Book Review - Liar's Poker

In its true sense, money is defined as "a tool to measure one's "contribution" to the benefit of society". Innovate, create jobs, bring in efficient - and "make money". Gates made tons of it, Ambani made it big and Balmer cracked it too - and they did it the 'right' way! But what about Richard Fuld - the ex-Lehman CEO!?

Well - I never really appreciated the extent of value that I-bankers, traders, structured product developers and other such forms of life provide to the society. Sure - they bring in some sort of financial efficiency into the system by playing the broker in the business. Sure - they help you fulfill your dreams - not by a charity - but by a careful assessment of your "NPV". Sure - they help in de-risking your business by hedging / forex solutions. Sure - they play the middle-men in completion of a financial deal. But are the prime motivations for offering such services limited to "benefiting" the client / society? Can these professionals actually see if there is a "value erosion" in any of the above deals? And more importantly, will these people stop if they actually see a "value erosion" in any of the services... Erosions that can lead to a prolonged recession - as one we are witnessing today?

"Liar's Poker" by michael lewis answers the above questions, and dwells into more!

The book is a kind of story-cum-narration that takes you through the life of the author when he joined Solomon Brothers in early 1980s. The book starts with his initial days at the firm where he lands up as a fresh graduate with no taste of the corporate world. It then covers his orientation cum practical training session where he gradually lets go of his integrity, morals and ethics for that additional piece of bonus. There are certain interesting narratives where author explores his conundrum of making a choice between "higher bonus" or "letting down a customer who bets his life on your word". The gradual metamorphosis of the author into one of the highly successful employee of the firm, the political equations in such an environment, the sleaze-fests, its all there - the author has described, in goriest of details, all about the life of a Solomon trader (which incidentally many of us in fin professions can relate to)!

The book provides an interesting "insider view" of what went wrong in Solomon Brothers (in 1980s. His perspective on how the lure of a million dollar bonus leads people to chuck integrity, honesty and even common sense out of the window is quite interesting, pretty saddening and quite relevant now.

The book is a very good read, esp. in the current context. The book will make you appreciate how we landed up in the mess we are in! The entire information on what goes behind those office walls - how risky assets are bought at a pittance, how the inherent risks are bundled and sold off at exorbitant prices, and how the money thus earned in bonuses spent - will either make you abhor this profession (or absolutely love it - depending on your perspective of love the world or hate the world!). This book will also enable you to appreciate a mugger - who is actually more direct and upfront - in stealing your money! ;-)

This book is a must-read for any person who is planning to make a career in finance - the book will help him / her in understanding the practical situations and ethical calls that one is likely to take in this profession. Of course - as an ageing finance professional - if you just want to feel nostalgic about your last (or lost) job, you may as well give the book a dekko!

Do let me know your views on the book.

~GS
Naah... ~ Gautam :-)