Liar's Poker Book Summary - Liar's Poker Book explained in key points

Liar's Poker summary

Michael Lewis

Rising Through the Wreckage on Wall Street

Brief summary

Liar's Poker by Michael Lewis is a captivating memoir that takes us behind-the-scenes of Wall Street in the 1980s. Lewis, a former bond salesman, exposes the greed and excess that drove the financial industry to the brink of collapse.

Table of Contents

    Liar's Poker
    Summary of 12 key ideas

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    A series of government regulations in the 1970s made firms in the bond market more profitable.

    When a government or company wants to raise money by borrowing, they can issue bonds.

    In return for receiving a loan, the government or company gives the lender a promise to pay interest on the loan for a fixed period. This promise – rather like an I.O.U. note – is the bond, and it can be traded; whoever owns the bond receives the interest.

    Before the late 1970s, bonds were not prestigious or profitable products on Wall Street. Stocks, which give holders actual shares in companies, were much more profitable and sought after.

    However, changes in government regulation began to make bonds a more profitable area of business.

    The first of these changes happened in 1975, when the US government made regulations that reduced the profitability of stocks.

    Before this change, stock trading was a highly lucrative business. Those who sold stocks could make huge amounts in fees or commissions from doing very little work, so naturally they concentrated their efforts on trading stocks rather than bonds. The regulation changed the way that these fees were determined, and the amount that one could charge for trading stocks massively declined.

    Although this regulation lessened the amount of money you could make from stocks, they were still more profitable than bonds. But four years later, in 1979, another change in government regulation brought bonds closer to stocks in profitability.

    In this year, the chairman of the US Federal Reserve, Paul Volcker, allowed interest rates – which had previously been fixed – to fluctuate. Bond prices have a strong relationship to interest rates. When interest rates go down, bond prices go up. This regulation, therefore, provided possibilities for bond prices to rise rapidly. This made them attractive as financial investments.

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    What is Liar's Poker about?

    Liar's Poker tells the story of Salomon Brothers, a leader in the bond market in the 1980s. This tell-all account of the author’s experiences at Salomon Brothers explains how the firm became one of the most profitable investment banks on Wall Street through its role in establishing the mortgage bond market, and what it did once it reached the top.

    Liar's Poker Review

    Liar's Poker (1989) is a gripping and eye-opening account of the cutthroat world of Wall Street in the 1980s. Here's why this book is worth your time:

    • The author's firsthand experience as a bond trader gives readers an insider's perspective of the high-stakes world of finance.
    • The book exposes the dark underbelly of the financial industry, revealing the greed, deception, and excess that were prevalent during that era.
    • Through sharp wit and humor, the author brings to life the absurdity and chaos of Wall Street, making it a compelling and entertaining read.

    Who should read Liar's Poker?

    • Anyone interested in the history of Wall Street
    • Anyone who wants to know how past events helped shape the present
    • Anyone who wants to know what mortgage bonds are and how they developed

    About the Author

    Michael Lewis started his career as a bond salesman at the London branch of Salomon Brothers but later left investment banking to pursue a career as a financial journalist. He published his first book, Liar's Poker, in 1989. Lewis has since written many bestselling titles, including Moneyball, The Blind Side and Boomerang.

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    Liar's Poker FAQs 

    What is the main message of Liar's Poker?

    The main message of Liar's Poker is a captivating exploration of Wall Street's greed and excesses during the 1980s.

    How long does it take to read Liar's Poker?

    The reading time for Liar's Poker depends on the reader's pace, but it typically takes several hours. The Blinkist summary can be read in 15 minutes.

    Is Liar's Poker a good book? Is it worth reading?

    Liar's Poker is a compelling read that sheds light on the inner workings of Wall Street. It's definitely worth your time.

    Who is the author of Liar's Poker?

    The author of Liar's Poker is Michael Lewis.