Gregory Zuckerman
Author of The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution
About the Author
Works by Gregory Zuckerman
The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution (2019) 489 copies, 11 reviews
The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History (2009) 447 copies, 10 reviews
The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters (2013) 222 copies, 5 reviews
A Shot to Save the World: The Inside Story of the Life-or-Death Race for a COVID-19 Vaccine (2021) 74 copies, 1 review
Tagged
Common Knowledge
- Legal name
- Zuckerman, Gregory
- Birthdate
- 1966-09-07
- Gender
- male
- Occupations
- journalist
- Short biography
- Gregory Zuckerman is a Special Writer at The Wall Street Journal. He writes about big financial trades, firms and personalities, among other investing and business topics, and regularly pens the widely read "Heard on the Street" column.
He's a three-time winner of the Gerald Loeb award, the highest honor in business journalism. Greg won the Loeb Award in 2015 for a series of stories revealing discord between Bill Gross, founder of bond powerhouse Pimco, and others at the firm, stories that led to his departure. In 2012, Greg broke news about huge, disastrous trades by the J.P. Morgan trader nicknamed the "London Whale," trades that resulted in $6.2 billion losses for the bank. - Nationality
- USA
- Associated Place (for map)
- USA
Members
Reviews
This is not a technical book – very much a personality-focused, shock-horror the gas price has tanked, wow it works, lets buy some wine, succession of shot and cut narratives. The important differences between drilling, fracking, horizontal drilling and staged fracking are incidental to the colourful background, which is treated the foreground. Two points stand out: First , the laws that govern the right to prospect/produce oil and gas in the USA are entirely different from those in South show more Africa. And the laws that regulate fracking are admitted to be flawed, prone to wide interpretation and weak application. Second, hydraulic fracturing may have first been used in the 1940’s, but its recent development to extract oil and gas from shale is entirely new. The risks of these innovations were and are still not fully understood. Each geological formation responds individually to the fracking technique applied. Years of trial and error may be needed in each case. Even in the USA, where fracking has had a clear decade of use (with huge and surprising success) there is still no consensus on how much oil and gas is retrievable. The estimates vary every moment, with commodity prices, resource identification, technology and (recently) environmental limits. Do not expect the SA research into unconventional gas to produce an estimate of SA shale gas potential that has any real meaning – even after the 2 year study. Fracking will become a “game changer” if they decide to allow it, whatever the energy outcome. There is no way of knowing, before the damage is done, whether the trade offs are justifiable. show less
Good introduction to fracking through the personal stories of a few wildly successful upstart outsiders. By the 1980s, large oil and gas fields in the USA were by conventional wisdom long gone. Large multinationals like Exxon were drilling in foreign locations. In the 1990s, small operators begin experimenting with new technologies and invented fracking that targeted shale oil and gas, initially almost right under Exxon's headquarters in Texas. Soon other fields were found and suddenly the show more USA was becoming one of the world's biggest oil and gas producers. A few small companies that embraced the new technology became very rich as things ramped up in the 00s. The USA could become energy independent, even a net exporter, something that seemed impossible only a few years ago. The book focuses on the stories of a few of the "wildcat" CEOs who benefited. Zuckerman is a good story teller, and this is an important story of our times that is still playing out, the impacts are broad and significant. show less
I had always believed in the efficient market hypothesis. This book convinced me that I was wrong: it's not that there aren't inefficiencies to be exploited in financial markets, it's just that humans suck at seeing them. The same cognitive biases that create those inefficiencies in the first place also prevent us from exploiting them. We see signal where there is only noise, we anchor our expectations, we become emotionally invested in our choices. But the machine is immune to all show more that.
Zuckerman gets into a lot more detail about Renaissance's models than I expected him to. I guess by now there are enough ex-employees willing to share company secrets. Or maybe the company secrets they are willing to share are not that big anymore: using Markov chains to model price movements, looking for price ratios instead of absolute prices, etc. Whatever is happening at quant funds right now is probably way beyond any of that (convolutional neural networks that count cars in Walmart's parking lots, that sort of thing).
