To most people, even most investors the words "entertaining" and "derivatives" do not belong in the same sentence. Yet Satyajit Das' Traders, Guns, & Money is one the most entertaining investment books I've read in a long time, and is also on excellent primer on topics including derivatives, risk management, and Wall Street's inner workings. This will sound like hyperbole but it isn't: this is possibly the best insider account of a career in investments since Michael Lewis's book Liar's Poker came out in 1989.

Das is able to combine an informative introduction to the "dazzling world of derivatives" along with a jaded, cynical depiction of Wall Street greed. He discusses financial markets using a well-known quote from Donald Rumsfeld, and it is surprisingly effective: "There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know."

Das uses this to discuss efforts to quantify risk, which he often describes as silly, and suggests that most professionals know it is too: "Risk management is like any religious text; nobody is willing to criticize it in public but few follow it completely in private." His stories about the sophomoric antics among young traders are entertaining, and may discourage some young people from pursuing a career on Wall Street (or encourage it in some cases).

In all, I can't recommend this book strongly enough. Risk management and derivatives are fields that all investors should have some knowledge of because they are such a large part of financial markets today. Traders, Guns, & Money is a great way to learn about them.

On a side note, Warren Zevon's song Lawyers, Guns, and Money (I assume the title of this book is a take-off on it) is a classic and should be on the iPod of every investor.