Chaos Kings

How Wall Street Traders Make Billions in the New Age of Crisis

By: Scott Patterson

Narrated by: Eric Yang

Written by a veteran Wall Street Journal reporter, this is a fascinating and “closely observed chronicle of the storm-chasing edgelords of finance and the critics with whom they clash” (The New York Times)—the billion-dollar traders and crisis predictors who strive to turn extreme events into financial windfalls.

There’s no doubt that our world has gotten more extreme. Pandemics, climate change, superpower rivalries, cyberattacks, political radicalization—virtually, everywhere we look there is mayhem bearing down on us, putting trillions of assets at risk.

And at least two factions have formed around how to respond. In Chaos Kings, Scott Patterson depicts how one faction, led by Nassim Nicholas Taleb, bestselling author of The Black Swan, believes humans can never see the big disaster coming. In their view, extreme events—so-called Black Swans—while inevitable, will always catch us by surprise. In 2007, Taleb’s longtime collaborator, Mark Spitznagel, launched the Universa hedge fund, which would go on to make billions protecting investors against unforeseen chaos in the market.

A second faction, which relies on complex formulas, believes looming chaos can be detected. Chief among these risk prognosticators is Didier Sornette, a colorful French mathematician who enjoys riding his motorcycle at speeds in excess of 170 miles per hour. When Sornette looks out from what he calls his Financial Crisis Observatory in Zurich, Switzerland, what he sees are Dragon Kings—punishing events that are unlikely to occur but have probabilities that can be predicted…and defended against.

Which faction is right? All of our financial futures may depend on the answer. “Detailed yet accessible, this will appeal to fans of Michael Lewis’s The Big Short” (Publishers Weekly).

interesting topic

decent narrator, interesting topic of dealing with uncertainty or trying to create predictions, lots to think about

Masterclass of risk management frameworks

This book explores the views of the pioneers of risk management from academia and from practitioners. Excellent!

Ok listen - much derivative and a bit disjointed

Most of the information about Universa and Black Swan events are already out there. Both Taleb and Spitznagel have written extensively about the ideas in here. I personally believe Universa's model of not forecasting but knowing that big drawdowns happen is the right way to go. I do wish he had an offering for retail investors. It just seems so straightforward and simple to have most of your money in the s&p 500 and small part of used as insurance hedging. Very few people get forecasting right so this just makes sense. The numbers Universa demonstrate are very compelling. The book was disjointed in that it had a long section on climate change. I didn't really see the tie into Universa and Black Swans. It seems as if the author just wanted to talk about it. If you already understand Unviversa and Black Swans, probably not the book for you. If don't understand, it's a decent listen.

Great book och risk and Taleb

I enjoyed the book, overall worth a read.

Empirica Capital and its historical peforamne and stategy was super interesting!

Wanted more

Book took some weird directions which seemed tangential and went way too in depth to those areas. Wanted more about what the book was advertised to be….