The book is an unflattering portrayal of Wall Street traders and salesmen, their personalities, their beliefs, and their work practices. Lewis found that his job at Salomon Brothers was paradoxical. He can't rationalize how his job of selling bonds to customers produced much goodness. Chapter lengths are short with descriptive titles that are straightforward and readily understandable. Lewis, who had by this time seen enough, decided to get out of the market. John Gutfreund then made a deal with Warren Buffet to avoid the takeover, at the expense of Salomon shareholders.
Liar's Poker: Rising Through the Wreckage on Wall Street Summary & Study Guide Description
But when a market is widely regarded to be in a bad way, even if the problems are illusory, many investors get out. All in all, this book was a very fun read. Great book, highly recommend it. Moneyball in particular was a book read by a number of investment professionals. Notify me of follow-up comments by email. Notify me of new posts by email. Do not re-syndicate without permission. Do not take it as legal, financial, or tax advice for your personal situation. Rates and terms set on third-party websites are subject to change without notice.
The editorial content on this site is not provided by the companies whose products are featured. I thank you for supporting this independently-owned site. February 23, at Find The Best Charities: Best Charity Comparison Websites. I'm Jonathan and I've been sharing about money since Lewis portrays the s as an era where government deregulation allowed less-than-scrupulous people on Wall Street to take advantage of others' ignorance, and thus grow extremely wealthy.
He traces the rise of Salomon Brothers through mortgage trading, when deregulation by the U. Congress suddenly allowed managers of savings and loan associations to start selling mortgages as bonds. Lewis Ranieri , a Salomon Brothers' employee, had created the only viable mortgage trading section on Wall Street, so when the law passed, it became a windfall for the firm.
However, Lewis believed that Salomon Brothers became too complacent in their new-found wealth and took to unwise expansion and massive displays of conspicuous consumption. When the rest of Wall Street wised up to the market, the firm lost its advantage. Another problem Lewis noticed was a large disconnect between what Salomon Brothers mortgage traders were paid, and what they believed they should have been paid.
Ranieri and his fellow traders felt that, since their department generated so much money for the firm, they ought to receive considerably higher salaries and compensation. Gutfreund and other managers, on the other hand, argued that the traders were not risking their own money, but the firm's, and noted that the mortgage department spent years losing money before succeeding. Because of this disagreement, Salomon Brothers lost many of its traders when other firms that added mortgage bonds to their business began to offer higher salaries, easily luring the Salomon Brothers mortgage bond traders away.
Likewise, Lewis argued that Salomon Brothers tried to "professionalize" itself. As he notes, Ranieri and his fellow traders lacked college degrees; one of the traders had not even finished the eighth grade.
Despite their lack of academic credentials, the group was extremely successful financially. But in order to improve its "image," the firm began to hire graduates of prestigious business and economics programs. Because of his uncouth manners, Ranieri along with many of his Italian American colleagues were eventually fired. Lewis argued that Salomon Brothers' mortgage-bond success was based not on innate intelligence or trading skill, but on pure luck.
Lewis noted that, although Ranieri was often hailed as a "visionary" for creating a mortgage department before a mortgage market existed, deregulation caught him completely by surprise. The firms that lured away Salomon's traders with higher salaries ended up losing money, as it soon became clear that the traders lacked any special skills: After enough firms became involved with mortgage bonds, prices stabilized, and the bonds eventually traded like any others.
After dealing with mortgage bonds, Lewis examined junk bonds and described how Michael Milken built junk bonds from nothing to a multi-trillion-dollar market. Because the demand for junk bonds was higher than its supply, Lewis argues that corporate raiders began to attack otherwise sound companies in order to create more junk bonds.
Lewis remarked in his conclusion that the s were a time when anyone could make millions, provided they were in the right place at the right time, as exemplified by Lewis Ranieri's success. From Wikipedia, the free encyclopedia.
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