I was ready to roll up my sleeves and start modelling stuff, but fortunately I got to this point in the book first: "In the five years leading up to spring of 2019, quant-focused hedge funds gained about 4.2 percent a year on average, compared with a gain of 3.3 percent for the average hedge fund in the same period." Well, the S&P500 yields on average 9.8% a year (6% after inflation). For Simons to get his average 66% yearly return he had to hire a team of geniuses. I'm no genius, and I'm not in a position to hire any geniuses to work for me, so I guess I'm staying with index funds (except maybe for some "fun money").
Overall this is a well written, well researched book, and I got a lot out of it. show less
Zuckerman gets into a lot more detail about Renaissance's models than I expected him to. I guess by now there are enough ex-employees willing to share company secrets. Or maybe the company secrets they are willing to share are not that big anymore: using Markov chains to model price movements, looking for price ratios instead of absolute prices, etc. Whatever is happening at quant funds right now is probably way beyond any of that (convolutional neural networks that count cars in Walmart's parking lots, that sort of thing).
I was ready to roll up my sleeves and start modelling stuff, but fortunately I got to this point in the book first: "In the five years leading up to spring of 2019, quant-focused hedge funds gained about 4.2 percent a year on average, compared with a gain of 3.3 percent for the average hedge fund in the same period." Well, the S&P500 yields on average 9.8% a year (6% after inflation). For Simons to get his average 66% yearly return he had to hire a team of geniuses. I'm no genius, and I'm not in a position to hire any geniuses to work for me, so I guess I'm staying with index funds (except maybe for some "fun money").
Overall this is a well written, well researched book, and I got a lot out of it. show less
The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History by Gregory Zuckerman
The key to writing a good financial book is timing. As it looks, John Paulson's fund seemed to have lost some of its luster in the recent years (though what the future will look like, no one knows). This book is at the intersection of the 2007-08 pop-econ genre (think Big Short) and great business history books (think Barbarians at the Gate). In other words, a useful refresher on 2007 crisis reporting, driven by lively explanations of idiosyncratic personalities. Some of the book is show more redundant for any readers of the Big Short (in fact, Lewis wrote the book to discuss every investor but John Paulson) but those looking to scratch that itch more might profit from reading this book. I originally picked up this book out of a specific curiosity about John Paulson, an alumnus of my college and whose name now adorns many of the rooms and halls there.
Player wise, the book focuses mostly John Paulson but also his major analyst Pellegrini, his friendemy Greene as well as Michael Burry and Greg Lippmann (the latter two both covered by the Big Short). What unites all these players is that none were housing or mortgage specialists. Pellegrini was a new analyst hired by Paulson, who only knew what CDSs were from a serendipitous brush of the shoulders earlier in his career. Pellegrini discovered that housing prices were much higher than historical trends, indica of a housing bubble. Paulson was a merger arbitrage specialist, Burry a stock picker, and Lippmann a Deutsche CDS salesman who discovered that contrary to conventional wisdom housing prices, not income, determined default rates (house buyers with extremely high interest rates after teaser rates could refinance because the housing price rose. when housing prices fell, people were unable to refinance their loans and defaulted). Greene was a real estate mogul trying to protect his real estate empire from collapse (he had suffered from a housing bust before). This is a lesson that seems to confirm what Taleb calls the green lumber fallacy. Often those who "know the most" about a subject matter confuse that knowledge with a knowledge of how to profit off movements and trends.
The common thread that runs through their stories are the struggles these investors faced in trying to short the housing market. I think Zuckerman shines the most by writing each chapter as if it was a cliff hanger. In hindsight almost everyone can repeat ad nauseam (at least abstractly) the causes of the crises and how CDSs allowed short sellers to profit from the housing bubble's burst. Zuckerman writes in the moment showing how difficult it was for the investors to reason forward and figure out what seems obvious in retrospect.
