Liars Poker

Liars Poker In a previous review, I talked about The Bonfire of the Vanities and about the mastery of Tom Wolfe in crafting his characters, the story line and the various social types he described there There was one aspect of that book that I did not talk much about and yet which was prevalent in my attraction to the story not only it is one of the iconic stories that symbolizes Wall Street in the 1980s but it is also taking place at a very specific time when Wall Street was actually part of History Indeed, Wall Street was at that juncture the mighty knight that was spearheading the victory of capitalism over communist It was backed by the arrogant success of the money business of these days, that Ronald Reagan and Maggy Thatcher overpowered their arch enemy and delivered the final blow to the crumbling Soviet Union No moral judgement of good or bad here, just an observation of a given point in history.I love history and I work in New York, at the core of the world s financial center Therefore when Finance becomes part of history, I feel as if I can touch history up close This is why I was looking for another story in that vein and I found it with the Liar s Poker.Like myself, Michael Lewis was writing as an insider and therefore what he writes feels very real I prefer fiction and therefore I would have liked it if he had turned the book into a novel but it is nevertheless very good Lewis describes his experience as bond salesman on Wall Street during the late 1980s This book too is considered iconic of the Wall Street of these days with all the excesses of greed, the ruthless race among competitors to be the first to rip the shirt off each client P22 To succeed on Salomon Brothers trading floor a person had to wake up each morning ready to bite the ass off a bear Once the wolves were let loose there was no mercy to expect P200 like all of us, he lived by the law of the jungle and the law of the jungle said Geek salesmen are red meat for traders No exception P208 the best thing was to pretend to others at Salomon that I had meant to screw the customer People would respect that That was called jamming P274 Every company has got people sitting around who do nothing for what they get paid says Joe Perella If they take a lot of debt, it forces them to cut fat The takeover specialists did for debt what Ivan Boesky did for greed Debt is good they said Debt works In these days, Salomon Brothers mortgage department made history because it was successful, obnoxiously, filthily successful at taking advantage of the deregulation by selling big chunks of mortgages like bonds As a result, individuals that were not particularly polished in the first place to say the least turned into a crowd of grotesque Jabba the Hut who suddenly could leave their shady pubs and have their moment of glory at the top of the world P89 If you fuckin buy this bond in a fucking trade, you re fucking fucked And if you don t pay fuckin attention to the fuckin two year you get your fuckin face ripped off P214 The only thing that saved me in meeting after meeting in the early days at Salomon was that the people I dealt with knew even less London was or is a great refuge for hacks So why would there be an interest for the average reader to dive in this world of slobs and frat boys Well, why would an honest Roman citizen be interested in a detailed description of a barbarian tribe living somewhere off in the forests of Germany He wouldn t except at the very moment of the barbarian invasion when those slobs are about to take over the whole world and impose a new world order and this is exactly what had happened back in the eighties These big swinging dicks as they called themselves triggered the first business revolution of the post cold war world They would have a massive impact on the economy There would be other such revolutions in the new globalized jungle created by ruthless capitalism of course such as the dot com bubble that I witnessed up close and that I described in my novel Bubble Boys and of course the leverage revolution and its subsequent liquidity crisis of 2008.Each time, the world shook harder, a little like these barbarians who, from invasion to invasion, come every time a little closer to Rome So what will be the next financial crisis about and what impact will it have on history Some of the clues are right there, in Michael Lewis book A must read. This book surprised me I read and enjoyed Lewis Moneyball a while back, and thought I was getting another journalistic account, this time of a crazy moment in corporate culture Instead, it s very much a memoir of that world And I didn t care for it at first, since the group of people he writes about are so spectacularly awful He brings a certain world of investment banking trainees home to you, and I wanted nothing to do with it If that was the whole book, I don t think I could take it Something like the way some people don t like The Office esp the BBC version it s too painful to see such human lowness.But I m glad I stuck around, because he can really tell a story The sense of battle, politicking, and putting up fronts Wry observations Big picture, little picture He comes off as a whistle blower with no sense that he s betraying his world just an inside man dissecting a world he finds amusing, deranged, and perversely fun. Atlas Shrugged for the philistine It s subtle glorification of the greedy, underneath a veneer of hilarious sarcasm and grudging respect is the stuff financial Bibles are made of An interesting