Liar’s Poker by Michael Lewis is an unparalleled exposé into the financial world of Wall Street in the 1980s. Published in 1989, the book tells the story of the transition from the traditional partnership-based firms to the modern, immensely profitable corporate entities of the 1990s. Through firsthand accounts, Liar’s Poker captures a time of tremendous change in the financial sector, while giving an inside look at the high-stakes culture of Wall Street.
Lewis, who worked at Salomon Brothers at the time, takes readers through the firm’s travails and successes in the decade preceding the collapse of the “Big Four” investment banks. Liar’s Poker is based on Lewis’ own experiences, as well as those of other Salomon Brothers executives, including John Meriwether and Michael Bloomberg, both of whom rose to become some of the most powerful players in the industry.
The explosive growth of the markets during this time was driven, in part, by the growing use of debt financing and the increased popularity of exotic instruments such as mortgage-backed securities. Lewis describes the ego-driven culture of Wall Street and how transactions between firms and investors were quickly becoming more complex, and the risks of losses greater. The narrative is enhanced by the subtle humor of a frustrated, yet optimistic participant in the financial sector.
While few on Wall Street may have anticipated it, Liar’s Poker predicted the potential threats of greed, gambling and deception that could deeply affect the financial industry. The true power of Liar’s Poker is that it provides an entertaining yet sobering warning of the dangers of disregarding basic principles of finance and accounting.
The book provides an in-depth look into how Wall Street was run in the 1980s, with particular attention to the inner workings of Salomon Brothers. This includes stories of the various personality types and power struggles within the firm, and stories of debauchery and excess that seemed to accompany the burgeoning success of the firm.
Despite its criticism of the lofty lifestyles of Wall Street execs, Liar’s Poker is ultimately a story of opportunity mixed with risk. Ultimately the world of finance, which is portrayed in the book as an unpredictable and sometimes dangerous place, is also a world filled with great potential. Lewis’ book can be seen as both a warning and a reminder that success can never be taken for granted.
Liar’s Poker is an essential read for any student or individual interested in finance and investment banking. Through gripping anecdotes, Lewis offers a factual, hilarious, and sometimes shocking look into the world of high finance. The book is a thrilling ride through the poker game on Wall Street, and the stakes were higher than ever.
