http://allaboutalpha.com/blog/2007/08/22/book-review-a-demon-of-our-own-design-bookstaber/ Hedge funds, portable alpha, 130/30 and alpha-centric investing Wed, 10 Mar 2010 21:44:24 +0000 http://wordpress.org/?v=abc hourly 1 http://allaboutalpha.com/blog/2007/08/22/book-review-a-demon-of-our-own-design-bookstaber/comment-page-1/#comment-89487 allaboutalpha.com: AllAboutAlpha.com Sat, 08 Mar 2008 16:51:23 +0000 http://allaboutalpha.com/blog/2007/08/22/book-review-a-demon-of-our-own-design-bookstaber/#comment-89487 [...] In his book “A Demon of Our Own Design” Richard Bookstaber describes how the breakdown of basic market physics during Black Monday meant that “all stocks moved together” (see related posting): “The huge volatility of the market broke down all but the most fundamental relationships between markets and securities.  The usual day-to-day world where investors cared about subtleties like corporate earnings or analysts’ forecasts dissolved as the energy of the market was turned up.  All stocks moved together; if it was a stock, it was soldit was like plasma physics: as matter becomes hotter, it becomes less differentiated.  The forces that bond atoms together in the form of molecules are overwhelmed, so that rather than having a myriad of different substances, we have the elemental building blocks of the atoms.  Turn up the heat even more and the atoms themselves are melded into plasma, positively charged ions and negatively charged free electrons; matter in its most uniform and non-differentiated state, no longer hydrogen atoms and oxygen atoms, just a seething white-hot blur of matter.” [...] [...] In his book “A Demon of Our Own Design” Richard Bookstaber describes how the breakdown of basic market physics during Black Monday meant that “all stocks moved together” (see related posting): “The huge volatility of the market broke down all but the most fundamental relationships between markets and securities.  The usual day-to-day world where investors cared about subtleties like corporate earnings or analysts’ forecasts dissolved as the energy of the market was turned up.  All stocks moved together; if it was a stock, it was soldit was like plasma physics: as matter becomes hotter, it becomes less differentiated.  The forces that bond atoms together in the form of molecules are overwhelmed, so that rather than having a myriad of different substances, we have the elemental building blocks of the atoms.  Turn up the heat even more and the atoms themselves are melded into plasma, positively charged ions and negatively charged free electrons; matter in its most uniform and non-differentiated state, no longer hydrogen atoms and oxygen atoms, just a seething white-hot blur of matter.” [...]

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