Eerie to read the 1980s description of the 2000s financial crisis. Everything old is new again. And Lewis is just an incredible non-fiction writer, weaving anecdotes with explanations.

I liked it, it was a good journey through what it was like working in the financial industries, mainly in Salomon Brothers in the mid 80s. Basically, obscene amounts of money + people that "if they weren't salesmen would be truck drivers" = debauchery and frat-like behaviour. As some examples, the mortgage trading desk was apparently all fat - they would order $500 worth of mexican food for a couple of people, which as you can imagine is difficult, so included things like 5 gallon tubs of guacamole. The employees would play pranks on each other: for example, just before someone's flight, they would sneakily take his suitcase, take out all the clothes and replace them with paper towels.
On the information front I feel I learned a bunch from "Liar's Poker", mostly about mortgage backed securities and how they work.

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 S&P 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 more year to go (as of this writing), here are the results thus far: The hedge funds are up a cumulative 22 percent. The S&P? 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, more poignant than the first, is this Buffett quote:

"There's been far, far, far more 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.

Considering I still don’t understand most of the financial stuff in this book, this is the most engaging intro to investment banking I’ve read (in my almost zilch experience reading about investment banking). I drew a little diagram to understand bonds while reading, and the fact I bothered to get out my pen to understand a complex foreign system written about in a book read for leisure purposes speaks to the attention-grabbing nature of the writing, even when it was also absolutely confusing. Also there were many laugh out loud moments in the first half of the book. People interested in finance will of course find this interesting, as well as those interested in how to make boring complicated things interesting. But surprisingly due to the book tracing the author’s 20s, I find this book is a fun story for navigating work as new grads (in wholly disrespectful immoral self-serving ways) - particularly the dynamics people might encounter and how to deal with them.

Rise and fall of Salomon Brothers, the big swinging dicks of wall street!

Very well written by Michael Lewis (also the author of Moneyball and The big short) about the greed and gluttony of the 80's wall street. Lewis gives an insider's perspective of the bond trading floor (also centre of the universe) in this part memoir, right from landing the investment banking job, his training program at Salomon Brothers, and his transformation from a "geek" bond salesman to a big swinging dick.

“That was somewhere near the middle of a modern gold rush. Never before have so many unskilled twenty-four-year-olds made so much money in so little time as we did this decade in New York and London.” "If you guys weren't trading bonds, you'd be driving a truck. Don't try to get intellectual in the marketplace. Just trade."

Will highly recommend this (especially if you, like me, aspired to be an Analyst at Goldman Sachs or the likes at some earlier point :P )

I was hoping for a better book from Michael Lewis. I read The Big Short: Inside the Doomsday Machine before reading this, so my expectations might have been biased, but I was hoping for something that did more than illuminate some scandalous activity. It was minor league in that it attempted to illustrate some central characters in Solomon Brothers. Lewis does much better in making his characters palpable in The Big Short.

He touched upon this a couple times, but he never entirely pounced upon this: he should have written the book as an ethnography. It wavers in between ethnography, observations, spy story, and I think that wavering weakens it. It needs to be written as an ethnography by someone who clearly does not fit into the Solomon Brothers culture.

The explanation of finance and some financial activity is explained well. He explains in The Big Short that college graduates would read this book and ask him for advice, reading it as a training manual.

I was also hoping for a more lucid discussion of the recession in 1987. I thought the end was building up to it, but it did nothing to really captivate on the topic of Solomons' fall or the recession. The fall is inevitable, as explained early in the book. I have seen it written in other reviews: the parts about the training program and the first third of the book are the best. It is chaotically disorganized and jumpy.

A gripping page turner, I could not put this book down. I smoked a doobie and talked my head off about it. Easily the best book I have read since the Bible.


The high flying, off-the cuff-speech, quick and easy money of wall street is a world I oft romanticize.

This book described the stock market in the early gettings of globalization c. 1980. It was a time of unprecedented growth in certain industries. Those that moved the money took a hair off the top of every change. All they had to do was sit and watch their money skyrocket. Largely unregulated for this type of growth, the bond market went from $55 billion nationally in 1950 to $700 billion in 1976. Solomon brothers, primary loan lenders, went form biggest losers to hottest company on wall street overnight. Their training program was valued more than Morgan Stanley and Merrill Lynch.

Tidbits I hope to keep with me is:
mortgage loans are where most of consumer assets lie. there is more value in refinanced mortgages than the stock market. This is why huge economic disruption follow faults in law regarding mortgages lending. So many mortgages exist because of tax write offs and incentives the governments provides to feed growth of this asset. Thousands of mortgage <$100k @ 12% interest are packaged with a B-rating of fault/sporadic repayments; these are sold to big business at a high return. Pension plans, offshore freight handlers, and industry moguls buy and trade $billions in sub-prime loans.

