a magazine, but its pretty in depth, but at the same time doesn't assume you're an expert on all parts of the system.
- alttab 17y ago
  My girlfriend is a tax specialist for one of the most respected Mutual Funds in the country that doesn't do any wishy-washy derivative trading, she works directly with the CFO and the Comptroller. I read this entire article to her out loud and she was actually impressed with the accuracy of what is usually sensationalist writing from the Rolling Stone. As programmers who like to make black and white or otherwise binary decisions about things, I'd say we'd be the least qualified to make bogus or unfounded statements.
ig1 17y ago
I normally recommend The Complete Guide to Capital Markets for Quantitative Professionals by Alex Kuznetsov (despite the title you don't have to be a mathmo to read it, anyone with a technical mindset should be fine). I'd avoid relying upon articles like this one though, from my experience they're frequently wrong. I've been a developer on the leading equities analytics software, was lead developer on the worlds largest credit derivative trade settlement platform, and now work in currency trading. I don't have a huge in-depth knowledge in these areas, but I know enough that I can tell most of these articles are written by people who are completely clueless.
- jhancock 17y ago
  Thanks for the book tip. Now, assuming this article is clueless. It is well written, but ok, lest say its factually inaccurate. Where is the article that is accessible and has enough facts right?
  - jeromec 17y ago
    FWIW, I think this author is hitting around the nail, even if not on target, and his emotional style of writing can further bring his credibility into question. However, I wouldn't say the article is clueless or fictional, far from it. I found myself agreeing for the most part with another article from this author about economic bubbles and Goldman Sachs (http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine/print http://www.rollingstone.com/politics/story/28816321/the_grea...) and I'm someone that both predicted and warned of our impending economic trouble as early as Nov '07 (provable screenshots). I recommend watching Money as Debt (5 part series so click at each end): http://www.youtube.com/watch?v=mIIAvdJvCes&NR=1 http://www.youtube.com/watch?v=mIIAvdJvCes&NR=1
- jdbeast00 17y ago
  i bought it...thanks. hope its good
known 17y ago
http://www-rcf.usc.edu/%7Elharris/Trading/Book/Book-extract.pdf http://www-rcf.usc.edu/%7Elharris/Trading/Book/Book-extract.... (PDF)
cynicalkane 17y ago
It's not that the inner workings of financial systems are obscure, but rather that there is so much misinformation around. Ask a simple question like "how does money work" and you will hear responses, in very loud and belligerent voices, from the gold-standard crowd, the full-reserve banking crowd, the anti-Fed crowd, the Rolling Stone-influenced true believers, the hyperinflation fearmongers, the deflation fearmongers, Austrian economics true believers, Randists, socialists, And most of them are wrong. I don't really feel like addressing them all, or at all, but you should see most of them are wrong because most of them are mutually contradictory. About the only thing the have in common is an irrational fear of banks, as if banks are breaking into homes and stealing money from single mothers. The signal to noise ratio is very high. I'm not aware of any book that describes all the major parts of finance in one go, but Warren Buffet's shareholder letters (which have been collected in book form) are a good place to start. He explains so clearly what business is and is not that I think it will arm one with a good signal-to-noise filter. I think the hacker feels that highs, lows, Jim Cramer's screaming, stock charts, naked shorts, uptrends/downtrends, and all that other stuff is a basket of canards, but is unable to articulate this; armed with the knowledge of how and why exactly public corporations work and what their stock is for, he should be ready to use the same patterns of knowledge to tackle the rest of finance.
- jeromec 17y ago
  Warren Buffet himself said he doesn't understand economics.
  - cynicalkane 17y ago
    We were talking about finance, not economics.
    - jeromec 17y ago
      Huh? Did you read your own words in your post right above? ..the hyperinflation fearmongers, the deflation fearmongers, Austrian economics true believers, Randists, socialists, And most of them are wrong. And in case you haven't noticed from the recent bank and financial mess, economics and finance are related.

