Liar’s Poker, By Michael Lewis

Liar’s Poker

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ormer Wall Street trader Michael Lewis has made a mint out of writing books about the dark art of investment banking. He took the market by storm with Liar’s Poker, which chronicled the testosterone-fuelled world of Salomon Brothers in the mid 1980s.

Liar's Poker

As the book says, the International Monetary Fund would put losses on US-originated subprime related assets at a trillion dollars. One trillion dollars of losses created by American financiers and embedded in the US financial system.

Liar’s Poker: Rising Through The Wreckage On Wall Street

I liked this book a lot because Lewis blends his unique brand of deadpan humor with actual facts about his time on Wall Street. I find that is something that is really hard to do in a book because finding that perfect balance between truth and humor is near impossible. I also like it because the book had a lot of ramifications in the financial world. The book practically ended a few careers as it exposed many brokers for being loose with their money and becuase many people had just been pulled right out of high school. I just found that so interesting because it is very, very rare that you find a book that can do that. To write a non-fictional portrayal of your life during your 20s is not an easy task. To do this while still in your 20s, to have it be your first book, and to have the story revolve around bond trading / Wall Street – and not have the book be as dry as it sounds – seems an almost cruel undertaking.

If there are dangerous fools in this book, there are also heroes, unsung, of course. They are the linchpins of the system—those public servants whose knowledge, dedication, and proactivity keep the machinery running. Michael Lewis finds them, and he asks them what keeps them up at night. Michael Lewis’s brilliant narrative takes us into the engine rooms of a government under attack by its own leaders. In Agriculture the funding of vital programs like food stamps and school lunches is being slashed.

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So, the senior people bet first and junior traders always bet last. This was a disadvantage for the juniors if they played a naive strategy. What Brown discovered was a system that didn’t require cooperation between people but escalated the bids very quickly thus jamming the early bidders when the betting came back around to them.

Liar's Poker

Readers who want to get an inside look at how Wall Street investment banks really operated back in the 80’s will find much to enjoy and ponder. Some will find value in the economic history of the Savings & Loan era. Others might focus on his story about how a firm’s culture can change people, and the choices one is confronted with should they wish to rise up in that world. He takes a complex topic, such as mortgage-backed securities, and explains them so that your everyman can understand them.

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. I’ve been reading other reviews of this book and I hadn’t realised that it was over 20 years old. It reads like it could have been written about the overblown corruption of the Finance market right now that explodes into the press every few years. Plus ça change, plus c’est la même chose, at least with Wall Street. The book is highly recommended for lots of open-mouthed, “geez, people act like that”, say things like that moments and because Michael Lewis, as always, knows his subject well and writes about it in a very entertaining and non-dry way. Goodreads helps you keep track of books you want to read.

The scene where Lewis miserably flunked his first interview at an investment bank. The limits of reckless gambling on the Street were defined in the book’s opening scene. A movie based on the book is in development, according to IMDB. A reviewby the New York Times was effusive in its praise of Lewis, closing “Whatever the case, he’s obviously as good a writer as he was a bond salesman. Perhaps that’s because both jobs involve being able to tell a good story.” The last line is probably the funniest/most ironic line I’ve read all year. Would definitely recommend it to those who are associated with the world of investment banking. Ironically , this was one of the suggested readings when I was interning with Goldman Sachs.

“Fuck it,” said the trader, “here, read it off the sheets,” and handed O’Grady a sheet listing bond prices. O’Grady returned to his desk only to find that while there were plenty of prices on the sheet, they weren’t the prices he needed. Note that everyone gets at least one turn so the hand could just as easily have ended with Player1 making an opening bid and the other 3 all challenging.

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Question feed To subscribe to this RSS feed, copy and paste this URL into your RSS reader. The strategy described in Patterson’s book was more or less to use the information from your own bill to have more confidence in making large bets. For instance, if you have two 3s on your bill when the previous bid was four 9s, then rather than bid five 3s you should bid 10 or more 3s . How much you should increase your bet in the strategy was likely based on Bayesian reasoning, though the book does not go into that much detail.

Inside Salomon Brothers the men from equities were second-class citizens. ThriftBooks sells millions of used books at the lowest everyday prices. We personally assess every book’s quality and offer rare, out-of-print treasures. We deliver the joy of reading in 100% recyclable packaging with free standard shipping on US orders over $10. As he has continued to do for a quarter century, Michael Lewis here shows us how things really worked on Wall Street.

