Bookstaber, who has a PhD from MIT, writes that before the rise of computer trading, investment banks tended to hire college graduates who were also former athletes because managers thought they had the right temperament to handle the stresses of trading. Then computers came along and of course they need models to work with. Who had better models than PhD professors at universities? So the banks loaded up on PhD’s to create models for computer trading.
Bookstaber provides an insider’s account of the victories and tragedies of investment banking and arbitrage trading from the mid-1980s on because he labored in the trenches as a risk analyst, much of the time with Salomon Brothers. Two things stand out to Bookstaber: computer trading and innovation.
