Skip to main content

Straight to Hell by John LeFevre

A strange book: think of the movie The Wolf of Wall Street, but instead of retail brokers on Long Island, it's the institutional bond syndicate desk at a major bank. But the pranks, the drugs and the ludicrous behavior are all the same. 

Straight to Hell is crass, outlandish, instructive at certain points[*] and genuinely comedic at others--but I wish I hadn't read it. It's hard to tell what the author is trying to do exactly (moralize? satirize? shock? warn?), but ultimately the book leaves you with a gross feeling: for the author, for all the people in the story, and for yourself as the reader.

For readers interested in this genre: stick to Michael Lewis' classic Liar's Poker. 

[*] Instructive, that is, if you're curious how an institutional sell-side bond house works; how bond issuance deals are won and lost; how major sell-side firms both compete and cooperate as they fight over deals; how these deals, once won, are then doled out to institutional investor clients. I can't imagine many readers would share this curiosity, however--and you have to fight through a lot of unsavory stories to satisfy it.

Notes: 
1) Now that I've read my fair share of works about Buddhism (see in particular Thich Nhat Hanh's The Heart of the Buddha's Teaching) I'd consider this book an example of "bad intellectual nutriments."

2) Early on you can tell this book is unlikely to interest somebody from outside the business.

3) The author starts at an intern, then does the company training program (note the ruthlessness the company uses to weed out underperformers), he survives his first few years, then moves up to join the fixed income syndicate desk, a big job.  

4) "Statistically speaking, you shouldn't worry about what your first wife's mother looks like." I had to think about this one for a while before I got it.

5) On winning the right to offer a deal on behalf of a bond issuer (getting the client "pregnant") and then "we'll moonwalk them back once we win the deal" to agree to more realistic deal terms (on interest rates for example, or deal size). Also you control the client by suggesting it would signal weakness or be embarrassing to cancel a deal after a long roadshow, the client might lose "access" to capital markets, etc.

6) The deal process--everything from bakeoff to roadshow to deal allocation--is all well explained, but will likely be over the head of most readers outside the industry.

7) The mechanics of a bond deal that goes badly: just the same as a bad IPO. When clients get a "full allocation" they instantly know the deal is bad.

8) Note also the game theory aspect of bond issuers who frequently need to access capital markets: See the Thai telecom company with debt maturities that need to be "rolled" in each of the next few years; we thus have a game theory situation with repeated iterations, so the parties involved can only screw each other over to a certain point! They know they have to play the game again soon. Equity deals are less like this. 

9) See also certain interesting agency problems here: say you work for a sell-side bond shop and your client (a company that wants to issue bonds) comes to you, thinking of doing a bond issue between October and December. Well, how does your P&L look? Is your bonus already set for this year? Then encourage the client to wait for January so that deal would show up in next year's bonus numbers--plus you start the year with a great-looking deal pipeline.

More Posts

The Practicing Mind by Thomas M. Sterner

This short and humble book will be priceless to an open-minded reader.  It discusses how to cultivate present-moment awareness, how to focus on process rather than product, how to make haste slowly, and many other practices that are increasingly indispensable in our haste-filled, results-oriented modern era. Several years ago I heard an unforgettable story from the owner of a language school in Santiago, Chile. She told me about a disgruntled customer who had been taking Spanish classes for weeks, but wasn't getting any better. This student complained, loudly, "I paid my money. Where is my Spanish?" This story stuck with me for well over a decade because it's a metaphor for how people confuse buying something with learning something, confuse "taking a class" with actually learning a domain and developing a sincere practice of that domain. We've productized so much of life in the modern era that people think they can buy language fluency off the shelf, li...
Read more

Understanding Human Nature by Alfred Adler

A difficult book, in part because Adler isn't all that good at expressing his ideas: he's a practitioner, not a writer, and it shows. Further, I believe Understanding Human Nature has more in direct value than direct value: the reader has to move from what the book teaches to a layer of second-order insights. I'll explain what I mean in a moment. First a quick summary of the book's core themes and ideas. According to Adler, we all have a psyche, formed and largely fixed in childhood, and that psyche has an ulterior psychological goal. For most of us, unfortunately, that goal takes the form of striving for power, control, attention, or superiority. Throughout the book Adler gives examples where peoples' psyche-driven strivings cause suffering, both for themselves as well as everyone else in their blast radius. Most of us will likely resist Adler's claim that to understand other people and their motivations you must first understand their psyches' "ulter...
Read more

Empire, Incorporated by Philip J. Stern

Bluntly: this book is worth your attention if two things are true: 1) you're interested in the history of the early joint stock companies and their role in colonial history, and 2) you're willing to put up with a long, cluttered and disorganized book. Empire, Incorporated doesn't know what it really wants to be, and as a result author Philip Stern finds himself scattered everywhere, throwing at the wall anything and everything to do with mercantile-era joint stock companies. The book simply crawls with minutia to the point where even its own author at times gets his own lines crossed and loses his own thread. [A quick  affiliate link to Amazon  for those readers who would like to support my work here: if you purchase your Amazon products via any affiliate link from this site, or from my sister site  Casual Kitchen , I will receive a small affiliate commission at no extra cost to you. Thank you!] I'll critique the work more in another paragraph, but let's first ...
Read more