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traders guns and moneyFirstly, I hope I’m spelling “Tolle Lege” correctly. Haven’t bothered to check.

Anyways this week’s book comes from Satyajit Das entitled “Traders, Guns and Money…”. This book mainly deals with the knowns and unknowns of financial derivatives. What’s that? I’m glad you asked!

Financial derivatives are an instrument (like a contact) which derive their value from another thing. Confused? Me too.

About a year ago I was introduced to a man named Kyle Bass who is a hedge fund owner (Hayman Capital) and a growing figure in the financial world. The topics he talked about in interviews and conferences were fascinating to listen to. So I was encouraged to buy a book on derivatives to understand some of the jargon he and other hedge fund owners were throwing around.

Thats where this books came in. Dat, however, didn’t do the job for me… not because he was a sloppy writer or ignorant, but because I am a sloppy reader and dumb! I’m fairly new to the derivative world and Dat’s writing method didn’t cut it for me. He mainly wrote about his interaction with other people in banking, corporate, etc. in a comical way and didn’t explain what a derivative actually is and go into the specifics (neither was the book intended to do that).

But I did learn many things from the book so its not all that bad, in fact I’m planning on going back to it later after I’ve gained some more knowledge to the derivative world.

For example I learned that derivatives can be both good and bad. Good in that it produces wealth and an abundance of it. Bad when it falls into the wrong hands. Dat gives ample examples of that (Enron, P & G, etc).

Also this got me thinking that derivative trading was one of, if not, the main cause to the housing bubble. The author puts it succinctly when he says “credit was derivatized”.

All in all the book was an okay read even if I didn’t retain all the information given.

3.5/5 stars for Dat!