slice of financial history is captured succinctly, precisely the development of Collaterized Mortgage Obligations in the 80 s which also has direct relevance to the recent U.S housing crisis If you wish to get everything you can out of this book, get your Finance 101 straight It ll be a lot fun. In 2007, super investor Warren Buffett of Berkshire Hathaway made a bet with some of the people over at the Protege Partners hedge fund He wagered that over a period of ten years the SP 500 a passive index would outperform a group of five hedge funds handpicked by Protege, with the loser donating one million dollars to the charity of the winner s choice Hedge Fund A limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains With one year to go as of this writing , here are the results thus far The hedge funds are up a cumulative 22 percent The SP Up close to 66 percent.So what does this have to do with Liar s Poker First, the prospective reader should understand what Liar s Poker is It is a memoir by best selling author Michael Lewis about his brief stint working for the investment firm Salomon Brothers during the mid eighties.So, you may well ask, what does this have to do with Warren Buffett Well, there are two connections First connection In 1987, Buffett was approached by Salomon Brothers which was struggling against a hostile takeover attempt and offered a deal If Buffett would lend Salomon 700 million dollars in the form of a special bond which Salomon would then use to buy back their own shares to fight the takeover attempt then Buffett would have two options Either A he could hold the bond in exchange for an interest rate of nine percent a good return or B he could, at any time before 1996, trade the bond in for Salomon common stock at 38 a share, only losing money if the company somehow went bankrupt.The second connection, poignant than the first, is this Buffett quote There s been far, far, far money made by people in Wall Street through salesmanship abilities than through investment abilities Which brings us back to Salomon Brothers.Because Liar s Poker is their tale, the story of a group of traders and salesmen who at times not only did not make their customers money, but who on occasion used their customers as patsies in order to minimize their own losses at their customers expense by selling said customers investment products that Salomon Brothers owned, and which Salomon knew were crap when they were sold, in order to get them off Salomon s books It tells the tale of Michael Lewis, fresh out of Princeton and the London School of Economics, and his three year sojourn with what was at that time one of Wall Street s premiere investment firms, and how a combination of greed, stupidity and internal corruption almost destroyed the company.Highly recommended reading for those folks curious about the goings on of a prominent Wall Street firm during the eighties, and who don t mind a behind the scenes look metaphorically speaking at how the sausage gets made. Why am I languishing here, making approximately 0 dollars as a librarian Why was I not a Wall Street investment banker These guys were having all the fun In his introduction to the Big Short, Lewis writes that he was dismayed people took Liar s Poker not as a cautionary tale, but as a how to manual for their careers But I can totally understand why He makes the trading floor sound like the place to be, the absolute center of the universe He s also got a real knack for explaining something in one or two sentences, and then providing a brief anecdote or lively quote to illustrate the thing described It s literally never boring I ve heard people say that his writing is successful because it makes readers feel smart, and I get that Although sometimes, when you have failed to understand something so colorfully and breezily explained, it can actually make you feelless smart I read one particular page about the rise of junk bonds three times, and then just gave up. pp 83 is a discussion of SL s failure in the US.pp 136 is the best explanation of CMO s I ve ever read.Great read Initially loaned to me by a coworker I went out and bought it shortly thereafter.A former art student winds up becoming a bond salesman for Salomon Brothers in the mid 1980 s He sees a lot, and describes it vividly Chernobyl The October Crash of 1987 Gutfreund and Meriwether quibbling over how much to bet in one hand of the title game.He introduces some terms to the lexicon that persist to this day BSD as used in the movie Boiler Room Good deal of relevant information for both the average investor as well as the seasoned professional When the news about Chernobyl breaks Mike s good friend has some advice for him, Buy potatoes This is a powerful illustration of how traders, not investors, think.A spread, any spread While this is probably Michael Lewis s most famous book, it is not my favorite Lewis is always an engaging writer, but maybe because this is a recounting of a period of his life, and not an investigation into an exciting mystery or a study of a socialogical phenomenon, it s just not as fascinating as his other works The book is interesting, as it follows Lewis s journey from college interviews to working at top investment firm Salomon Brothers The whole investment banking world is incredibly cutthroat, not surprisingly The money to be made was incredible, and unfortunately the snakes of the world benefited from this People who could sell worthless stuff for large sums of money were the heroes People who had the best interests of their customers at heart were the losers A problem with this book is that it is somewhat dated again, because it is a diary of time in Lewis s life and not just about an event that exists on its own Honestly, I probably would have scored this higher and enjoyed it if Lewis s other books weren t so absolutely fantastic Moneyball in particular is one of my favorite books and has been reread until it s somewhat tattered I ve loved every other book by Lewis, so this one suffers in comparison Still a good read, if you are interested in the good ol days of finance First book of this type I truly enjoyed Thank you Lewis for opening up a new field of book to explore. 