Best wall street books for beginners

An inexperienced young trader encounters the raw, outrageous reality of investment banking

Liar's Poker by Michael Lewis

The 1990 debut by the rockstar financial journalist depicts his experience at the Salomon Brothers bond desk. 'Liar's Poker' is one of the iconic depictions of the heady excess of 1980's Wall Street: it introduced the term "big swinging dick" to describe hotshot traders (Slate).

Part of the inspiration for the book was Lewis' incredulity at the fact that an investment bank would hire him in the first place. "I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later," he wrote in Portfolio.

Lewis says he wrote the book partially to dissuade smart young college graduates from becoming bankers. But the opposite happened. Like the movie 'Wall Street,' book intended as a cautionary tale came across to many as a celebration of finance. From Portfolio:

"I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual."

Lewis is now working on making a film version of the book (Reuters).

(Amazon link.)

Top Wall Street players collude behind closed doors, pursued by intrepid detectives

Den of Thieves by James B. Stewart

The 1991 book details the insider trading scandals of the 1980s involving Wall Street big shots like junk-bond king Michael Milken.

From the NYTimes review:

"Milken accelerated a broad-gauged publicity campaign to convince the American public that his creation of the high-yield bond market had proved highly productive to the national economy [....] One mission of that campaign was to produce a book, eventually to be called 'Portraits of the American Dream,' which would feature company success stories that depended on Mr. Milken's bonds. 'But no sooner would the writers finish a chapter on a company such as Ingersoll Communications,' writes Mr. Stewart, 'than the company would threaten to default.'"

(Amazon link.)

A renegade investment banker blows up his firm and tells the story in jail

Rogue Trader by Nick Leeson

The autobiographical 1997 book describes how Leeson singlehandedly caused the collapse of Barings Bank. It was later made into a movie starring Ewan McGregor.

(Amazon link.)

Swashbuckling financial entrepreneurs create a new industry and bank billions

More Money Than God by Sebastian Mallaby

The 2010 book is the best available history of the hedge fund sector.

The Wall Street Journal called it "the fullest account we have so far of a too-little-understood business that changed the shape of finance and no doubt will continue to do so."

(Amazon link.)

Wall Street and the White House struggle behind the scenes to prevent global economic collapse

Too Big to Fail by Andrew Ross Sorkin

The 2009 book is the editor of Dealbook's account of the 2008 crash.

This is where we got the most vivid anecdotes of the financial meltdown. Via HuffPo:

"For example, Sorkin reports that during the crisis then Treasury Secretary Hank Paulson, who was formerly Goldman Sachs CEO, complained loudly 'It's ridiculous that I can't deal with Goldman at a time like this!' Or Morgan Stanley head John Mack screaming 'Nobody gives a shit about loyalty!'"

The book was made into an HBO movie in 2011. Haven't seen it? Check out our 2-minute version of the film.

(Amazon link.)

Harvard professors and elite investment bankers riskily amass $100 billion in assets, threatening the entire financial system

When Genius Failed by Roger Lowenstein

The 2000 book tells the story of the meteoric rise and spectacular fall of hedge fund Long-Term Capital Management. The fund suffered from excessive self-confidence; it had two Nobel laureates advising its investments. After back to back 40% returns from 1994 to 1998, the vastly over-leveraged LTCM fell victim to Russia's 1998 default. The fund's failure forced an unprecedented intervention from the giants of Wall Street.

From an excerpt of the book published in the NYTimes:

"For the first time, the chiefs of Bankers Trust, Bear Stearns, Chase Manhattan, Goldman Sachs, J.P. Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley Dean Witter, and Salomon Smith Barney gathered under the oil portraits in the Fed's tenth-floor boardroom—not to bail out a Latin American nation but to consider a rescue of one of their own."

(Amazon link.)