- Series: Norton Paperback
- Paperback: 320 pages
- Publisher: W. W. Norton & Company; Reprint edition (March 15, 2010)
- Language: English
- ISBN-10: 039333869X
- ISBN-13: 978-0393338690
- Product Dimensions: 5.6 x 0.9 x 8.3 inches
- Shipping Weight: 12.6 ounces (View shipping rates and policies)
- Average Customer Review: 4.3 out of 5 stars See all reviews (915 customer reviews)
- Amazon Best Sellers Rank: #2,769 in Books (See Top 100 in Books)
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Liar's Poker (Norton Paperback) Paperback – March 15, 2010
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From Library Journal
As described by Lewis, liar's poker is a game played in idle moments by workers on Wall Street, the objective of which is to reward trickery and deceit. With this as a metaphor, Lewis describes his four years with the Wall Street firm Salomon Brothers, from his bizarre hiring through the training program to his years as a successful bond trader. Lewis illustrates how economic decisions made at the national level changed securities markets and made bonds the most lucrative game on the Street. His description of the firm's personalities and of the events from 1984 through the crash of October 1987 are vivid and memorable. Readers of Tom Wolfe's The Bonfire of the Vanities ( LJ 11/15/87) are likely to enjoy this personal memoir. BOMC and Fortune Book Club selection.
- Joseph Barth, U.S. Military Acad . Lib., West Point, N.Y.
Copyright 1989 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
“The funniest book on Wall Street I’ve ever read.” (Tom Wolfe)
“Often profane, always hilarious, right on the mark.” (People)
“So memorable and alive . . . one of those rare works that encapsulate and define an era.” (Fortune)
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Top Customer Reviews
 Solomon Brothers showed excessive greed and always placed the firms interests above those of their customers and rich customers treat the bond [and stock] market like a casino. Middle class people who need a decent return to retire muddle along but the market rises and falls precipitously on the gambling mentality of the rich.
 Previous to 1980 bond markets were unregulated so when junk bonds were invented [and bond prices became volatile like stocks] it was not illegal to trade bonds on insider information. Traders will always be more nimble than government regulations and the system will always favor the dishonest few.
 At the end in his conclusions, he says that the principals at Solomon will remain "fat and happy". To me that is an oxymoron. They operate on the principal that money is everything. If it were true the US would be the happiest country in the world because it has the highest GNP. Fat people are unhealthy and being healthy and taking care of oneself is at least as important as being rich.
Also if a person is rich enough to buy five houses, he can only be in one place at a time...just like a poor person. If a person is impoverished, more money will make him happier. But after a person has enough money for all his needs, more money doesn't increase happiness. People who realize this can become truly happy.
After reading and loving several of Michael Lewis book, I became increasingly curious to read his very first book. The latter will essentially take him away from a very lucrative career on Wall Street. How strong that pull of the pen must have been to fight off a gigantic economic incentive that he indicated he was most vulnerable to.
This book is now nearly 30 years old! Yet, it still reads really well. It is aging like a good wine. You can see that all the components of the young author’s talent are all already in place. Michael Lewis success is based on numerous foundational qualities you will find in all his books.
First, he creates very colorful, often over the top, memorable characters. In this book, his descriptions of the main protagonists are invariably memorable. He renders even peripheral characters fascinating. His description of several mid-level bond traders is very interesting. He vividly describes their unique eccentric behaviors, and the way their respective mind works (often in completely different ways).
Second, Lewis is just a world-class all around story teller. This is the secret of just about any “content” entertainment. That is true in movies, videos, TV series, music, and most of all in books. Books are just raw content. It is all about the story and nothing else (no distracting video or music entertaining any other of your senses). Lewis threads two long stories anchoring the book. The first one is his own first-hand experience as an evolving bond trader at Salomon Brothers during the mid-eighties. The second one is an articulate narrative of the seismic wave affecting Wall Street during this period.
Third, Lewis is very good at explaining, teaching, educating without meaning to. In other words, he is very good at explaining the complex and obtuse and rendering it understandable and actually interesting. Lewis, armed with a bachelor in history from Princeton, a masters in economics from London University, and his several years of bond trading, will develop a rather beautiful and curious mind able to understand just about anything. And, just as importantly his mind is able to develop a very broad and meaningful context to any complicated concept he explains.
Lewis first book is full of all the above qualities. The mid 1980s represent an intense era for Wall Street.
Lewis covers in detail the onset of the mortgage market created in good part by Morgan Stanley and their development of collaterized mortgage obligations (CMOs). The CMOs facilitated the pooling of home mortgages with their unpredictable prepayment behaviors and turn them into CMO-type bonds with predictable maturities (through creation of separate tranches). That created nearly overnight a several $trillion market for such bonds. And, it made Salomon a ton of money as its mortgage desk ran a quasi-monopoly on issuing and trading such CMO bonds. However, Salomon will shoot itself in the foot by not paying their CMO bond traders adequately. While they would generate tens of millions in profit for the firm, they would reap bonuses of just a few hundred thousand. Competitors pounced and hired all those CMO bond traders away from Salomon with million dollar packages. Very quickly the CMO bond market became a lot more efficient (much harder to extract easy profits on bid-ask spreads). And, Salomon became an also ran as it lost its proprietary knowledge within this market as its traders walked out the door really rich working for someone else.
Lewis next covers the onset of the Junk bond market created by Mike Milken from Drexel Burnham (chapter 10 near end of the book). This chapter is probably the best in the whole book, in an otherwise already excellent book overall. The way Lewis describes Milken, the latter was definitely some kind of genius. One may argue that he was a Machiavellian and nefarious one. However, in terms of insight and foresight regarding the credit markets he was way ahead. He was the one who first analyzed in much detail comparative returns of bonds, and discovered that on a risk-adjusted basis Junk bonds were attractive at the time. And, he totally left Salomon Brothers in the dust. Milken had pretty much created a gigantic near monopoly in this segment of the market before Salomon even was aware of its emergence. And, unlike Salomon, he did not make the mistake of underpaying his junk bond trader. So, he hung on to the majority of the profits generated by this segment a lot longer than Salomon did. What did Milken in just a few years later as we know, it is not the capital markets, it is the law.
Lewis explains that both the rapid onset of CMOs and Junk bonds were in good part caused by the large US Current Account Deficits the US was running vs. Japan and Europe (not yet China). And, that this abundance of bonds was for the mentioned foreigners an attractive way of recycling their excess dollars into reasonably high yielding instruments.
The book has a lot more interesting themes than I cover here including the near-barbaric inside culture at Salomon that never seizes to amaze in both vulgarity and more often than not stupidity. You could see that there was no way Salomon could possibly remain an independent firm for long given the way it was so poorly managed.
On more than one occasion, I had to stop reading because I was laughing so hard, wondering, "Did he really say that?! Wow! Are there really people like that?!" My early life in Manhattan, right after college was an adventure, but a mild one compared to the stories in this book.