9 – Relative Poverty
The more I read this book, the more I wished I had read it earlier. Or perhaps not, if I had read the book, say 5 years earlier, I might have understood the book quite differently.
The 300 pages were gripping accounts of various stories at Salomon Brothers when it was at its peak during most of 80’s. It was a time when the industry was brimmed with innovation, unmistakable greed and greedy mistakes. This is the second book I have read from Michael. Similar to Moneyball, this book convincingly reconstructed events that took place during that period with just enough technical details to keep it going for less finance savvy readers. Michael used his razor sharp pen artfully performed an autopsy of maniac era of gold rush of financial market. The entire book was narrated in a light hearted tone with a generous doze of self-depreciating jokes. Page turner, finger licking “read”!
Salomon Brother was the place to be. Elite graduates from Ivy leagues were groomed in a training room where seasoned traders shared how to survive in a jungle (trading floor); it was a distinguished honor to work as a bond trader and an equally distinguished disgrace to work as an equity one; Michael’s name was cheered over the speaker to congratulate him how much money he made for the company at the cost of some ill-fated client; the harbinger of mortgage backed security that rooted subprime crisis two decades later was a fat Italian who worked his way from mail room; Salomon Brothers ripped off their clients as if there is no tomorrow, believing that it would always be the only bond trader in the market; money showered from sky more frequently than water that nourished arrogance and extravagance. The legendary bond trader Lewis Ranieri who built the mortgage backed security market single handed pledged his unshakable faith in the company because one Salomon Brother MD showed him a random kindness. Lewis and his army of foul mouthed, fat Italian traders had the market entirely on their terms but couldn’t find a way to stay in the company. Eventually, the internal politics irreversibly gnawed the company inside out. Michael left the company and parted with his sure route to becoming a millionaire before 30. In his own words, he realized that the ability to make money isn’t the only parameter to measure your worth. However rich one becomes, he just escapes one level of poverty and enters another.
Although proprietary trading has been made the taboo of the industry, the withered glory still lingered on the street as well as among universities. With the rich living experience at center of the market, Michael was able to write with a pair of keen eyes that just know where and what to look. A plethora of seemingly inexplicable information was carefully made meaningfully and interesting. A great book I immensely enjoyed.