Book Review: Liar's Poker, by Michael Lewis

I know I am behind the ball, but I just recently finished reading Michael Lewis's first book Liar's Poker. I have long been told it was a must-read first-hand account of what Wall Street felt like in the "good 'ol days" of the Milken-esque, high margin LBO, junk-bond fueled '80's. At it totally is.

First of all, I hope Lewis is no stranger to my roughly 3.1 million (HA) regular readers. With titles including (but not limited to) The Big Short and Moneyball, Lewis is (at worst) a fantastic gateway-drug into the larger world of finance and economics reads, and (at best) a staple of our literary diet. Unlike many financial writers, Lewis's work reads like that of an author interested in finance, rather than a quant trying to info-spam journal editors into publishing an incomprehensible paper, making even Lewis's most sincere and serious tomes feel like page-turning beach reads. Ok, that is a bit of an overstatement (or, understatement?), but the larger-than-life characters in his non-fiction certainly exhibit features of the best constructed literary protagonists.

Onto the actual book. As an aspiring bond-jammer myself...I mean, finance professional (did I just say that?)...it is nothing short of fascinating to read Lewis's first-hand account of his introduction, training, and professional exploits at the (then) formidable Salomon Brothers, first through the newly-created mortgage trading desk (that more-or-less invented the collateralization that led to our most recent recession), and later bond sales in London. While I sincerely hope much has changed in the business since 1986, I fear the sophomoric and fraternal nature of Salomon's associates observed by Lewis is still alive and well in the fast-paced, winner-take-all roulette wheel that is our modern capital markets. In the final chapters of the book, Lewis recounts being paid a quarter-million dollar bonus just months after the crash of 1987, and just two years out of training. Being the sharp guy he is, Lewis knew something was up; should people really be paid that way to do what they did? To jam paper and be the first one to the bank? Lewis even comments (paraphrased) if employee compensation was based on what he contributed to society, he should be fined not paid! Clearly an audacious claim that only an insider-turned-outsider could make.

Endlessly thought-provoking and entertaining, go grab a copy and enjoy!