These profits pale in comparison, however, to those made by Lewis Ranieri’s mortgage bond department, the setting up of which is detailed across several chapters. We also get a glimpse into the culture of the mortgage bond department, which is essentially just an amped up version of the culture of the rest of the firm. Fresh off the trading floor of the Salomon Brothers London office in 1989, Michael Lewis offers an insider’s account of life on Wall Street in his first novel. Lewis masterfully details how the mortgage bond boom on the 41st floor of Salomon Brothers in the early 80s propelled the firm to world dominance. This is a tale of greed, however, as he provides an interesting perspective on management’s inability to see minds on the floor as the firm’s greatest asset, ultimately leading to its fall from grace. Of all the terrifying things about our financial system that Lewis highlights throughout the book, perhaps the most eerie is its precise foreshadowing of the 2008 crash.

Better yet, it allows people to play remotely across the world wide web. The strategy was discussed in the book “The Poker Face of Wall Street” by Aaron Brown (p ).

The Scene Where The Bank’s Ceo John Gutfreund Challenges John Meriwether To A Hand Of Liar’s Poker For $1 Million

“Look, asshole,” said O’Grady, forgetting the sanitized version, “since you were so fucking helpful the first time I asked, maybe you would be kind to give me the goddamn prices now.” The trader fell back in his chair. O’Grady was, conveniently, about twice the size of the trader.

Liar’s Poker was a game that Salomon Brothers’ traders engaged in on a daily basis. Michael Lewis humorously foils this game with the rules in the industry and the financial products the team invented to drive commissions. Lewis reflects on how the environment corrupted his soul and ultimately forced him out the door. He describes a time and area within Wall Street where individuals were painted as masters at taking advantage of the public for financial gain. The Big Short is a story about the bond markets, not the equities markets, where investors can go long or short on shares, depending on their view. In the bond markets, the way to short sub-prime mortgages is to buy a credit default swap , which is an insurance policy against defaults on sub-prime bonds.

Books By Michael Lewis

I can’t help but think that if everyone said tomorrow that they’d made a huge mistake and bankers were not to blame and that they are in fact wonderful, that Lewis would call a few contacts and be back at his trading post in minutes. The game was called Liar’s Poker.Michael Lewis was fresh out of Princeton and the London School of Economics when he landed a job at Salomon Brothers, one of Wall Street’s premier investment firms. During the next three years, Lewis rose from callow trainee to bond salesman, raking in millions for the firm and cashing in on a modern-day gold rush. Liar’s Poker is the culmination of those heady, frenzied years—a behind-the-scenes look at a unique and turbulent time in American business. Michael Lewis has published many New York Times bestselling books on various subjects.

Liar's Poker

The Germans wanted to be even more German; the Irish wanted to stop being Irish. Four years after his #1 bestseller The Big Short, Michael Lewis returns to Wall Street to report on a high-tech predator stalking the equity markets.

General Probabilities In Liar’s Poker

The stock market consists of exchanges or OTC markets in which shares and other financial securities of publicly held companies are issued and traded. Bernie Madoff is an American financier who ran a multibillion-dollar Ponzi scheme that is considered the largest financial fraud of all time. Salomon Brothers was a Wall Street investment bank with a reputation for high-risk, high-reward trading that merged with Citigroup in 2003. The game is comparable to “Liar’s Dice,” a game where players roll dice, hide the numbers they have rolled, and then make bids on the total number of dice they believe were rolled by all players with that face value.

  • His description of the firm’s personalities and of the events from 1984 through the crash of October 1987 are vivid and memorable.
  • If the serial numbers support the challenged player then the player will win the agreed upon stakes from each other player.
  • Fortunately the rise of internet connectivity and smartphone devices lent themselves to pushing the game forward.
  • Where Lewis describes how Volcker and America’s borrowers juiced the bond market.
  • Working at different firms, they come to this realization separately; but after they discover one another, the flash boys band together and set out to reform the financial markets.

A helpful and/or enlightening book that, in addition to meeting the highest standards in all pertinent aspects, stands out even among the best. A helpful and/or enlightening book that is extremely well rounded, has many strengths and no shortcomings worth mentioning. A helpful and/or enlightening book that has a substantial number of outstanding qualities without excelling across the board, e.g. presents the latest findings in a topical field and is written by a renowned expert but lacks a bit in style.

) 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). Around the same time a more advanced version of Liar’s Poker took root on Wall Street in the 1980s, in particular at the legendary trading house Salomon Brothers. A fuller examination of these enhancements will be the subject of a future article.

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There is a moment, after Elise references her daughter, Stuart automatically assumes the intelligence analyst is married. John Boyd’s character, with a hint of Catholic conservatism, presents as a traditionalist. Despite this, noting previous episodes, there is nothing to suggest Stuart is overly judgemental. Stuart, because of how personally attached he is with certain people, cares deeply for his colleagues.

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