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 Genesis of Russophobia in Great Britain by John H. Gleason

In-depth (and surprisingly interesting!) analysis of the shifting public and government opinion on Russia during late 18th and early/mid 19th century England, plus a useful (and telling) exploration of the various propaganda and media narratives used to drive these opinions. I've written before on this site, many times, that history rhymes, it doesn't repeat exactly, so you have to know your history--and by this I mean know your actual history, not your country's preferred propaganda narrative of history--in order to see that rhyme to make useful, accurate predictions. It is fascinating to see England in the 1800s applying various forms of the same propagandized and manufactured Russophobia that we see in the United States today. England went from a literal  alliance with Russia (against Napoleonic France) to a state of paranoid loathing of Russia in a matter of decades; the USA likewise went from " aren't they our friends now? " after the Soviet collapse to...
Read more

The Kybalion: Hermetic Philosophy by "Three Initiates" [William Walker Atkinson]

The best way to think about this unusual book from 1908 is to group it with other New Thought works from the same era (see the nearly incomprehensible Your Invisible Power by Genevieve Behrend  for example), and then draw a lineage directly down through various foundational success literature works of the early/mid-20th century (see Napoleon Hill's Think and Grow Rich , or his lesser-known but much more impactful book Outwitting the Devil ).  [A quick  affiliate link to readers to the book here . You can support my work here by buying all your Amazon products via any affiliate link from this site, or my sister site  Casual Kitchen . Thank you!] We can also see the ancestry here of "positive thinking" books by Norman Vincent Peale as well as  Emile Coué's surprisingly useful works on autosuggestion , and we can continue this lineage through Maxwell Maltz's famous Psycho-Cybernetics right down to the 1980s-era birth of NLP literature, the wor...
Read more

Kroll on Futures Trading Strategy by Stanley Kroll

A simple and direct book, written in plain language, but the ideas here are the result of years of thought, practice and genuine mastery.  In fact, to a novice (or even intermediate) investor, some of author Stanley Kroll's trading advice may appear obvious, even tautological. I recommend instead to read them as koans: ruminate and chew them over, think of analogous situations you've been in yourself, and then think of ways to apply the idea. See for example, when the author discusses how long he holds a "long-term" position, he says, "You hold a position for as long as the market continues going your way." A novice investor would see this as inane; the advanced investor sees it for the wisdom it is, and knows he needs the reminder. [A quick  affiliate link to readers to the book here . You can support my work here by buying all your Amazon products via any affiliate link from this site, or my sister site  Casual Kitchen . Thank you!] The author counsels rea...
Read more