Early regulations in 1977 of loans and savings (L&S) paid off any debt accumulated in buying a mortgage. Small L&S owners encouraged all their mortgages to refinance; also, they would buy neighboring L&S holdings for $100million and sell it to a bondholder $80 million. They were able to cut profit losses while gaining assets. Bondholders sold these to whoever could buy, and packaged it in different ways to have an array of products to sell. For example, they could sell just the interest, or just the premiums on a $500 million dollar AAA rated mortgage bond. Interest had growth possibility, premiums acted like run of the mill low interest bonds. L&S went from local to global overnight.

Junk bonds were next. Companies floundering on bankruptcy with piss poor rates were packaged and sold to investors. The US government bailed out these industry giants. So even with a decade of profit loss, these companies would stay afloat. The company would, therefore, be hugely undervalued just before it went under. The trick was finding which companies were on the verge of declaring bankruptcy. Entire teams of investors were on the front lines looking at declining working conditions and bad management for tells. They would then buyout the company and sell it to investors; bond traders made money in the buy and sell of say a $300 million dollar regional airlines. Investors made a quick turnover in their holdings, laughing all the way to the bank. The newly available global funding of junk bond holdings skyrocketed this once risky investment. Every pension plan and mogul's empire across the world could now be invested rather than sit in a savings.

Leveraged takeovers were the unregulated, titans of the late 1980s. Billion dollar takeovers of 3M, Xerox, and Tim Horton's, and $4.9 bill southland co. (7-11's proprietary holder) went largely unpaid and brought about the 1987 recession. An example of a leverage takeover: Buyers believed AT&T was undervalued; with a few sector furloughs, skimming the fat, and loading responsibilities, profits=revenue-cost would soar, and the company would be resold in a few years at huge margin.

First book of this type I truly enjoyed. Thank you Lewis for opening up a new field of book to explore.

pp 83 is a discussion of S&L'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...

1980 Wall Street.

Michael Lewis's personal account of working at the Wall Street. Wild ride of working at Solomon Brothers, making and looking millions. Since then there are some changes are made, but are they enough?

Đọc Lewis thì khỏi phải nói rồi, rất thỏa mãn ở khía cạnh giải trí. Đây có lẽ là một trong những quyển thú vị ngôn ngữ nhất về phố Wall (đọc là: buồn cười) mà tôi đọc được. Nếu Flash Boys hơi nặng tính kỹ thuật và chỉ trích, The Undoing Project thiên về tính lịch sử và thán phục thì Liar’s Poker, đúng như cái tên, nghiêng về những trò mánh khóe và lừa bịp (The Big Short và Moneyball thì tôi mới chỉ xem phim, chưa đọc sách).

Với những kinh nghiệm ít ỏi của tôi khi còn “ở bên trong” thị trường chứng khoán thì quả đúng là như vậy. Không phải ngẫu nhiên mà đây là nơi tập trung những kẻ thông minh nhất quả đất vào làm việc và chém giết nhau (nơi thông minh thứ nhì chắc là NASA).

Tóm lại là thống khoái.

Liar's Poker, by Michael Lewis, focuses on two main points: the development of the mortgage securities and explaining the Wall Street culture, and an autobiography of his time working in mortgage securities. The author begins the book fresh out of Princeton, repeatedly denied a job at every firm he applied at until he unwittingly gets lucky at a party with a partner’s wife. Later, in order to show the Wall Street culture, Michael Lewis tells the story of how Lewie Ranieri created the mortgage securities department at Salomon Brothers. Lewis finishes off with his own personal experience in Wall Street working for Salomon Brothers overseas in London, surviving a near hostile takeover, and then leaving when Wall Street stopped matching with his values.
Despite being written almost twenty years ago, a lot of Liar's Poker remains relevant today. Liar’s poker explores Wall street in the 80s when financial institutions were “largely unregulated”. Humor in Wall Street was sexual and/or sexist toward women with terms like “big swinging dick” thrown around often. As an eighth grader with very little real background and no classes in economics, I appreciate the fact that they dumb everything down to terms that anyone can understand if only they read closely. I have watched and read several financial movies, books, and documentaries about Wall Street and economics but none have come close to explaining it in a way that young people and adolescents can understand, much less find humor in. The humor of the book stems from being blunt and full of potty humor. My favorite of the potty jokes being “But everyone wanted to be a Big Swinging Dick, even the women. Big Swinging Dickettes.” One of my favorite examples of the books bluntness was “Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market” for how blunt and honest it is. Without a doubt, Liar’s Poker is one of the best books I’ve read although I would recommend it only to those with at least a basic understanding of economics and some time to kill.