Another Book

Before making my reading list here is my review of Brokers, Bagmen & Moles. It was pretty good. I have a pretty good idea of how futures work (having been licensed to trade them and learning more of the theoretical stuff when I was in Korea (firms like Aspect and Winton are big traders of client money in this area). What I didn't know is that the trading was so rife with conflicts of interest, lies, deception and outright theft and fraud (at least is was before the culmination of the FBI sting in January 1989...maybe it still is now). Traders like Aspect and Winton now use slippage to refer to price divergences between what they see on a quote and what they get filled at in the market. Now Globex (an electronic system for order placement and matching that was in the planning stage in the last 1980s) is in place so things should be better than back then when real people did all the trading.

Basically, both the CBOT (Chicago Board of Trade) and the Merc (or CME, Chicago Mercantile Exchange) had moles (FBI agents posing as traders) in various pits recording illicit conversations over a two year period. Thing is, not all of the indictments stuck (even with additional information from stoolies) and the scandal didn't seem to have made a dent on the higher-ups and the system in general. Perhaps now things have changed for the better, but I really like to read the history of the exchanges and firms to get a better feel for how things were, how they are now and how the could be. The chronology was a little weird and the authors said a few things again and again; they also went on and on at the end on how the system was not changing (a recurring theme throughout the tome) but overall it was a pretty good read.

Now I'm 57 pages into 295-page Sudden Death: The Rise and Fall of E.F. Hutton. and I like it. I've already read the histories of Goldman Sachs, Morgan Stanley/JP Morgan, Citibank and have lined up a few more (such as Greed & Glory on Wall Street: The Fall of the House of Lehman) to go through in the next few months. I used to wonder why Lee Iacocca said his favorite reading material is biographies; now I know why: because it lets you know how people before you made their make and, more importantly, their thinking throughout it. Usually these movers and shakers were not just lucky: they worked hard, were very persistent and had a vision that they made into reality. They were not just toilers and workers (no one can get super-rich, without a lottery ticket, by doing that)--they had something pretty extraordinary (yet usually quite simple) that they could translate into a monolith of a corporation.

Anyways, I better get back at it...lunch is over.