Trader’s Wish List - Fifth Installment
December 10, 2007
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John Forman - The Essentials of Trading author
This today’s installment of my list of wish list recommendations for traders.
The featured wish list items for today focus on some of the darker stories of trading and the financial markets. The first on that list is the story of the notorious Nick Leeson as he outlined in his autobiography Rogue Trader. Leeson was responsible for a trading fraud so enormous it brought down one of banking’s oldest and most prestigious institutions, Barrings Bank. The book was made in to a movie starring Ewan McGregor. Personally, I found the book more worthwhile than the movie, but the latter isn’t bad.
The second book on the list of those featuring Wall Street’s notorious is The Predators’ Ball. This is the story of Michael Milken and the activities of Drexel Burnham Lambert during the 1980s. The tale of Milken and the junk bond market of the time can be viewed in parallel to the drama surrounding Enron and other episodes of corporate fraud seen around the market of the early 2000s. Read the book and judge for yourself whether you think Milken actually did anything wrong, though.
The third book I want to mention is Black & White on Wall Street. During the early 1990s, Joseph Jett was at the center of a huge scandal during which he was accused of creating $350 million in fake trading profits for his employer Kidder Peabody, and earning $8 million in bonuses for himself. This book is Jett’s story from his perspective. It may or may not convince you of his guilt, but it definitely provides a very interesting view of the markets as they can be seen from the inside of bond trading desks.
Sticking to the 1990s, the fourth of the primary books is When Genius Failed. In the latter part of the decade, a massive hedged fund known as Long-Term Capital Management was the biggest name in the markets. It had holdings reported to be $140 billion dollars, with massive positions in a wide array of markets. Those running the fund were among Wall Street’s best and brightest and they were producing amazing results - until it all fell apart incredibly fast. It was such a potentialy devastating scenario for the whole financial system that the the Federal Reserve had to step in to avoid complete chaos.
These stories involve traders and firms with huge positions. That doesn’t seem like it would really mean much to the individual trader. The fact of the matter, though, is that they are still people. They make the same kind of mistakes that small traders make. Even putting that aside, the look in to the inner workings of the markets that these books provide are very worthwhile by themselves.
Here are some other posts which might interest you:
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