Michael Lewis: The Occupational Hazard of Working on Wall Street

Not been around long enough to comment on finance specifically but this is pretty true of all 'experts'. In fact, the more archaic the knowledge you have, the more likely you are to behave this way. Politicians are an easy example, but also consider doctors and physicists- Steven Hawking has no better idea if aliens exist than any of us, yet he feels completely confident making wild predictions about the answer. It is pretty clear to me that most people think they are right about most things. Therefore, the issue is not a higher rate of moral hazard in finance, but that most would rather 'trust' the experts than consider their positions critically.

Bullshit. As far as personal toll goes, that's any high powered career, tech, finance, medicine etc. It sounds like Michael Lewis is trying to sell a book and bolster recognition by trading off the stigma and pathos many people have toward finance. Please name a profession where anything he has said couldn't be extrapolated to fit it as well.

Michael Lewis writes puff pieces that mass consumers can understand. I'm sure the financial analyst at Kellogg gives a crap when corn prices go up and margins on corn flakes take a dive.

And finance people aren't smarter, but I think working in an industry that is so heavy on current affairs gives you an opinion on a diverse range of things. How many of us read the economist or watch BBC. Finance people give a shit.

I have read all of Michael Lewis' books and find them entertaining but he is trying to portray wall street is evil to sell books. First wall street hours are not that crazy, anyone driven by success will putting in those same hours no matter what the career.

Also as TNA said most individuals in finance tend to actually read a lot and know current events. I am of average intelligence but I am prolly reading a book or 2 week on array of topics and all my friends not working in finance tend to never read even the ones who have great jobs. In finance you are required to be up to speed on current events.

Everyone pretends to know more than know. All business is an estimated guest, you open a restaurant you cant guarantee you are going to have the hottest restaurant in town but you want it to be.

Yellow Journalism at its finest.

As others have said, all these points are the same for any professional in any industry - finance, consulting, medicine, tech, law, education, etc.

Michael Lewis is a great story teller but he should go back to writing about baseball and football.

two words to describe Michael Lewis: Penis envy.

The industry isn't perfect, and I myself have second thoughts at times. But honestly, Lewis is no different than Ivy Tower left-wing professors: detached from reality, also only care about themselves, and self-serving at the expense of others.

"a forecasting service for a coin-flipping contest"

This is a real gem though right? If there are no coinfipping contests yet we should organize one. And we should get John Madden as commentator.

You can apply this to any profession.

Michael Lewis is a hack.

Occupational Hazard of Being a Hack: you tend to think that everyone tends to actually do what you think they tend to do.

While some of the flaws in the system he relies on to make himself into a cleaner cut Michael Moore are legitimate, his level of financial sophistication precludes him from getting a free pass for trying to understand a very complex problem as a layperson. He knows much better, yet he plays dumb.

He relies on misappropriations of logic and fact to feed into the populace (dumb) media narrative.

But he sure does sell a lot of books.

He's as cancerous in the media as the bad actors are on Wall Street. On a side note, I actually think the bad in the media is far more destructive than the bad on Wall Street. At least Wall Street never claimed to provide a public service or to serve anyone other than its own principals. As opposed to Lewis who rides around on his high horse hording gobs of canned ham into the mouths of the masses while telling them its a filet cooked in goosefat.

He's just trolling at this point.

I understand the point Lewis is trying to make, don't agree with it, but for one he seems to be holding tech people out as an ideal. I don't look down at tech people at all but most of the people in tech today are not comparable to the Xerox Parc guys of old or Gordon Moore, or Jobs and Gates. They're not making life and societal advances that greatly improve the human condition necessarily. They're figuring out faster ways to post pictures of people's cats, kids and craft project. But that's another story. I'm not against techies, but don't try to pretend like they're all curing cancer.

Point 1.

Finance isn't a science or engineering. Neither are a large percentages of occupations. We're not looking for hard proofs or discovering the ultimate truths of the universe. And I don't think any kid getting out of school thinks they're doing so. No one has the delusion that because they got the coveted TMT GS analyst gig that they're going down in the history books as Jonas Salk. It's about the money. He has a valid point earlier in the article about the prestige factor though. It does sound good to say at Christmas dinner your senior year that you have that gig lined up when your uncle asks what you're doing next year.

In addition, his comparison of Wall Street jobs to coin flipping is hyperbole to a degree I can't really define. I'll tell you what Mike, my 6 year old son can flip a coin like the best of them. I'm going to bring him into work and make him an MD and see how well he does at picking what companies to acquire and let him negotiate the finer points of the deal. If any of you guys want him to sit on your trading desk or run a hedge fund, he's available. Just PM me. My son doesn't have to work in PE: hedge funds are fine and I'll even let him have a career in sell-side IB (I just won't bring that up when I'm at the country club).

Point 2.

This is true in nearly every industry, especially at the entry level.

The guy who goes to work for a telco company as an engineer most likely isn't going to tell the CEO or the media that their cell phones or transceivers on their towers are giving everyone head cancer unless he really has hard proof that they are indeed carcinogenic. It would be career suicide to do so unless it was true. Lower lever traders and structured finance guys didn't think they were writing bad paper, they were just doing their jobs. And the guys who actually had the decision making ability to hold that paper got hurt personally far more than the average Joe when the market collapsed. Ask any former senior Lehman guy who had a good deal of their net worth tied up in company stock. Ask Dick Fuld.