This article actually does a shockingly good job. I'm not an economist, but I understood everything that was happening there. Speaking of economists, reading The Economist is a pretty good way to get your feet wet initially. It's a magazine, but its pretty in depth, but at the same time doesn't assume you're an expert on all parts of the system.

alttab 17y ago
My girlfriend is a tax specialist for one of the most respected Mutual Funds in the country that doesn't do any wishy-washy derivative trading, she works directly with the CFO and the Comptroller. I read this entire article to her out loud and she was actually impressed with the accuracy of what is usually sensationalist writing from the Rolling Stone. As programmers who like to make black and white or otherwise binary decisions about things, I'd say we'd be the least qualified to make bogus or unfounded statements.

ig1 17y ago

I normally recommend The Complete Guide to Capital Markets for Quantitative Professionals by Alex Kuznetsov (despite the title you don't have to be a mathmo to read it, anyone with a technical mindset should be fine). I'd avoid relying upon articles like this one though, from my experience they're frequently wrong. I've been a developer on the leading equities analytics software, was lead developer on the worlds largest credit derivative trade settlement platform, and now work in currency trading. I don't have a huge in-depth knowledge in these areas, but I know enough that I can tell most of these articles are written by people who are completely clueless.

jhancock 17y ago
Thanks for the book tip. Now, assuming this article is clueless. It is well written, but ok, lest say its factually inaccurate. Where is the article that is accessible and has enough facts right?
- jeromec 17y ago
  FWIW, I think this author is hitting around the nail, even if not on target, and his emotional style of writing can further bring his credibility into question. However, I wouldn't say the article is clueless or fictional, far from it. I found myself agreeing for the most part with another article from this author about economic bubbles and Goldman Sachs (http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine/print http://www.rollingstone.com/politics/story/28816321/the_grea...) and I'm someone that both predicted and warned of our impending economic trouble as early as Nov '07 (provable screenshots). I recommend watching Money as Debt (5 part series so click at each end): http://www.youtube.com/watch?v=mIIAvdJvCes&NR=1 http://www.youtube.com/watch?v=mIIAvdJvCes&NR=1
jdbeast00 17y ago
i bought it...thanks. hope its good

known 17y ago

http://www-rcf.usc.edu/%7Elharris/Trading/Book/Book-extract.pdf http://www-rcf.usc.edu/%7Elharris/Trading/Book/Book-extract.... (PDF)

cynicalkane 17y ago

It's not that the inner workings of financial systems are obscure, but rather that there is so much misinformation around. Ask a simple question like "how does money work" and you will hear responses, in very loud and belligerent voices, from the gold-standard crowd, the full-reserve banking crowd, the anti-Fed crowd, the Rolling Stone-influenced true believers, the hyperinflation fearmongers, the deflation fearmongers, Austrian economics true believers, Randists, socialists, And most of them are wrong. I don't really feel like addressing them all, or at all, but you should see most of them are wrong because most of them are mutually contradictory. About the only thing the have in common is an irrational fear of banks, as if banks are breaking into homes and stealing money from single mothers. The signal to noise ratio is very high. I'm not aware of any book that describes all the major parts of finance in one go, but Warren Buffet's shareholder letters (which have been collected in book form) are a good place to start. He explains so clearly what business is and is not that I think it will arm one with a good signal-to-noise filter. I think the hacker feels that highs, lows, Jim Cramer's screaming, stock charts, naked shorts, uptrends/downtrends, and all that other stuff is a basket of canards, but is unable to articulate this; armed with the knowledge of how and why exactly public corporations work and what their stock is for, he should be ready to use the same patterns of knowledge to tackle the rest of finance.

jeromec 17y ago
Warren Buffet himself said he doesn't understand economics.
- cynicalkane 17y ago
  We were talking about finance, not economics.
  - jeromec 17y ago
    Huh? Did you read your own words in your post right above? ..the hyperinflation fearmongers, the deflation fearmongers, Austrian economics true believers, Randists, socialists, And most of them are wrong. And in case you haven't noticed from the recent bank and financial mess, economics and finance are related.