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March 29, 2010

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I, too, enjoy reading Lewis' articles once in a while. However, he's starting to sound like a broken record. According to his oversimplistic view of the financial world, all the wrongdoing that ever happens on Wall Street is due to "greed" (whatever that is). Well, a system in which the watchdogs do their job, and in which the incentives are properly aligned should be somewhat robust to "greed", right?!

In any case, I have been waiting for almost 3 years for this movie, and I am glad I won't have to wait much longer.

I found "The Blind Side" very enjoyable although sometimes overwritten. I haven't read "Liar's Poker", though, which would be a lot more relevant here. I was surprised by Lewis's vehemence against Wall Street, for instance when he writes: "it’s difficult to tell a story about the corruption of character when everyone in it is already corrupt." That sounds a tad extreme. Maybe he feels that the many people who have read "Liar's Poker" expect him to rail against greed no matter what.

To go back to the movie's impact for a second, I do believe a lot of people out there admire Gordon Gekko. For instance, his Facebook page - most likely created to prepare for the release of the movie sequel - has over 7,000 fans.

I have read "Liar's Poker", and I find it an interesting caricature of the 1980's. I don't believe that Wall Street has remained the same. Traders these days tend to be a bit more cerebral, in my humble opinion. Lewis says that greed still rules, but what is in a word? What is his definition of greed?

I know a lot of guys whose interest in Finance (and Business in general) can be traced back to watching Gordon Gekko in the 1987 movie. My opinion is that Gekko's power to wreak havoc as he wishes (without any punishment) is greatly alluring to easily impressionable young males with mild sociopathic tendencies. Gekko symbolizes the modern Genghis Khan, and that appeals to (some) men's most primitive instincts. After all, everyone knows that etiquette and restraint are feminine traits ;-)

"Mild sociopathic tendencies"? lol! And here I was, saying that Michael Lewis was a tad extreme :)

I do see your point. It can be exhilarating for some people to be in control and do as one pleases without getting caught. Restraint doesn't make them feel powerful. I'm sure one's attitude to Gordon Gekko is a great predictor of personality type.

Lewis is not the only one to have written about the excesses of the 1980s Wall Street. Tom Wolfe wrote "The Bonfire of the Vanities" in the mid-1980s. The main difference between the two authors is that Wolfe is clearly a much superior writer. By the way, have you read Wolfe's 2007 article "The Pirate Pose"? ( http://www.portfolio.com/executives/features/2007/04/16/The-Pirate-Pose ) I find this passage quite illuminating:

"Practically all of these people love the pirate pose, not because they’re out for ill-gotten booty—although many of their detractors would dispute that—but because they love the image of the pirate as freebooter. The freebooter’s success does not depend on that machine for work known as bureaucracy. His success is all his. (...) The freebooters have only contempt for other types of money managers, who always play it safe. They reserve a special scorn for mutual fund managers, a breed they call “pure vanilla.” Corporate C.E.O.’s don’t come off much better, not even “superstars” such as Lee Iacocca and Jack Welch. (What’s the big deal about Iacocca? His Chrysler “turnaround” depended on a government bailout. And Welch—you would have to be a pretty dim bulb, in a manner of speaking, not to be successful with General Electric, which is part of the business world’s wholly rock-solid trinity, along with Otis Elevator and the Federal Reserve.) C.E.O.’s are people who expend their energies in binges of insincerity, holding the hands of shareholders and board members, constantly “negotiating” with government, with labor, and with God knows who else, constantly temporizing, compromising—resorting to flattery and “charm,” both of which are unmanly—striving to look dignified, clad in the obligatory dark suit, white shirt, and red or Arctic-blue necktie. That goes for C.E.O.’s and everybody else who works in investment banking, for the Merrill Lynches and Morgan Stanleys, with one exception: the traders. THE TRADERS ARE ON THE FRONT LINES moment by moment, pulling the trigger with only seconds to think about it. They are our kind! They are aggressive—real men! Their plain vanilla C.E.O.’s know it too. They will pay a daring, battle-hardened trader $50 million and up per year to keep him from defecting to our pirate fleet. They pay them more than they pay themselves, because they are worth more, because they are real men, because they are willing to fight. What idiot thought up “boards of directors” anyway? My board of directors consists of me, myself, and I. My investors don’t have to love me. I don’t have to charm them. I have to do one thing and one thing only, make them money. That and only that will make them happy. Few souls have the nerve to ride the risks I ride, to make pirate raids and insult pompous fools wherever I find them."


Lastly, I wholeheartedly agree that whether one sees Gekko as a villain or as a hero speaks volumes about one's personality.

Gekko the Great? Guy comes from nothing, turns into a master of the universe, whose one mistake was sympathy towards a kid that he thought wanted it as much as he did?

I find him much more a hero than Bud Fox, who went to NYU.

This movie should prove very, very interesting. Hopefully it coincides with me *also* getting a job on The Street.

Hi Rod,
Thanks so much for the Portfolio link! That was quite a read. Very interesting take on the status fixation, the lone wolf image and of course the pirate story.

And the Daniel Loeb letter! Let's not forget the Daniel Loeb letter. "“It is time for you to step down as C.E.O. and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites.” Loeb seemed to presume that every C.E.O. he went after was a “socialite” belonging to some exclusive “club” and engaging in such “aristocratic” pastimes as grouse shoots on the weekends." And the CEO resigned weeks later.

I loved this part, much later in the article: "The board of a building on Park Avenue is now considering rejecting applicants who have too much money. These days, when a personal net worth punches a hole in the earth’s atmosphere, it invariably signals one of these people." The fact that the Metropolitan Museum and MoMA are not letting the "pirates" onto their board of directors was also quite telling.

The hedge fund managers Wolfe describes in his article make Gekko look like an altar boy.

Hi Ilya! I expected you to say that. Hope all is well.

Daniel Loeb's letters are also discussed in this article ( http://nymag.com/nymetro/news/bizfinance/finance/features/10426/ ). An excerpt:

"Loeb is proud of his letters, which are thorough, well argued, and filled with clever turns of phrase. (He had a batch prepared for his high-school English teacher.) In a letter to the CEO of Warnaco, he referred to the CEO’s “imminent involuntary extraction.” To the CEO of Bindview Corp., a software company, he wrote of “your seemingly perpetual failure.” He’s gone after Intercept, Potlatch, Penn Virginia. There’s one where he calls the CEO “Chief Value Destroyer,” which he abbreviates CVD. “I’m surprised some CEO hasn’t had him shot,” says one manager."


Lastly, Google may have its own verb, but Gordon Gekko has his own species of lizards! ( http://www.jcvi.org/reptiles/species.php?genus=Cyrtodactylus&species=gordongekkoi )

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