Liar’s Poker by Michael Lewis

Happy #WellTailoredWednesday! I just finished reading one of the quintessential finance books, Michael Lewis's Liar's Poker. And boy, it was...quite underwhelming.

Background

Liar's Poker recounts the culture of Wall Street in the 1980s, when the [in]famous Salomon Brothers was at its peak. At the time, Michael Lewis was an ambitious Princeton graduate who landed a job as a Bond Salesman and who climbed the ranks to eventually make millions for the firm. This was the frat-boy, deviant era of finance. Men earned their keep not from their degree of education (many weren't even college graduates) but from their P&L numbers. It was very much a boy's club back then, complete with the crudest jokes, big egos, and even bigger wallets.

He describes the birth of the commercial mortgage-backed security (CMBS) from Lewis Ranieri, who is regarded as one of the godfathers of finance. While immensely profitable to the big banks at the time, CMBS loans became the kryptonite to some of those very banks later on. Now, the CMBS loan is known to be one of the major catalysts to the Great Recession. Lewis describes this phenomenon in more detail in another book, The Big Short, which I plan on reading soon.

Lewis also mentions several other notable characters of finance including Howie Rubin, who's recent bizarre accusations have invariably shined a light back into Liar's Poker, Michael Milken, the junk bond king who was one of the richest men on the Street at the time, and John Gutfreund, the former CEO of Salomon Brothers who eventually ran it to the ground.

John Gutfreund, featured in Liar's Poker, on the trading floor of Salomon Brothers.
John Gutfreund, featured in Liar's Poker, on the trading floor of Salomon Brothers.

My Opinion

I know that Liar's Poker is regarded as one of the "must read" books about Wall Street. However, I felt that it leaned on the side of a historical overview than of a non-fiction classic. There were many times when I wanted to skip through the background of their firm and dive into details about life on the Street. For example, I felt that Lewis spent too much time discussing how Salomon stacked up against Goldman Sachs and Morgan Stanley and how a junk bond operated.

That said, I do admit that Lewis does a good job of painting the scene at times. His recount of how Salomon Brothers slowly started to crumble to the point of needing to sell, and then describing the entire ordeal of selling, is harrowing almost like a Tom Clancy novel. You almost feel bad for the bankers at the firm...until you remember that they all raked in millions of dollars from the retirement funds of hardworking Americans. Another example is Lewis's honest portrayal of his very early days of trading, where he makes some very costly overpromises to his customers, only to have to make up for it at the end with his tail between his legs.

Final Thoughts

As mentioned, I was a little disappointed in this book and would give it a rating of 3.5/5 .

Read If You:

  • Want to learn about Wall Street in its heyday and see how its culture of greed eventually spiraled into doom for Salomon Brothers
  • Work in Finance/go to Finance dinner parties and are looking to drop "Ranieri", "The rise and fall of Salomon Brothers", or "Big Swinging Dick" (though I'd highly encourage you to NOT say that out loud)
  • Read and/or watched The Big Short and enjoy Michael Lewis's style of writing

Don't Read If You:

  • Are expecting a dramatic tale of devious tales in Finance. If you're looking for this, I'd highly recommend Straight to Hell by John LeFevre
  • Want to learn about the current state of Finance. While the events told by Lewis were accurate, a LOT has changed since 1987
  • Can't stand to read some of the deviance, misogynistic, and sometimes racist tales told from that era

Thanks for reading and please feel free to leave your thoughts in the comments section below!

3.5Overall Score

Happy #WellTailoredWednesday! I just finished reading one of the quintessential finance books, Michael Lewis’s Liar’s Poker. And boy, it was…quite underwhelming. Background ...

  • Applicability
    3.5
  • Theoretical
    3.0
  • Ease of Reading
    3.5
  • Book Length
    4.0

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