Lewis touches upon some events and experience from the late 80's and early 90's -- including the hostile takeover of RJR Fun stories from yesteryear.
Lewis touches upon some events and experience from the late 80's and early 90's -- including the hostile takeover of RJR Nabisco of the Barbarians at the Gate fame -- and they're all very fun. He also takes us on a boat trip in the Amazon as well as to Japan, which was apparently dastardly rich even at the time.
It's a collection of old articles but reads very much like a collection of fun short stories. ...more
The second half of When Genius Failed was really disappointing. I had to really force myself through. The writing was verbose and, well, just boring.
TThe second half of When Genius Failed was really disappointing. I had to really force myself through. The writing was verbose and, well, just boring.
The first half was good enough. I liked the setup. LTCM was a huge hedge fund with great marketing that raised a lot of money and made huge profits with minuscule margins by taking a lot of loans. Their investors made a lot of money. Until things went wrong and everything went to zero.
I liked the story but I'd have loved better writing....more
John Brooks was probably the Matthew Lewis of his era. Business Adventures comprises 8 financial and business stories. I skipped the last one a(3.5/5)
John Brooks was probably the Matthew Lewis of his era. Business Adventures comprises 8 financial and business stories. I skipped the last one after the first 20-odd pages. It was about the falling pound. Not that it wasn't an interesting topic, but after a bit I sort of wanted to finish it more than enjoy it, and I knew that was my cue to exit.
That said, most stories are both crisp and engaging. I especially liked the one about the price-fixing scandals of General Electric. (Executives there would tell their juniors to "especially not talk to their competitors," which those juniors would take as a wink wink way of saying exactly the opposite.)
Overall though I can see that Brooks set the tone for a generation of narrative-driven financial writers, including some of those that I love today....more
There are quite a few books about the 2008 financial crisis, but there aren't a lot writing giving an insider's perspective about the crisis as(3.5/5)
There are quite a few books about the 2008 financial crisis, but there aren't a lot writing giving an insider's perspective about the crisis as it happens. Diary of a Very Bad Year does! The writer, Keith Gessen, interviews someone who is apparently a bigshot hedge fund manager over a period of a year.
Initially the anonymous HFM says that "this is as bad as things are going to get". Later we see the transition to "I cannot believe that this is how bad things are".
Honestly, I wanted to like this book. It does give an insider's perspective, avoids hyperbole, goes into some wonderful tangents, but.. overall I felt it was forgettable. Quite literally. It's been a few weeks since I read the book and I can't remember too many details from it already....more
The New New Thing could very well have been written today about the 2020-2021 tech boom. Sure, the dotcom boom was much more of a pop--in size--but thThe New New Thing could very well have been written today about the 2020-2021 tech boom. Sure, the dotcom boom was much more of a pop--in size--but the ideology that drove the boom of then and the boom of now is pretty much the same.
In TNNT, Michael Lewis follows around Jim Clark, the founder of more than one billion dollar companies: Silicon Graphics, Netscape, Healtheon. Fascinating to read about Lewis going with him on his experimental boat, and also taking the risk of getting on to a helicopter flown by Clark (even if under supervision).
Lewis gives us an insight into the excesses of Silicon Valley, the competition, into the kind of people that thrive there. Jim Clark cannot focus on a single thing, he's always in the search of the "new new" thing. He's not a person you'd want to hang out with on a Friday evening, but if you got the chance to hang out with him on a Monday, he might just make you very rich.
Lewis takes us inside Clark's boat, some court proceedings of Netscape's conflict with Microsoft, the initial days of Healtheon. At times, Lewis seems to be the only one self-aware about the bizarre. How can Healtheon, with no product and no revenue, with employees with zero idea about American healthcare, promise to revolutionise it and be valued at more than a billion dollars? What is the diamond that first failed to enamour and then suddenly really enamoured investors?...more
A plot is set up, then things happen, and then finally there's a conclusion. That's what makes a story. Right? Wrong.
