Posts Tagged ‘review’

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Liar’s Poker by Michael Lewis – book review

Friday, September 18th, 2009

Liar’s Poker is the story of Salomon Brothers as told through Michael Lewis. He joined Salomon in the mid-80’s and went through their training course before becoming a bond salesman.

The story is a mixture of his personal experiences of learning how to sell bonds and a look at the 80’s history of Salomon and their mortgage bond department.

On a personal level he progressed from a clueless beginner into someone who was making multi-million dollar deals. He spent time on both the London and New York trading floors and describes the differences between them.

On a more corporate level Michael gives an account of the company politics at Salomon. He talks about Salomon boss John Gutfreund and other main players such as Lewie Ranieri head of mortgate bonds, Tom Strauss head of government bonds and Bill Voute who was head of corporate bonds.

Later on the competition that Salomon faced from Michael Milken’s Drexel is discussed. Drexel were one of the companies that took a large amount of business away from Salomon.

If you want to learn about life at Salomon brother this is the book for you – it is a good entertaining read.

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The Naked Trader by Robbie Burns – book review

Thursday, September 3rd, 2009

Robbie Burns quit his job in 2001 to become a full time trader in the stock market. He has proved to be a very successful trader building up a substantial sum in his ISA pension.

In this very light hearted book he explains how he goes about picking the right shares to invest in. He discusses how to understand company finances, how to choose when to buy and when to sell.

He talks about how to identify problems in annual reports by using his traffic light system, and there is a brief introduction to more advanced topics such as using Level 2 and direct market access.

His strategies are suitable for trading over a medium term period of weeks or months rather than shorter time frames.

There are some fun chapter with reader’s letters and a section on big mistakes that traders have made.

The book is written in a very chatty style. In between the ‘meat’ are references to eating toast and having a nap. The style will appeal to people who like the easy to read nature of the ‘dummies’ series of book.

This is a quick read, but it is highly recommended – especially if you are new to trading and want a simple introduction to playing in the stock market.

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Fool’s Gold by Gillian Tett – Book review

Thursday, August 27th, 2009

Fool’s Gold is the story of how mortgaged backed CDOs (collatorised debt obligations) were created and how they played a major role in the bank collapses and recession of 2007-2009.

The book largely focuses on how J.P. Morgan set up the teams of people who created these products and how the products evolved over time. J.P. Morgan created these new financial derivatives as a way to spread risk. They believed that their creations would make the world economy safer by allowing risk to categorised, insured and dispersed.

The author argues that the problem was not so much caused by the creation of these financial derivatives by J.P. Morgan, but by the way they were warped by other profit hungry banks into a tool that allowed huge quantities of sub-prime loans to be handed out and then sold on to other institutions who didn’t fully understand what they were buying.

The first two thirds of the book are largely concerned with how these new financial innovations were created. It follows their gradual evolution from a risk dispersal product, to a product which had the unfortunate side effect of concentrating huge amounts of risk on the balance sheets of companies across the world.

The final third of the book tells the fast paced story of the collapse.The collapse of Bear Stearns and the role that J.P. Morgan played in saving them are covered, as is the collapse of Lehman Brothers and AIG.

If you want to gain a further understanding of the credit crunch – particularly from the perspective of the J.P. Morgan bankers who were watching with horror as the situation developed – then this is a good and easily readable book. The actual bank collapses are covered very quickly so if you want a detailed account of these then you may have to look elsewhere.

Overall an enjoyable and informative read.

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Review: Cityboy: Beer and Loathing in the Square Mile

Friday, June 26th, 2009

“Cityboy”: Beer and Loathing in the Square Mile is a novel by Geraint Anderson based on the years he spent working as a utilities analyst for a variety of banks in the City of London. Geraint first started writing an anonymous column called ‘Cityboy’, which appeared each week in the free evening paper ‘thelondonpaper’. The column became very popular as he revealed the stories of excess and backstabbing that were an everyday event in the line of work in which he was involved.

In 2008 he decided to reveal his identity and this book was timed to be released soon after. As luck would have it (for him!) he released the book just as the media’s attention was focusing on the finance industry due to the credit crunch and impending recession.

Geraint makes it clear that this book isn’t autobiographical. It is a novel, but he says the characters and events are typical of what he observed whilst working in the square mile. The ‘hero’ of the story is Steve, a bit of a hippy with not much ambition and lacking in a career until his brother arranged an interview with a French bank. Somehow he got the job and was plunged into the exiting world of being a utilities analyst.

Geraint clearly doesn’t think highly of the life of a financial analyst. He describes the job as being about coming up with a vaguely plausible explanation of which way a share price will move and occasionally publishing these findings as a research note. It doesn’t matter if the note is wrong as long as it has been written in a way that covers your back! Once the note is published the analyst will travel round trying to persuade clients of the value of the note, in the hope that they will then place orders and trades with the bank. More trade equals more bonus – and it is bonuses which appear to be the major motivating factor of the people in the book.

Steve doesn’t take the job too seriously until he has an encounter with the number one rated utilities analyst – Hugo Bentley. Hugo is arrogant, successful, rich – everything the young Steve wants to be. He irritates Steve to such an extent that Steve makes it his life’s goal to beat Hugo to the spot of being the number one rated utilities analyst.

To do this he has to attract more and more commission from his clients, and work an every increasing number of hours. Along with the hours comes a whole host of bad behavior. Drug usage and heavy drinking are all in a days work for Steve, as are expensive holidays and even more expensive bets.

This book is a fun and quick read. It will certainly make you more skeptical of what an analyst does for a living, and probably make you jealous that some people can make so much, for doing so little.

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