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Friday, February 4, 2011

"Big Short" Author "Screwed" by Merrill Broker Turns to Indexing

In this video Michael Lewis talks about his most recent book, The Big Short ( I'm half way through it now), and bond trading. Michael Lewis was a former bond trader.

In the second half of the video, he reveals that he had a bad experience at Merrill Lynch. He said he just didn't want to be bothered with thinking about his own money management. A Merrill Lynch broker, a family connection, invested his assets in auction rate securities and Lehman preferred --both of which imploded. He then went to Schwab and now has most of his money indexed.

He joins a list of people who know Wall Street and have learned the hard way the wisdom of indexing..

The Big Short: Inside the Doomsday Machine Michael Lewis is one of my favorite writers. I loved Liar's Poker,  The New New Thing, Blindside, Moneyball, and now The Big Short,.

In my investment management/advisory practice I come across people who just "don't want to be bothered."   And I understand. I feel the same way about plumbing. The faucet starts spraying water in all directions, and my inclination is to ignore it until  my wife spots it and then I just want to call a plumber.

The same attitude, as  pointed out by Lewis, can be costly in the money management arena.

Again, the second half of this video is worthwhile.
Posted by Robert Wasilewski at 8:08 AM
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3 comments:

  1. MoneyConeFebruary 4, 2011 at 10:41 AM

    Before reading The Big Short, I had no idea who Michael Lewis was! But what a read that was! (I only read the post from Vanity Fair, not the book..yet)

    Absolutely fascinating! Now he goes indexing as well! Not surprising!

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  2. DIY InvestorFebruary 4, 2011 at 12:11 PM

    @MoneyCone Like many people interested in the last several years I have read many books on the causes and the culprits of the 2008 meltdown. Still, I learned a lot in this book. And I can say that about all of Lewis' books. He has a knack of capturing the essence of the people involved in whatever he is writing about.
    Sort of like Gladwell. Readers always come away feeling smarter.
    If you haven't read Lewis' other books you are in for a treat.

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  3. MoneyConeFebruary 5, 2011 at 9:09 AM

    I definitely mean to check it out Robert! I remember after reading the excerpt (it was a pretty detailed one, not just a review. That too in Vanity Fair - that was another revelation that VF carries awesome articles and is not about cosmetics!), I couldn't help talking about it to anyone who would listen! :)

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