First, it was difficult to directly short housing. The classic way of shorting housing, would be to buy a house, sell it and then rebuy when the bubble burst pocketing the profit. Such a strategy is obviously costly and impractical. This was resolved when the CDS was invented, in order to satisfy the demand of investors to match or to hedge CDO returns (this was also the cause of contagion, as many banks were actually the counter party to the short). Not all investors could buy CDS protection either, it was only available to large investors (w/ IDSAs), so getting access to CDSs was difficult for smaller players. Even then the cost of shorting raises as the bubble continues, so calling a bubble is not enough, it's necessary to time the burst correctly. Second, all the investors faced difficulty in raising money. It was difficult to convince people to pony up the money to take advantage of this supposed opportunity, especially when the "experts" were convinced that there was no housing bubble. Fund raising was a serious practical issue, especially for "outsiders" calling doomsday. Burry for example was forced to lock in his clients money, angering many investors including the legendary Greenblatt. Lippmann was mocked widely at Deutsche. Few investors wanted to be locked in a negative carry trade, where losses (the costs of protection) were certain, but gains were speculative. Third, it was difficult to implement the strategy, especially in the face of rising housing prices. Refinancing by home owners, financing by mortgage lenders or acquisitions of failing mortgage lenders reduced the predictability of negative impacts on housing prices. Fourth, many of the shorting instruments were thinly traded (an exception was the ABX index on subprime). This created problems for exiting the position (low liquidity/ blowing up the price if word gets out of exit), as well as valuing the insurance when housing prices did drop. Sometimes it was suspected that banks who wrote the CDS purposefully refused to mark down the prices. Not to mention, the creditworthiness of the counter-parties came into question as the financial sector toppled in 2008 (and it was revealed that it was the banks holding the other sides of those trades). Finally, it was difficult to decide when to exit the trades. Selling the mortgage protection locked in a profit, but at the risk of forgoing further profit. Paulson waited until the housing prices trended very low, risking a rebounce that would wipe out his gains, to sell (he said he remembered that Soros said to "go for the jugular"). An investor who had the disciple, luck and tenacity to weather all those difficulties, without knowing them in hindsight, made a killing in 2007-08.
Zuckerman does a good job explaining all the relevant financial concepts, so that none of the complicated mechanisms get in the way of enjoying the very human drama from Lippmann's understandable but obnoxious boosting to fellow traders when the bubble burst (though ironically, much of his bonus was in deutsche stock that fell afterwards), to Pellegrini's tense relationship with Paulson (Pellegrini never felt secure at the firm, and never felt like he got the respect he deserved, despite Paulson granting him a bonus that ensured Pellegrini would never have to work again). Pellegrini was a brilliant analyst but hot-blooded, often insulting or fighting which made it difficult for him to be promoted. Paulson killed it at school, but itched for that big trade. Paulson was first in his class, and an excellent student but had difficulty striking gold. Few had heard of him before the big trade. Greene was a character all in himself, making his fortune by starting off as a circus ticket phone salesman who would fake accents to curry favor with buyers. Paulson would ask Greene to invest in his fund explaining the basic concept. Greene eventually bought CDSs of his own, straining his friendship with Paulson who considered the move dishonorable. Despite being millionaires, sometimes billionaires, humans seem cursed to be stuck with human nature. Sometimes it's hard to remember that, but this book is a good reminder. show less
Player wise, the book focuses mostly John Paulson but also his major analyst Pellegrini, his friendemy Greene as well as Michael Burry and Greg Lippmann (the latter two both covered by the Big Short). What unites all these players is that none were housing or mortgage specialists. Pellegrini was a new analyst hired by Paulson, who only knew what CDSs were from a serendipitous brush of the shoulders earlier in his career. Pellegrini discovered that housing prices were much higher than historical trends, indica of a housing bubble. Paulson was a merger arbitrage specialist, Burry a stock picker, and Lippmann a Deutsche CDS salesman who discovered that contrary to conventional wisdom housing prices, not income, determined default rates (house buyers with extremely high interest rates after teaser rates could refinance because the housing price rose. when housing prices fell, people were unable to refinance their loans and defaulted). Greene was a real estate mogul trying to protect his real estate empire from collapse (he had suffered from a housing bust before). This is a lesson that seems to confirm what Taleb calls the green lumber fallacy. Often those who "know the most" about a subject matter confuse that knowledge with a knowledge of how to profit off movements and trends.
