Book Recommendation: Demon of Our Own Design

I just finished reading Richard Bookstaber’s well-done Demon of Our Own Design, the subtitle of which is “Markets, Hedge Funds, and the Perils of Financial Innovation”. The gist: Bookstaber argues that financial innovations have markets more volatile and interlinked, not less, and that’s a bad thing.

I have a few bones to pick with the author, but I still recommend it highly.

As a reminder in other recent reading, Peter Bernstein’s Capital Ideas Evolving is also high on my recommended financial reading list.

[Update] Author Bookstaber has a low-frequency, worth-reading blog here.


  1. I think Pinero once said “Financiers are nothing more than pawnbrokers with imagination.” These days it doesn’t take that much to be a variant of Carl Ichan and still keep the label. But in a globalized markets, victim are countries not companies and unions. Singapore may stand to lose about $800 million dollars for their interests in American subprime issues.

  2. What’s worse is it’s not clear exactly how markets are more-interlinked until it’s “too late”.