Liar’s Poker

The epigraph quotes Frederick Schwed, Jr.’s book Where Are the Customers’ Yachts? Wall Street has a river at one end (the East River) and a cemetery at the other (Trinity Church Cemetery), with a kindergarten in between (Wall Street itself).

Lewis begins at his bond-trading firm, Salomon Brothers, in 1986. Its chairman, John Gutfreund, dubbed “the King of Wall Street” by Business Week (14), can strike terror into the hearts of traders merely by walking up behind them and watching them work. Gutfreund’s best trader is John Meriwether, a man so cool-headed that no one can ever tell by his manner whether he is winning or losing in the bond market.

The traders are avid players of Liar’s Poker, a game that uses dollar-bill serial numbers as the “cards.” Each player holds a bill and privately inspects its serial number, and then the players take turns bidding on the likely total number of digits—for example, “three sevens” or “four ones”—on everyone’s bills. Bidding escalates (“three sixes” becomes “four sixes” or “three fives”), and players can challenge bids, until all have challenged one of the players, at which point the bills are revealed. The final player challenged either gets caught bluffing and must pay off all the other players, or he triumphs and gets paid by everyone. The game requires good math skills, an ability to bluff, and nerves of steel—the essential skill set of a bond trader. Meriwether is the best at Liar’s Poker; Gutfreund plays, too, but he is the worst at it.

One day, Gutfreund walks up to Meriwether and offers to play a game of Liar’s Poker: “One hand, one million dollars, no tears” (14). (“No tears” means the loser must suffer the loss in silence.) Meriwether knows at once that the offer is a no-win for him: “If he won, he upset Gutfreund. No good came of this. But if he lost, he was out of pocket a million bucks” (18). Gutfreund, though no longer a trader, “wanted badly to be one of the boys” (15). “Gutfreund was the King of Wall Street, but Meriwether was King of the Game” of bond trading (16). Gutfreund has something to prove.

Meriwether counters with an offer to play for $10 million, guessing that Gutfreund, despite his huge wealth, will balk. Gutfreund turns him down, and the match doesn’t happen. Meriwether has neatly out-bluffed his boss.

In 1984 Lewis is finishing his master’s degree at the London School of Economics when he is invited “to dine with the Queen Mother” (21) at a crowded fund-raiser also attended by two Salomon Brothers executives and their wives. One of the wives grills Lewis about his career plans, then offers to smooth his way to a job at Salomon. The queen and her regalia—including pet corgi dogs—depart, and as they pass his table, Lewis’s interlocutor shouts, “Hey, Queen, Nice Dogs You Have There!” (24). Lewis at once falls in love with Salomon corporate culture: “To some, they were crude, rude, and socially unacceptable. But I wouldn’t have had them any other way” (24).

Lewis takes a number of meetings with Salomon executives. No one offers him a job. He learns that Salomon never makes such offers and that a recruit should simply call them up and announce, “I accept” (25). This he does, and he is hired. He feels guilty about getting the job through connections while 6,000 others applied and only 120 are admitted to the upcoming training program. In 1981 at Princeton, Lewis applied to banks on Wall Street and was savaged by recruiters; this time around, he decides to appreciate his good luck.

Had he not been so fortunate, Lewis would likely have taken the normal route of applying for a job as a lowly financial analyst, toiling for bad pay and working overtime for two years, then going to business school. Looking back on his early failure to land a bank job, he realizes that “you’re supposed to talk about the challenges, and the thrill of doing deals, and the excitement of working with such high-caliber people, but never, ever mention money” (35).