Michael Lewis is a brilliant writA plot is set up, then things happen, and then finally there's a conclusion. That's what makes a story. Right? Wrong.
Michael Lewis is a brilliant writer. He catches the reader's fancy from the get go. But Liar's Poker doesn't really have a plot. It's not based on a singular event -- a market crash, a scam, or whatever. Instead, it's part memoir, part deep look inside the world of investment banking. Or maybe just one investment bank Salomon Brothers, where Lewis worked for ~2 years.
Liar's Poker is a primer into investment banking. He tells it like it is, there's no glorification, and no undue vilification of either the profession or any individual character. He knows how to tell a story, even if there's no plot, and there was not a single page in the book that dragged or felt like it didn't fit.
Most investment bankers, turns out, are just glorified salesmen. Bonds' salesmen, in this particular instance. They call up fund managers and try to feed them shit so that they buy whatever they want to sell. I mean, at least some salesmen do that. Or did that, this book was published decades ago.
Now why would a fund manager buy a bond or some other complex financial instrument out of nowhere 'cause some guy called him to sell it to whom? I really don't know. It's mostly greed. But fund managers do do that (or did that). And the investment banks where these salesmen work are darn fucking rich, so they have darn fucking good images (dapper suits and fancy restaurants help for sure). But the investment banks aren't the fund manager's friends. They're just middlemen with conflicts of interest at every point and you can never be sure of which interest they're furthering at which point in time.
Essentially, unless you're a big, big fish, dealing with investment banks is a massive gamble. They're not out there looking for your interests. As with any agent/broker/middleman.
Lewis intersperses his writing on how investment banks operate with his own moral dilemmas. Bankers love to think that they "deserve" all the money they end up making (hundreds of thousands of dollars, sometimes millions, back in the '80s!). Lewis is unambiguous in his thoughts that he didn't deserve it. He gives us a brief insight into his dilemma in the epilogue and I love the measured, reflective individual I see there.
Undoubtedly a classic for the ages. If you know nothing about finance, read this book, google a little, and you'll come out with both knowledge and emotions (and dazzled by the humour)....more
Barbarians at the Gate—an undeniable classic in finance—takes the reader from start to end of a leveraged buyout (LBO) which is a fancy way of saying Barbarians at the Gate—an undeniable classic in finance—takes the reader from start to end of a leveraged buyout (LBO) which is a fancy way of saying buying out a company after taking a loan against the company's assets. (What Elon Musk was going to do with Twitter.)
The entire concept of an LBO is mind boggling and might take a few minutes to grasp. In theory, someone with $0 can end up owning a multi billion dollar company. Here's how it works.
1. Identify a company with a high amount of free cash flow (lot of cash coming in with nothing to do with it). 2. Go to a bank. Tell them about this company and convince them that this might be a good company to lay your hands on. 3. Go to the company and make them an offer they cannot refuse. 4. Buy company with money loaned out from the bank. Pay the loan back from the cash that the company that you now own generates. Reduce costs by firing employees and/or selling off assets. $$$$ 5. In case the newly acquired company is mismanaged and you cannot pay back the loan—no problem! The bank takes over the company and does whatever it wants with it. You start with nothing and end up with nothing. No harm done.
This is, obviously, a simplified version of events. But in essence this how LBOs work. In reality, if you go to a bank and ask for a loan to buy a multi billion dollar company, they wouldn't really oblige. Not unless you put up a few billion dollars yourself (as Musk did). But you get the gist of how it works.
Barbarians is about a famous LBO back in the 80s when LBOs were quite the rage in corporate America. And why wouldn't they be? Almost all stakeholders apart from the employees saw money. And this particular famous LBO? One of America's largest companies at the time (in the top 20 I think?) called RJR Nabisco. They owned the Oreo brand (yes, the cookie) while their moneymaker was their cigarettes (Camels).
The book is action-packed from start to finish. There is no dull moment. The author takes us through the littlest of details, after what would probably have been hundreds or maybe even thousands of hours of interviews. The detail is impeccable. The writing is simple enough for a finance layman to pick up.