21 years after publication, Liar s Poker feels both relevant and ancient Relevant because it seems the Big Swinging Dicks of Wall Street are ever with us ancient because of references to things like WATS lines and the lionizing of Salomon Brothers trader John Meriwether, whose Long Term Capital Management would spectacularly implode in 1998, and Michael Milken, who apparently had not yet been indicted when the book went to press but got a 10 year prison sentence for securities violations.Lewis is a raconteur than a documentarian, which is both pleasing and irritating Certainly raconteurs can sell books Most people don t want to read dry scholarly accounts of Wall Street But there are times in the book most of chapters 1 4 where his writerly persona is so big that it crowds out everything else His tone is so arch, snarky, exaggerated, so swimming in eddies of simile and metaphor, that I don t completely believe him though I m sure the vague outlines of his story are true He pairs bravado with disarming self deprecation, telling us repeatedly how he was utterly green, knew nothing, stumbled his way through everything, yet brought a trader who had wronged him to his knees, and by the time he left Salomon was earning the largest bonus of his class undeserved, he insists He steps away from the tales of towel slapping long enough to give a detailed history of the rise of mortgage trading at Salomon Brothers and how Salomon management allowed hegemony to slip through their fingers Raising the question, how did such a junior employee know so much about a the mortgage market, and b the internecine battles among Salomon bigwigs The portrait he paints of Salomon s chairman John Gutfreund is fairly devastating though ancient history Gutfreund would be forced out by Warren Buffett in 1991 after a Treasury bond scandal.Some examples of his raconteurship Ranieri welded a coherent departmental personality out of two separate but equally gamy ethnic groups. Italians and Jews, if you care Buying whole loans that is what the traders called home loans, to distinguish them from mortgage bonds was an act of faith, like eating bologna.For each step forward in market technology they the traders took a step backward in human evolutionthey became louder, ruder, fatterTheir days began at 8 a.m with a round of onion cheeseburgersWe d order four hundred dollars of Mexican food, says a former trader You can t buy four hundred dollars of Mexican food But we d try guacamole in five gallon drums, for a start A customer would call in and ask us to bid or offer bonds, and you d have to say, I m sorry, but we re in the middle of the feeding frenzy I ll have to call you back In This Shrewd And Wickedly Funny Book, Michael Lewis Describes An Astonishing Era And His Own Rake S Progress Through A Powerful Investment Bank From An Unlikely Beginning Art History At Princeton He Rose In Two Short Years From Salomon Brothers Trainee To Geek The Lowest Form Of Life On The Trading Floor To Big Swinging Dick, The Most Dangerous Beast In The Jungle, A Bond Salesman Who Could Turn Over Millions Of Dollars Worth Of Doubtful Bonds With Just One CallWith The Eye And Ear Of A Born Storyteller, Michael Lewis Shows Us How Things Really Worked On Wall Street In The Salomon Training Program A Roomful Of Aspirants Is Stunned Speechless By The Vitriolic Profanity Of The Human Piranha Out On The Trading Floor, Bond Traders Throw Telephones At The Heads Of Underlings And Salomon Chairman Gutfreund Challenges His Chief Trader To A Hand Of Liar S Poker For One Million Dollars Around The World In London, Tokyo, And New York, Bright Young Men Like Michael Lewis, Connected By Telephones And Computer Terminals, Swap Gross Jokes And Find Retail Buyers For The Staggering Debt Of Individual Companies Or Whole CountriesThe Bond Traders, Wearing Greed And Ambition And Badges Of Honor, Might Well Have Swaggered Straight From The Pages Of Bonfire Of The Vanities But For All Thier Outrageous Behavior, They Were In Fact Presiding Over Enormous Changes In The World Economy Lewis S Job, Simply Described, Was To Transfer Money, In The Form Of Bonds, From Those Outside America Who Saved To Those Inside America Who Consumed In Doing So, He Generated Tens Of Millions Of Dollars For Salomon Brothers, And Earned For Himself A Ringside Seat On The Greatest Financial Spectacle Of The Decade The Leveraging Of America

Michael Lewis, the best selling author of Liars Poker, The Money Culture, The New New Thing, Moneyball, The Blind Side, Panic, Home Game, The Big Short, and Boomerang, among other works, lives in Berkeley, California, with his wife and three children.

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  • Paperback
  • 256 pages
  • Liars Poker
  • Michael Lewis
  • English
  • 13 May 2019
  • 9780140143454

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