Liar's Poker and the end of Wall Street

Michael Lewis wrote a couple of great books: Liar's Poker, which chronicled his time on Wall Street, as well as Moneyball, which covers the art of statistics & strategy in major league baseball. Recently he published an update on the current malaise affecting Wall Street, which is a very good read. Worth it just for the computer-generated picture of a supine bull in the street.


Here's a short excerpt:

Eisman stuck to his sell rating on Lomas Financial, even after the company announced that investors needn’t worry about its financial condition, as it had hedged its market risk. “The single greatest line I ever wrote as an analyst,” says Eisman, “was after Lomas said they were hedged.” He recited the line from memory: “‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.” A few months after he’d delivered that line in his report, Lomas Financial returned to bankruptcy.

The article also points out that credit quality on fixed income investments associated with consumers always strengthen in March and April. Why? Tax refunds.