Tagged: liar’s poker

Book: Liar’s Poker

I remember Michael Lewis’ Liar’s Poker being the subject of discussion when it came out. I was in college then, in New York City no less, and I’m really glad I didn’t read it at the time.

Here’s why: In an essay Lewis wrote in 2008 for Portfolio.com, he wrote:

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

If I’d read Lewis’ book when it was first published, I, like the Ohio State students, certainly would have become very interested in entering the world he describes.  Had I done so, I would have begun my career in the bull market of the 1990s, and then lost a bunch of money–my own and my customers’–in the tech bust of 2000. I don’t think I could have survived in that environment without becoming an horrible, horrible person, a substance abuser or worse.

All that said, I still find finance, equities and debt pretty interesting, and I relished the few stray bits of financial play-by-play in Lewis’ book as much as the colorful anecdotes.

Liar’s Poker is a pretty good account of one undisciplined firm and the culture it created. It’s a little thin on the personal side–both what Lewis and his wife did on nights and weekends, and what his co-workers did. The narrative is almost strictly in the office, like the movie Margin Call, a bunch of sweaty, aggro traders and salespeople working the phones frantically.

I haven’t been a huge fan of Lewis’ work that I’ve read in magazines, but this, the first book of his I’ve read, was a vivid and funny read. Next on the Lewis docket: The Big Short, his version of the 2008 financial crisis.

The rest of Lewis piece I quoted above later surfaced in The Big Short. What I learned from the essay is that the people who were aware that the toxic subprimes were about to blow up actually contributed to the bubble by shorting the bonds–that is, by providing liquidity to the market in collateralized debt obligations.

The rest of his piece is here. (Sorry for the dodgy link, but Portfolio.com, a $100M venture from Conde Nast, went bust after three years, more or less at the time of the 2008 crisis.)

Books read: 6

I’m already midway through Medici Money, by Tim Parks.