Overall the book goes to show in super depth the extent to which things work on whims and fancies of top level executives. If you think there's a full and proper thought process behind every move some bigshot suit takes in his tower office.. brace for a surprise. Because while there is a facade of decorum, even the largest of decisions often come down to feelings, emotion, networks, egos and, most importantly, greed....more
I was expecting to like this but it really just blew me away.
This is such an old, old book. First published in the 4os, the edition I read was publishI was expecting to like this but it really just blew me away.
This is such an old, old book. First published in the 4os, the edition I read was published in ~2003 and based Benjamin Graham's ~1974 edition. Every chapter is followed by Jason Zweig sharp, erudite commentary that places Graham's writing in context. I loved reading Zweig, just as much as I did Graham, if not more.
My favourite part of the book is Graham accurately describing something that we're seeing right now
“Somewhere in the middle of a bull market, the first new issues make their appearance. These are priced not unattractively and some large profits are made by the buyers of the early issues.
As the market continues to rise, this brand of financing goes more frequent; the quality of the companies steadily poorer; the prices asked verge on the exorbitant.
One fairly dependable sign of the approaching end of a bull swing is the fact that new issues of small and nondescript companies are offered at prices somewhat higher than the current level for many mediums sized companies with a long market history”
In essence, all he's saying is that a bull market will have a lot of IPOs. After a point, those IPOs will be of crap companies. And those crap companies will get expensive valuations. Take that as a sign of things soon going to pop.
Graham, all those years back, touches about what we today refer to as 'bullshit job'. Basically all those financial analysts that make forecasts with buy/sell recommendations. It's not that their research is bullshit. It could be very useful. But the forecast itself is a manifestation of people's demand to get a simplified investment answer.
“For years the financial services have been making stock-market forecasts without anyone taking this activity very seriously. Like everyone else in the field they are sometimes right and sometimes wrong. Wherever possible they hedge their opinions so as to avoid the risk of being proved completely wrong. (There is a well-developed art of Delphic phrasing that adjusts itself successfully to whatever the future brings.) In our view—perhaps a prejudiced one—this segment of their work has no real significance except for the light it throws on human nature in the securities markets. Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied. Their interpretations and forecasts of business conditions, of course, are much more authoritative and informing. These are an important part of the great body of economic intelligence which is spread continuously among buyers and sellers of securities and tends to create fairly rational prices for stocks and bonds under most circumstances. Undoubtedly the material published by the financial services adds to the store of information available and fortifies the investment judgment of their clients.”
Investing is extremely interesting to me 'cause there's no one way to ace it. The only golden rule is to buy low, sell high. Which is easy enough to follow, literally anyone can do it, but difficult enough that few actually end up doing it. It doesn't matter if you're a CFA or an "ace investor". You might still be wrong. And a noob who's begun investing today might be right.
P.S. I also really love how Graham says that the only mathematics that's required in investing is basic arithmetic. Anything more, god forbid any calculus, is, he says, a way to fuzzy the waters to prove your point. I don't know if agree, but I do find calculus annoying and unintuitive enough to want to agree....more
I'm biased towards finance writers who have a penchant for simplifying complex financial information and events. Michael Lewis, obviously, ranks up thI'm biased towards finance writers who have a penchant for simplifying complex financial information and events. Michael Lewis, obviously, ranks up there. So maybe the rating on this one can be disregarded.
Before reading Big Short, I knew that the financial crisis was triggered by home loans that couldn't be repaid. And that when house prices fell, it would make more sense for borrowers to just give up their houses instead of trying to repay their loans. I had no idea of the specifics.
I do have some idea now (thanks, Michael!), but honestly, my biggest takeaway from book isn't its causes and results. My biggest takeaway is the observation of just how clueless everyone was about what was going on. How nobody (apart from a handful outsiders) knew shit about what they were doing, but kept on doing that anyway.
This includes the CEOs of the big investment banks, traders, credit rating agencies, fund managers, insurance companies. They were all clueless. Somehow they had been fed the idea that house prices never fall and they ran with it until oblivion. Because why shouldn't they have? They all made a lot of money in the process.
