Wall Street Poker Rules

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When asked why she thought these Wall Street guys could be good at poker, Selbst said, 'Absolutely, there's so many similarities, cross-overs between the two industries. You're taking calculated risks, processing a world of information that's at your disposal.' Selbst also discussed how the math aspect of poker favors investors. Luckily for Wall Street, poker's popularity appears to be soaring. On March 28, Poker News Team reported that the TV show High Stakes Poker had seen a dramatic rise in ratings, including a 27% jump among adults 18-49 years old. Ratings among men aged 25-54 (said to be the target audience of the show) are said to have risen by 25%. The 7 Card Stud Wall Street Poker Card Game gets interesting when each player has to acquire another card so they have to either buy it from the 'Wall Street' or take a card from the deck. Each of the four cards is sold by a unit price as decided in the beginning of the game, which is paid to the pot.

Liar's Poker is a non-fiction, semi-autobiographical book by Michael Lewis describing the author's experiences as a bond salesman on Wall Street during the late 1980s.^[1] First published in 1989, it is considered one of the books that defined Wall Street during the 1980s, along with Bryan Burrough and John Helyar's Barbarians at the Gate: The Fall of RJR Nabisco, and the fictional The Bonfire of the Vanities by Tom Wolfe. The book captures an important period in the history of Wall Street. Two important figures in that history feature prominently in the text, the head of Salomon Brothers' mortgage department Lewis Ranieri and the firm's CEO John Gutfreund.

The book's name is taken from liar's poker, a high-stakes gambling game popular with the bond traders in the book.

Overview[edit]

The narrative of Liar's Poker jumps back and forth between two different threads.

One thread is autobiographical: it follows Lewis through his college education, his hiring by Salomon Brothers (now a subsidiary of Citigroup) in 1984, and his training at the firm. It is a first-person account of the personalities, workplace practices, and culture of bond traders. Several high-ranking Salomon Brothers employees of the era, such as arbitrageur John Meriwether, mortgage department head Lewis Ranieri, and firm CEO John Gutfreund, feature prominently.

The book's other thread gives an overview of Wall Street history before focusing on the history of Salomon Brothers particularly. This thread is less dependent on Lewis' personal experience and features quotes drawn from interviews. It is primarily concerned with how the Salomon Brothers firm almost single-handedly created a market for mortgage bonds that made the firm wealthy, only to be outdone by Michael Milken and his junk bonds.

Biographical section[edit]

Lewis was an art history student at Princeton University, who wanted to break into Wall Street to make money. He describes his almost pathetic attempts to find a finance job, only to be roundly rejected by every firm to which he applied. For example, in 1982 Lehman Brothers had rejected his employment application. He then enrolled in the London School of Economics to gain a master's degree in economics.

While in England, Lewis was invited to a banquet hosted by the Queen Mother, where his cousin, Baroness Linda Monroe von Stauffenberg, one of the organizers of the banquet, purposefully seated him next to the wife of the London managing partner of Salomon Brothers. She hoped that his intelligence might impress her enough for her to suggest to her husband that Lewis, be given a job with Salomon Brothers. The strategy worked, and Lewis was granted an interview and subsequently received a job offer.

Lewis then moved to New York City for Salomon's training program. Here he was appalled at the sophomoric, obtuse and obnoxious behavior of some of his fellow trainees, and indoctrinated into the money culture of Salomon Brothers and the Wall Street culture as a whole.

From New York Lewis was shipped to the London office of Salomon Brothers as a bond salesman. Despite his lack of knowledge, he was soon handling millions of dollars in investment accounts. In 1987 he witnessed a near-hostile takeover of Salomon Brothers but survived with his job. However, growing disillusioned with his work, Lewis quit the firm at the beginning of 1988 to write this book and become a financial journalist. The first edition was published October 17, 1989.

Wall Street culture[edit]

The book is an unflattering portrayal of Wall Street traders and salesmen, their personalities, their beliefs, and their work practices.

The book's name is taken from liar's poker, a high-stakes gambling game popular with the bond traders in the book.

Overview[edit]

The narrative of Liar's Poker jumps back and forth between two different threads.

One thread is autobiographical: it follows Lewis through his college education, his hiring by Salomon Brothers (now a subsidiary of Citigroup) in 1984, and his training at the firm. It is a first-person account of the personalities, workplace practices, and culture of bond traders. Several high-ranking Salomon Brothers employees of the era, such as arbitrageur John Meriwether, mortgage department head Lewis Ranieri, and firm CEO John Gutfreund, feature prominently.

The book's other thread gives an overview of Wall Street history before focusing on the history of Salomon Brothers particularly. This thread is less dependent on Lewis' personal experience and features quotes drawn from interviews. It is primarily concerned with how the Salomon Brothers firm almost single-handedly created a market for mortgage bonds that made the firm wealthy, only to be outdone by Michael Milken and his junk bonds.

