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Fiasco: The Inside Story of a Wall Street Trader Paperback – February 1, 1999
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About the Author
Frank Partnoy is the author of Infectious Greed and The Match King. He has written for the Financial Times, the New York Times, and Portfolio. He teaches law at the University of San Diego, where he lives.
Top customer reviews
In this instance, book illustrates the dramatic growth in derivative products market. As a chicken fried equities guy, I had no clue just how exotic these instruments had become by mid-90's. FIASCO goes trough painstaking detail explaining the structure and at times dubious purpose of those instruments (disguising something volatile and high-risk as a stable product, for example)... all along shedding some light on personalities involved in creating and selling those products.
Makes me wonder how things have changed over the last 20 years. After all, we did have a CMO blowup only 8 years ago. I wonder what's next... Buyers and investors beware! Don't get your faces ripped off.
Drawbacks: sometimes their examples seem to have a "representation flaw" such as taking one derivatives salesman who did not know how to explain derivatives as a representation of ALL professionals in that line of work.
There is also the "banker bashing" tone which has become a past-time for uninformed audience who are mostly outside the finance world but no doubt these tones sell nowadays due to populism.
Don't let those flaws repel you from enjoying the book. Most books have their flaws. So long we are aware of the flaws by employing "critical thinking" on everything we read then I think we can make the most out of each book we decide to read.
As with most Wall Street tell alls I was horrified these people are running our financial world. Buyer Beware would be an understatement in most instances, especially as you read about derivatives. I often wonder what these brilliant minds could do instead of simply trying to be as rich as they can while screwing everyone else out of their money. Sad to read that state pensions and insurance funds were tied up in this mess, however, what is really sad is the traders and salespeople knew these were risky derivatives and chose to say nothing or provide any warning (at least this is the feeling you get from the book). The author mentions the State of California and the State of Wisconsin (and I am sure New York) were part of this buying, and probably no coincidence, are going through severe financial constrains as I write this review.
The author wondered out loud "why such supposedly conservative investors were taking on so much risk." His bosses said as long as they were upfront in disclosing the risks, it was none of their business what these clients bought.
I found the definition of "emerging markets" as interesting. The author went on to say Bond Salesmen are very clever at inventing deceptive names for risky bonds to make them seem more desirable. The name sounds great, but they were really a disguise for junk bonds.
Good explanation about inflation and Brazil and the impact this had on pricing and interest rates. This would be a fascinating part of the job to learn and understand.
For me the book is a good reminder of not getting caught up in fads on Wall Street and to make sure you understand the financial instrument you are buying. The person who sells these should have your best interests in mind and share the goal of helping you reach yours. You will hate some of the people in the book, but realize they were doing a job, albeit a disgusting and ugly one at times.
I still think about if these people with these beautiful financial and quantitative minds decided to help those of us who are not financial geniuses how great this country could be (and most of us might not have to work until 70 years old to retire)!
As other reviewers have pointed out, FIASCO is a lot like Liar's Poker. At times I cringed at the level of copying (ie: phrases like "rip someone's face off" or clients getting "blown-up"). If you haven't read Liar's Poker or are not too bothered by copy-cats then you shouldn't care about this point. After all, Michael Lewis, the author of Liar's Poker does not mind it and praised FIASCO (see the book's back cover). He realizes that copying is a complement. In any case, the copying takes little away from the educational value of this book and perhaps enhances the entertainment value. If you enjoyed FIASCO, I also recommend:
When Genius Failed
Den of Thieves