Oh, that's my second biggest takeaway. Nothing new. Just a testimony to the power of incentives. All these participants had nothing to gain from acknowledging the impending crisis that their actions would result. Sure, they could've shorted the market and earned a fair bit of money in the process--but why take that risk when you're going to be paid millions for ignoring it in the first place? Why be right while risking being a pauper when you can continue your pristine life and be a millionaire instead?
The third takeaway that I have from the book is that the world of finance loves its losers--but in a bad way. You can be incompetent/defraud people/be clueless af and lose a million dollars but as long as that money wasn't *yours* (but the investors'), it's all good. Then, you were never a loser. The financial kingdom comprises of middlemen who have little to lose while winning constantly, everytime.
Big Short has only reinforced my belief that most complex sounding, jargony information is just an intentional obfuscation of simple ideas. That's really what the financial crisis was. Bankers took a pile of bullshit and covered it in layers and layers of bullshit, and then covered that with more bullshit, only to have bullshit that was so deep and so thick, that the same bankers that had covered it in those layers in the first place refused to believe that their handiwork could be bullshit at all. They just all convinced themselves that they were geniuses and couldn't go wrong.
Honestly, there were some bits where I struggled to understand what the hell was actually going on. Not in the context of the book's narrative -- that was brilliant -- but what was happening with the financial product (the CDO). But you know what? I'm quite okay with that. I didn't understand it all. But neither did Goldman. ...more
I love narrative nonfiction. It's really the only way I've been able to get through nonfiction and enjoy it5/5 for the first half, 3/5 for the second.
I love narrative nonfiction. It's really the only way I've been able to get through nonfiction and enjoy it.
Flash boys was great. The first half was especially engaging, even though the second half I felt dragged a little.
Flash Boys can be divided into two topics, largely. The first is high frequency trading (HFT). The second is a narration of how a certain individual, Brad Katsuyama, took on big Wall Street banks to end what Michael Lewis called a rigged system.
I'll speak about both.
The thing with HFT is... no one really is entirely sure of what's going on. That was the case a decade ago in the time period the book is based. And I'd say it's the case today as well. Most critique that I've read of Flash Boys is that it oversells just how dominant HFT is. Or just how much money they make. That's perhaps true, to an extent. But none of the critiques really tell me what's really wrong with anything Lewis's written. As a journalist myself, I realise that sometimes writers have to "oversell", but that doesn't make what they write wrong or even misleading. Just well, disappointing? (For whoever feels it's oversold).
I'm a little more bothered by the second arch. Brad might be a great person, but the exchange he started -- IEX -- is after all, a for profit entity that needs to market itself. Flash Boys has marketed it. Now, again, as a journalist, I understand where Lewis may be coming from. It's possible that IEX is genuinely the answer to the scum that HFT is. But the reader's left to take Lewis's word for it. I honestly don't know if IEX is the silver bullet or not, because there's just no way to know. Everything I read online is either written by a vested party, or are claims which don't have sufficient backing.
I'd have rather Lewis didn't fete Brad and IEX to the extent that he did. I'm perfectly fine not having a hero in my story. Regardless, I'd certainly more than like to read more about the inside workings of HFT and how these things work.
Oh I'm also not convinced by the "stock market is rigged" sentiment. Even if all of what Lewis writes is true to the tee, it makes little difference to the individual investor. If Amazon's stock price goes up 10X, the investor gets pretty much 10X, no matter if HFT firms make a killing when the trades actually happen. The stock market is still a marvellous place.
Side note: I couldn't help thinking of an HFT trader as one of those "bullshit jobs" that David Graeber has written about. They really add almost no value to people's lives by existing. I mean, unless you're paid by an HFT firm -- then it's your living. I've stopped making judgements about these things long back, whether being an HFT trader (that complies with the rules) is ethical or not in itself is anyone's opinion, but it's certainly a bullshit job. As long as there's money to be made, I guess....more
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