Liar's Poker Essay

940 Words Feb 25th, 2012 4 Pages
arMary Petritz
Real Estate Seminar
November 10, 2011

Liar’s Poker

Liar’s Poker, by Michael Lewis, is a book that thoroughly looks into the author’s life as a broker on Wall Street working for Salomon Brothers, the most profitable firm in the 1980’s. Michael Lewis graduated from The London School of Economics and decided to take his career into trading when offered a job by the top- trading firm. At this time, the mortgage market started booming, and money was flowing all over Wall Street. The secondary mortgage market was on the up-rise when Michael Lewis accepted a job at Salomon Brother’s. The secondary mortgage market was the selling of bonds, with a promise to be paid back with mortgage loans. The lender, whomever that
…show more content…
The Federal Reserve created a fixed money supply that let interest rates float. It was an inverse relationship with bonds; the value of fixed interest rate bonds would increase or decrease opposite of the interest rates. The change in the interest rates resulted in a gain or loss for the market. The fixed money supply allowed more control over interest rates, which enabled traders to have more control over what they were trading and for how much. The training program at Salomon Brother’s supported the myth that “a great trader is a great savage among trader-savages.” While the bond market was booming, the equity department had its downfalls. The fixed stock commissions ended in 1975, which resulted in the fortunes of the equity department deteriorating. The equity market makes money competing with stockbrokers, while the bond market, Salomon’s to be specific, monopolizes markets. Equity people have less money, but more contentment. Bond people have more money but less contentment. The equity market relies on experience, and not formulas or theories. In “Liar’s Poker,” the bond traders were the fastest-growing group of borrowers in the late 1970s, early 1980s. Due to the ending of the fixed stock commission, bond traders diminished in value. Michael Lewis ended up being the highest paid trainee at Salomon Brother’s and did very well for him self. Salomon Brother’s crashed due to economic downturn, and other companies

Related Documents