As the night rolled on, the quants fared well. Muller chalked up victories against Gowen and Cloutier in the early rounds. Weinstein was knocked out early, but Muller and Asness kept dominating their opponents. Griffin made it into the final ten before running out of luck and chips, as did Einhorn. The action got more intense as the hour grew late. Around 1:30 a.m., only three players were left: Muller, Asness, and Andrei Paraschivescu, a portfolio manager who worked for Griffin at Citadel.
Asness didn't like his first two cards on the next deal and quickly folded, happy to wait for a better draw, leaving the pot to Muller and Paraschivescu. The crowd fell quiet. The incessant honking city whir of Fifth Avenue penetrated the suddenly hushed room.
Breaking the silence, Griffin shouted a warning to his underling: "Andrei, don't bother coming into work next week if you don't knock Pete out." Some in the crowd wondered if he meant it. With Griffin, you never knew.
The room went quiet again. Paraschivescu lifted a corner of the two cards facedown on the table before him. Pair of fours. Not bad. Muller bent the corner of his two cards and eyed a pair of kings. He decided to go all in, sweeping his chips into the pot. Suspecting a bluff, Paraschivescu pushed his mound of chips forward and called, flipping over his pair of fours. Muller showed his kings, his only show of emotion a winsome glint in his blue eyes. A groan went up from the crowd, the loudest from Griffin. The other cards dealt in the hand couldn't help Paraschivescu, and he was out.
It was down to Muller and Asness, quant versus quant. Asness was at a huge disadvantage. Muller outchipped him eight to one after having taken Paraschivescu to the cleaners. Asness would have to win several hands in a row to even have a chance. He was at Muller's mercy.
Griffin, still smarting from his ace trader's loss, promised to donate $10,000 to Asness's favorite charity if he beat Muller. "Aren't you a billionaire?" Asness chortled. "That's a little chintzy, Ken."
After the deal, Muller had a king and a seven. Not bad, but not great. He decided to go all in anyway. He had plenty of chips. It looked like a bad move: Asness had a better hand, an ace and a ten. As each successive card was dealt, it looked as though Asness was sure to take the pot. But on the final card, Muller drew another king. Odds were against it, but he won anyway. The real world works like that sometimes.
The crowd applauded as Griffin rained catcalls on Muller. Afterward Muller and Asness posed for photos with their silver trophies and with Clonie Gowen flashing a million-dollar smile between them. The biggest grin belonged to Muller.
As the well-heeled crowd of millionaires and billionaires fanned into the streets of Manhattan that night, they were on top of the world. The stock market was in the midst of one of the longest bull runs in history. The housing market was booming. Economists were full of talk of a Goldilocks economy—not too hot, not too cold—in which steady growth would continue as far as the eye could see.
A brilliant Princeton economist, Ben Bernanke, had just taken over the helm of the Federal Reserve from Alan Greenspan. In February 2004, Bernanke had given a speech in Washington, D.C., that captured the buoyant mood of the times. Called "The Great Moderation," the speech told of a bold new economic era in which volatility—the jarring jolts and spasms that wreaked havoc on people's lives and their pocketbooks—was permanently eradicated. One of the primary forces behind this economic Shangri-la, he said, was an "increased depth and sophistication of financial markets."
In other words, quants, such as Griffin, Asness, Muller, Weinstein, Simons, and the rest of the math wizards who had taken over Wall Street, had helped tame the market's volatility. Out of chaos they had created order through their ever-increasing knowledge of the Truth. Every time the market lurched too far out of equilibrium, their supercomputers raced to the rescue, gobbling up the mispriced securities and restoring stability to the troubled kingdom. The financial system had become a finely tuned machine, humming blissfully along in the crystalline mathematical universe of the quants.
For providing this service to society, the quants were paid handsomely. But who could complain? Average workers were seeing their 401(k)s rise with the market, housing prices kept ticking ever upward, banks had plenty of money to lend, prognosticators imagined a Dow Jones Industrial Average that rose without fail, year after year. And much of the thanks went to the quants. It was a great time to be alive and rich and brilliant on Wall Street.