Book Notes: Liar's Poker

I finally found a used copy of Liar’s Poker, so I recently read it and essentially enjoyed it. After reading Moneyball, I thought it must be a worthwhile read. But, I have to say, the middle chapters about the intricacies of the market, the history of Salomon Brothers, and other specialized discussions tried my patience. I was much more interested in Lewis’ personal story and his somewhat “outsider” perspective. He has a gift for capturing the essence of people with all their quirks and why they are successful, or not, at what they do. I guess it is somewhat fascinating how so many alpha males and cavemen made so much money or lost so much money in the markets in the last 25 years, especially since so many of them were quite young as well. I’ve read a couple of other books like Rouge Trader, which was about Nick Leeson who brought down Barclay Bank, and Ugly Americans, which is about traders in Tokyo during the bubble economy. I can’t say that any of these books have improved my opinion of investment bankers, traders, and anyone in finance. After moving to Tokyo, I have rubbed shoulders with these people much more than I had in Seattle-probably due to Tokyo being one of the major world financial centers. Perhaps had I been in Seattle during Internet boom, it I could have compared it to that, but I was here. These are people, who feel that the accumulation of money and job status are the only important factors in life. These are people who feel that bonuses, expense accounts, and flying first class are entitlements, rather than perks or rewards. The same people, who never reflect on the havoc that their market trades have caused. Then again the institutions used the traders and money managers and then discarded them when fished-the 80s parables of greed that continues today. However, I don’t think any lesson were really learned by anyone then. Lewis was able to be outside it since he never considered being a lifer in the industry-he was able to walk away. I believe him when he writes: “I’m now convinced that the worst thing a man can do with a telephone, without breaking the law is to call someone he doesn’t know and try to sell that person something he doesn’t want.” It is something that I have spent most of my adult life trying to avoid learning about first hand, so far so good.

Comments

[Kraig]

Dude, I don't even know where to begin on your rampant generalizations.......so I will ignore them. Thx buddy.

[MC]

Fair enough, I'll admit to generalizations. but how can you talk about anything without using them. I am mostly referring to the 80s when everyhting was crazy in the market. I don't see the wealth trickling down to the little people. Where are all the profits going? Is that helpful to society? You can lecture me on the world bettering aspects of the financial industry when we meet next week.

[Edward]

I think that the financial industry is helpful in that it essentially mobilises resources (expressed in terms of money), furthering investment and eventually achieving greater production of goods and services with our finite resources. The man who has an idea can turn this into reality only by taking out a loan from a bank, or by selling shares in his company to investors – both financial transactions. The company that wishes to export overseas can minimise risk of exchange rate movements by using various hedging instruments. More production is generally a good thing (environmental concerns are another debate), but financial systems are imperfect, and there are people who operate within the financial industry for no purpose but to speculate on intangible assets, make money from within the system. As far as they care the rest of the manufacturing and service industries might not even exist, except ultimately the financial instruments with which these people speculate only exist because businesses need them too.