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What was Wall Street like in the 1980s? How did the Salomon Brothers make their fortune during this time? In the 1980s, Wall Street managed to recover from the high unemployment and inflation rates from the previous decade. This led to the rise of the bond market that the Salomon Brothers investment firm took advantage of. Let’s look at how the Salomon Brothers successfully navigated the bond market during this time.
How does Michael Lewis know so much about the Salomon Brothers? What did Lewis witness while working at the firm? In Liar’s Poker by Michael Lewis, the Salomon Brothers are written about extensively with firsthand knowledge. Fresh out of college in the mid-1980s, Lewis joined the Salomon team, was trained in their philosophy of investing, and then became part of its culture. Get the inside scoop on what it was like working at Salomon Brothers in the 1980s.
When was the mortgage bond era on Wall Street? How did bankers profit from home loans in the 1980s? The mortgage bond market was booming in the 1970s. The number of home loans that were borrowed was at an all-time high, and the investment bank Salomon Brothers found a way to capitalize on it. Discover more about how people profited off the mortgage bond market, according to Michael Lewis’s book Liar’s Poker.
What was the 1980s savings and loan crisis? How did Salomon Brothers and Lewis Ranieri navigate this crisis? Right on the cusp of the 1980s, the savings and loan industry suffered a shock that threatened to stop the housing market in its tracks. In Liar’s Poker, Michael Lewis says that instead of backing out of the mortgage bond business, Salomon Brothers dove head-first into the market, turning the US government’s plan to bail out local banks into a way to funnel money to itself. Continue reading to learn more about how the investment bank took advantage of the savings and
What are Collateralized Mortgage Obligations (CMOs)? How did CMOs defuse the mortgage bond market? During the height of the mortgage bond market, Lewis Ranieri started convincing banks to trade their bonds more frequently, allowing himself and Salomon Brothers to skim profits off every transaction. That was until CMOs came along. Discover more about the fall of the mortgage bond market.
What are junk-rated bonds? How did junk bonds become popular on Wall Street? After mortgage bonds began to decline on Wall Street, junk-rated bonds were next on the market. But unlike how Salomon Brothers took advantage of mortgage bonds to make a penny, junk bonds would be used against the investment bank. Find out how junk-rated bonds ended up hurting Salomon Brothers.
What is the book Barbarians at the Gate about? What was the biggest leveraged buyout in history? In their book Barbarians at the Gate, Bryan Burrough and John Helyar detail the 1988 leveraged buyout of RJR Nabisco, which is the biggest business transaction of the 20th century. The high value of the transaction, as well as the unusually competitive bidding in the LBO process, caught the attention of the press. Read below for a brief Barbarians at the Gate book overview.
What is an LBO? Are LBOs considered hostile in the business industry? A leveraged buyout (LBO) is when a group of executives makes a company private by buying all of the company’s stock. There’s still much debate on whether a leveraged buy-out is considered a hostile takeover of a company. Read more about LBOs, according to Barbarians at the Gate by Bryan Burrough and John Helyar.
Where did Jim Simons’s love for mathematics come from? How did he turn his childhood passion into a groundbreaking career? For Jim Simons, mathematics is everything. According to The Man Who Solved the Market by Gregory Zuckerman, Simons thought equations and theorems would be the answer to the universe’s biggest mysteries. Keep reading to learn more about Simons’s passion for mathematics.
What was the Black Monday stock market crash? How did the market suffer from this day? In Liar’s Poker, Michael Lewis writes about the day the financial world felt a shock unmatched since the Great Depression. On Monday, October 19, 1987, the global stock market crashed, wiping out trillions of dollars in investments. Learn more about Black Monday and how the investment bank Salomon Brothers and Lewis attempted to recover from the crash.