Biographical section[edit]

Lewis was an art history student at Princeton University, who wanted to break into Wall Street to make money. He describes his almost pathetic attempts to find a finance job, only to be roundly rejected by every firm to which he applied. For example, in 1982 Lehman Brothers had rejected his employment application. He then enrolled in the London School of Economics to gain a master's degree in economics.

While in England, Lewis was invited to a banquet hosted by the Queen Mother, where his cousin, Baroness Linda Monroe von Stauffenberg, one of the organizers of the banquet, purposefully seated him next to the wife of the London managing partner of Salomon Brothers. She hoped that his intelligence might impress her enough for her to suggest to her husband that Lewis, be given a job with Salomon Brothers. The strategy worked, and Lewis was granted an interview and subsequently received a job offer.

Lewis then moved to New York City for Salomon's training program. Here he was appalled at the sophomoric, obtuse and obnoxious behavior of some of his fellow trainees, and indoctrinated into the money culture of Salomon Brothers and the Wall Street culture as a whole.

From New York Lewis was shipped to the London office of Salomon Brothers as a bond salesman. Despite his lack of knowledge, he was soon handling millions of dollars in investment accounts. In 1987 he witnessed a near-hostile takeover of Salomon Brothers but survived with his job. However, growing disillusioned with his work, Lewis quit the firm at the beginning of 1988 to write this book and become a financial journalist. The first edition was published October 17, 1989.

Wall Street culture[edit]

The book is an unflattering portrayal of Wall Street traders and salesmen, their personalities, their beliefs, and their work practices.

During the training sessions, Lewis was struck by the infantilism of most of his fellow trainees. Examples included yelling at and insulting financial experts who talked to them, throwing spit balls at one another and at lecturers, calling phone sex lines and then broadcasting them over the company's intercom, gambling on behavioral traits (such as how long it took certain trainees to fall asleep during lectures), and the trainees' incredible lust for money and contempt for any position that did not earn much.

Lewis attributed the bond traders' and salesmen's behavior to the fact that the trading floor required neither finesse nor advanced financial knowledge, but, rather, the ability and desire to exploit others' weaknesses, to intimidate others into listening to traders and salesmen, and the ability to spend hours a day screaming orders under high pressure situations. He referred to their worldview as 'The Law of the Jungle.'

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He also noted that, although most arrivals on Wall Street had studied economics, this knowledge was never used; in fact, any academic knowledge was frowned on by traders.

Lewis also attributed the savings and loan scandal of the 1980s and 1990s to the inability of inexperienced, provincial, small-town bank managers to compete with Wall Street. He described people on Wall Street as masters at taking advantage of an undiscerning public, which the savings and loan industry provided in abundance.

Catch phrases[edit]

• Big Swinging Dick — A big-time trader or salesman. ('If he could make millions of dollars come out of those phones, he became that most revered of all species: a Big Swinging Dick.' p. 56.) The opposite of this term is Geek, used to refer to a just-hired trainee.
• Equities in Dallas — A particularly undesirable job within a finance firm. ('Thus, Equities in Dallas became training program shorthand for 'Just bury that lowest form of human scum where it will never be seen again' p. 58.)
• Blowing up a customer — Successfully convincing a customer to purchase an investment product which ends up declining rapidly in value, forcing the client to end up withdrawing from the market.
• Feeding Frenzy — The Friday-morning meal shared by a certain clique of bond traders. At this meal, traders would order astounding quantities of take-out food, far more than they could eat (e.g., a five-gallon tubs of guacamole with an order of $400 worth of Mexican food). The traders would then compete with each other to see who could display the most gluttony.
• The Human Piranha — Nickname for an employee ^[2] at Salomon Brothers who constantly used the word 'fuck' and its variants in his speech. A reference to Tom Wolfe's character in The Bonfire of the Vanities.
• No Tears — Used to describe a preset alternate rule Michael Lewis describes in the book, John Gutfreund challenges John Meriweather to a game of liar's poker, in which he states 'no tears' which means players of the game who lose can't complain about losing afterwards.

Reception[edit]

Despite the book's quite unflattering depiction of Wall Street firms and many of the people who worked there, many younger readers were fascinated by the life depicted. Many read it as a 'how-to manual' and asked the author for additional 'secrets' that he might care to share.^[3]

See also[edit]

• Lewis, Michael, The End, Condé Nast Portfolio, December 2008. Written by Lewis, this cover story can be read as the epilogue or wrap-up of Liar's Poker.
• David, Greg, 'The Securities Industry and New York City'^{[permanent dead link]}, Financial History, Museum of American Finance, Spring/Summer 2009.

