Summary Of Liar's Poker

Liar’s Poker, written by Michael Lewis, is a book describing the day to day challenges and life of traders at Salomon Brothers and other such investment banks. The book starts with the description of Liar’s Poker game which is played on the trading floors of Salomon Brothers Inc. The boss, John Gutfreund, himself challenges the best player in the firm John Merriweather who also happened to be the best trader of the firm. Gutfreund proposed an offer of a single hand of Liar’s Poker worth a million dollar with no bitching and whining from the loser at the end of the game. Liar’s Poker was played with 2 or more players sitting in a circle and each holding a dollar bill. Each player stated some figures like “three fives” meaning the serial number of dollar bills of all players combined contained three fives or the player could say “I doubt it” in which case a single player is
So the other competitors offered them highly lucrative packages and started recruiting talent from Salomon Brothers. This later on proved to be biggest mistake of firm to let go of important traders at the cost of few dollars to rivals who then started sharing mortgage bonds trading knowledge in other firms. The knowledge of mortgage bonds and other firms’ efficiency in trading them bought several buyers on the stage. CMOs(collateralized mortgage obligation) were traded by all the firms and since there were many buyers and demand exceeded supply the mortgages became less attractive and the return on them declined. What followed was depreciation of importance of mortgage bonds in any form and many traders such as Howie Rubin and Smith lost their firms a lot of money because of reading wrong signals from the market. Slowly Ranieri started losing touch on the minute details of the mortgage bonds and was eventually fired from Salomon