One of my goals for this year is to read three non-fiction books. I know that doesn’t sound like many but generally, I read books for enjoyment, not for education. Of course, the two are not really mutually exclusive but I’ve yet to find sci-fi investing books out there! 🙂
I usually read around 30-35 fiction books a year and I think 3 non-fiction is about all I want to attempt really.
Anyway, the second book I’ve read is ‘Liar’s Poker‘ by Michael Lewis.
Written and set in the 1980s, this semi-autobiographical book charts the rise and fall of investment bank Salomon Brothers (which ultimately became part of Citicorp in the late 1990s) and documents the greed, ambition and excesses of the people (including the author) who worked for the company and the bond trading industry.
Salomon Brothers made an absolute killing selling mortgage bonds to customers (including other banking institutions) who didn’t really understand what they were buying. In the days before the internet, the traders had all the info (and weren’t always truthful) and customers, fearful they would miss opportunities, would jump in with their money without doing their own research (yep, that old chestnut!).
The regulators were ineffective as they were always playing catch up on the new, inventive and complicated ways financial products were being structured to make profits. The bond traders and investment banks were unscrupulous and unrelenting in their greed, with no thought of consequences.
The amounts of money involved were jaw-dropping – it was scary to read about what the traders got away with, their audacity, the lies they told and how greed ultimately had businesses investing in things they didn’t have a clue in.
Big Swinging Dicks
All the traders aspired to be ‘Big Swinging Dicks’, the ones who made the most money and commanded the biggest bonuses. Yes, even the very few women who were able to fight their way past extreme gender inequality aimed to be a BSD!
Liar’s Poker
What was ‘Liar’s Poker’? It was a high stakes gambling game which the bond traders played, using bluffing and psychological tactics.
Anyway, I thought this was a good read (thanks for the recommendation, Jim), with a fair amount of humour and kept my interest throughout. I’d be tempted to read another of Lewis’ books. I know he wrote ‘The Big Short’ though having seen the movie adaptation, I may try one of his other ones.
What did I learn from this book?
Don’t invest in things you don’t understand and don’t be tempted by huge profits.
Have a great weekend all – it’s apparently going to be a sunny one! 🙂