References[edit]

1. ^Lewis, Michael, Liar's Poker, W.W. Norton & Company, 1989. ISBN0-393-02750-3. 'Archived copy'. Archived from the original on 2009-05-01. Retrieved 2009-05-25.CS1 maint: archived copy as title (link)
2. ^'The Human Piranha' is said to be Tom Bernard[1] who ran trading businesses for Salomon Brothers, Kidder Peabody, and Lehman Brothers for twenty-eight years on Wall Street.
3. ^ Simon Johnson and James Kwak, '13 Bankers: The Wall Street Takeover and the Next Financial Meltdown', (New York: Pantheon Books, 2010), p. 113-114 'citing' Michael Lewis, 'The End' 'Portfolio,' Dec. 2008

External links[edit]

• Liar's Poker (book details) - The Official Michael Lewis Website

Wall Street Poker Rules Online

Historical Parallels

In a May 16, 2010 article, the Los Angeles Times revealed the aggressiveness with which Wall Street is pursuing poker experts. Danon Robinson, a partner at Toro Trading, was quoted saying that 'if someone's been successful at poker then there's a good chance they could be successful in this business.' In fact, Robinson said, lack of interest in poker was 'a red flag' and 'almost the equivalent of not reading the Wall Street Journal.' Hedge fund executive Aaron Brown, meanwhile, said that Wall Street trading requires a steely maturity in the face of risk that is difficult to acquire 'unless you put the money on the table at some point in your life.' Rich Blake described a similar intangible in a 2007 ABC News article when he spoke of a 'penchant for risk-taking and a dispassionate regard for large sums of money.'

Today's traders are not the first to spot parallels between gambling skills and trading instincts. In the 1989 classic Liar's Poker, Michael Lewis introduces readers to Howie Rubin. Rubin, bored with being a chemical engineer, taught himself to count cards and parlayed $3,000 into $80,000 over the course of two years in Las Vegas. Using his skill in blackjack (which is among the few 'non-independent outcome games' in the casino), Rubin became a star trader in Salomon Brothers' mortgage trading department. According to Rubin, 'the trading floor at Salomon Brothers felt like a casino 'because it required making bets and handling risk 'in the midst of a thousand distractions.'

Poker-Themed Training Programs

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Some Wall Street firms are going so far as to make poker an integral part of their training programs. Susquehanna International Group, based in Philadelphia, actually issues poker texts such as Hold ‘Em Poker and The Theory of Poker as mandatory reading. The former, described as the 'first definitive work on hold'em poker', was published in 1976 and aims to educate beginners on the basics of the game. Topics covered include the importance of position, key 'flops,' semi-bluffing, strategies before the flop, the free card and how to read hands. The Theory of Poker, meanwhile, is a more sophisticated and intellectual treatment of poker fundamentals. Written by poker pro David Sklansky, the book 'discusses theories and concepts applicable to nearly every variation' of poker. The value of deception, psychology, heads up play, implied odds and even game theory are thoroughly covered from the standpoint of an aspiring poker player. Additionally, readers are introduced to the Fundamental Theorem of Poker and how it affects game play.

After digesting these books, new hires at Susquehanna are asked to spend a full day each week absorbing poker concepts – by actually playing the game competitively. When asked about the rationale for this unorthodox training approach, program director Pat McCauley said 'we are trying to teach people how to be good decision-makers under uncertainty.' That said, the poker-based training at Susquehanna is not just footloose and fancy-free fun and games. Rather, the training program and its poker games are run in a methodical and systematic manner. 'It's not the stereotypical stuff with bluffing', McCauley insists – 'it's real science'

Poker On The Rise

Wall Street Poker Rules 34

(Yannick Croissant)

Luckily for Wall Street, poker's popularity appears to be soaring. On March 28, Poker News Team reported that the TV show High Stakes Poker had seen a dramatic rise in ratings, including a 27% jump among adults 18-49 years old. Ratings among men aged 25-54 (said to be the target audience of the show) are said to have risen by 25%. The Los Angeles Times (citing research from PokerAnalytics) revealed that 6.8 million people played 'at least one hand of online poker for money' in 2009 – a 29% increase over 2008 and roughly three times 2005's poker participation. From the standpoint of Wall Street's investment houses, the surge in poker's popularity represents a growing crop of future hires who are both comfortable placing large 'bets' and undeterred by occasional losses.

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Furthermore, Wall Street offers an opportunity that few hardcore poker junkies can resist – higher stakes and upside. A professional trader routinely makes trades worth several million dollars each. Make more good trades than bad, and you'll be rewarded with a lucrative year-end bonus. At any rate, it appears that Wall Street's once-impenetrable barrier of connections, degrees and business experience is crumbling on the altar of raw poker ability.

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