The common thread that runs through their stories are the struggles these investors faced in trying to short the housing market. I think Zuckerman shines the most by writing each chapter as if it was a cliff hanger. In hindsight almost everyone can repeat ad nauseam (at least abstractly) the causes of the crises and how CDSs allowed short sellers to profit from the housing bubble's burst. Zuckerman writes in the moment showing how difficult it was for the investors to reason forward and figure out what seems obvious in retrospect.
First, it was difficult to directly short housing. The classic way of shorting housing, would be to buy a house, sell it and then rebuy when the bubble burst pocketing the profit. Such a strategy is obviously costly and impractical. This was resolved when the CDS was invented, in order to satisfy the demand of investors to match or to hedge CDO returns (this was also the cause of contagion, as many banks were actually the counter party to the short). Not all investors could buy CDS protection either, it was only available to large investors (w/ IDSAs), so getting access to CDSs was difficult for smaller players. Even then the cost of shorting raises as the bubble continues, so calling a bubble is not enough, it's necessary to time the burst correctly. Second, all the investors faced difficulty in raising money. It was difficult to convince people to pony up the money to take advantage of this supposed opportunity, especially when the "experts" were convinced that there was no housing bubble. Fund raising was a serious practical issue, especially for "outsiders" calling doomsday. Burry for example was forced to lock in his clients money, angering many investors including the legendary Greenblatt. Lippmann was mocked widely at Deutsche. Few investors wanted to be locked in a negative carry trade, where losses (the costs of protection) were certain, but gains were speculative. Third, it was difficult to implement the strategy, especially in the face of rising housing prices. Refinancing by home owners, financing by mortgage lenders or acquisitions of failing mortgage lenders reduced the predictability of negative impacts on housing prices. Fourth, many of the shorting instruments were thinly traded (an exception was the ABX index on subprime). This created problems for exiting the position (low liquidity/ blowing up the price if word gets out of exit), as well as valuing the insurance when housing prices did drop. Sometimes it was suspected that banks who wrote the CDS purposefully refused to mark down the prices. Not to mention, the creditworthiness of the counter-parties came into question as the financial sector toppled in 2008 (and it was revealed that it was the banks holding the other sides of those trades). Finally, it was difficult to decide when to exit the trades. Selling the mortgage protection locked in a profit, but at the risk of forgoing further profit. Paulson waited until the housing prices trended very low, risking a rebounce that would wipe out his gains, to sell (he said he remembered that Soros said to "go for the jugular"). An investor who had the disciple, luck and tenacity to weather all those difficulties, without knowing them in hindsight, made a killing in 2007-08.
Zuckerman does a good job explaining all the relevant financial concepts, so that none of the complicated mechanisms get in the way of enjoying the very human drama from Lippmann's understandable but obnoxious boosting to fellow traders when the bubble burst (though ironically, much of his bonus was in deutsche stock that fell afterwards), to Pellegrini's tense relationship with Paulson (Pellegrini never felt secure at the firm, and never felt like he got the respect he deserved, despite Paulson granting him a bonus that ensured Pellegrini would never have to work again). Pellegrini was a brilliant analyst but hot-blooded, often insulting or fighting which made it difficult for him to be promoted. Paulson killed it at school, but itched for that big trade. Paulson was first in his class, and an excellent student but had difficulty striking gold. Few had heard of him before the big trade. Greene was a character all in himself, making his fortune by starting off as a circus ticket phone salesman who would fake accents to curry favor with buyers. Paulson would ask Greene to invest in his fund explaining the basic concept. Greene eventually bought CDSs of his own, straining his friendship with Paulson who considered the move dishonorable. Despite being millionaires, sometimes billionaires, humans seem cursed to be stuck with human nature. Sometimes it's hard to remember that, but this book is a good reminder. show less
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Statistics
- Works
- 8
- Members
- 1,616
- Popularity
- #15,942
- Rating
- 3.9
- Reviews
- 29
- ISBNs
- 58
- Languages
- 4