Are there shysters on the Street? No doubt. There are also shithead doctors who run pill mills and social workers who embezzle money.

And I admit, Wall Street was wrong in a lot of the mortgage mess. I don't think it was malicious but a small percentage of those who worked in securitization and structured finance messed up by bundling loans together so the rest of us get to wear a scarlet A. You know who else was wrong? People who lied on their mortgage apps and took out irresponsible amounts of money to buy a house and defaulted on their mortgages. And if their excuse is that they're too stupid to know what a variable rate mortgage is, they're too stupid to own a house. And Washington DC who not only encourages non-qualified buyers to take out mortgages via the CRA, but they actually create a few agencies to buy up all of the notes to create excess liquidity in the market and implicitly back it with the full faith and credit of my government. The one I pay a ton of taxes to. Thank you for defaulting on your mortgage and knowing that I would be happy for my tax money to go to your house.

Point 3

I agree, the financial markets could use innovation. But do you know why that's so difficult? Not because government can not effect change in finance but precisely because government regulates the hell out of it. It's very difficult to revolutionize a very mature industry (Jesus turned the tables on the money lenders two millennia ago, if you believe that type of stuff) so most of the innovation happened a long time ago. And if you did want to innovate much of it, you need an outstanding amount of capital to do so because the regulatory burdens are so high.You know what's not regulated and does have regular innovations? Tech.

And the newcomer who may be, in his mind, most likely to innovate doesn't know the intricacies of the business because it is so complex and regulated. You could have invented Facebook in your dorm room 10 years ago because someone did. It would have been very difficult to be Lew Raneiri 30 or 40 years ago and securitize the first mortgages in his dorm room unless he had a cadre of lawyers, traders, sales guys and a butt load of capital to actually do it.

I'm not against all regulation, but Lewis at least needs to admit that it hinders the ability to innovate.

It's too bad, I used to like Michael Lewis. I know it probably his goal but when I read that book early in college it made me want to get into finance. Now he's just a preacher bending reality to fit his point of view.

People actually still care what Michael Lewis has to say?

Why all the hate? I really like Lewis' books and his column on bloomberg used to entertain me for hours when I first started. He has an opinion of Wall Street that is shared among a lot of people working on the Street and I respect that; things changed since the junk bonds he used to peddle, and things are cleaner - but there are still some grey area in banking. What the big banks are selling is a white washed image like any large corporation does, you just need to dig a little bit to realize what type of shit goes on, or just hear the news about LIBOR rigging etc... Lewis might go for the flamboyant claim that sell; but we would all do the same if we were writing a book. You get a lot more interest from people if you talk about a brash MD who farts all the time, then from a structured geek whose sole purpose in life is work and math equations.

Back to OP - it's not all black and white, and yes Lewis tends to portray it that way to sell. Like everything there is some good and some bad, read and work and make your own opinion of it.

Also OP you talk about red bull and 100+ hours, that's M&A and to a lesser extent DCM and ECM. Lewis talks about markets and that is what he relates in his book. No one gives a f.cuk about your red bull guzzling bankers, those are in cubicles doing excel spreadsheets and will have no opinion or very little do to with the points you mentioned from Lewis.

I agree that Lewis tends to sensationalize a lot and definitely plays off the negative stigma of the industry but I'm surprised by the amount of negativity and bashing of his core points. To play devil's advocate, here's my honest, and potentially unpopular opinion on the 3 points:

1) You tend to pretend to know more than you do I very much agree with this. Our industry is made up of a lot of very intelligent people, but at the end of the day, we're always on the outside looking in. Clients are the ones living and breathing their industry everyday, and its up to finance professionals to try and keep up with industry trends with thorough research and make an informed opinion based on their findings. The coin-flip example is obviously an extreme exaggeration, but the core point is that bankers often know less than their clients, as there's no substitute for actually working in the industry rather than for the industry.

2) You tend to find it hard to form deep attachments to anything much greater than yourself. Everything after the first two sentences is just catnip for the anti-finance crowd, but again I don't think the core point at the beginning is ridiculous. In 2008, a lot of us saw people who either lost their jobs because of downsizing or because their entire firm went under. Most of them bounced right back, took their stuff across the street and kept doing the same thing just with a different name on their business card. When times are bad, people may be forced jump ship, when times are good, people jump ship for higher pay as other banks look to expand their ranks. In either cycle, it's easy to see why most bankers don't feel a sense of loyalty to their firms.

3) You tend to feel the pressure to not challenge or question the existing arrangements This point really resonates with me. Anyone who has worked for more than one firm has seen the same slides, analysis, etc. sliced and diced 5 different ways to ultimately get to the same result. Banking is a lot of pack theory, i.e. we need to show X,Y, and Z because our competitors will be showing the same thing. The truth is, clients will choose you over competitors because of some differentiating factor (who has best access to the buyers, who has the most relevant transaction experience, who did they get along with the best, which firm has the best reputation, etc.) Once you get past the 5 slides that outline these points, you end up with 70 other boilerplate ones that people feel obligated to show because their competitors will do the same, and you don't want to appear lazy/less prepared. How many of you junior bankers out there have been working away on some random slide at 1am, thinking to yourself that the slide will have no bearing on whether you'll win the business or not?!

There you have it. Yes, Michael Lewis goes overboard with his examples but at the end of the day he's made a decent living sensationalizing topics to make them more appealing to the average reader, moviegoer, etc. Personally, I think his fundamental points are actually pretty accurate.