It’s really a good comedy – and tragedy – about bond traders. Bonds as in economic debt of course. Despite the economic background of this real life story at Wall Street in the 90s of the 80s, one doesn’t need to know economics to appreciate the book and its humor. And it had been a long time since I laughed so hard reading a book.
There are several memorable scenes in it. This is one of them:
One trader remembers that “Lewie would say he thought the market was going up, and buy a hundred million [dollar-worth of] bonds. The market would start to go down. So Lewie would buy two billion more bonds, and of course the market would then go up. After he had driven the market up, Lewie would turn to me and say, ‘See I told you it was going up’…”
“…Actually there was one good reason for using the charts: Everyone else did. If you believed that large sums of money were about to be invested on the basis of a chart, then, as dumb as it made you feel, it made sense to look at that chart; perhaps it would enable you to place your bet first and get in front of the coming wave. Many of our French and English speculators, however, honestly believed the charts contained the secrets of the market. They are aboriginal chartists. They would have used the charts even if no one else did. They communed with their charts as if they were Ouija boards. The charts were speaking to them.”
It maybe a typical dry economics humor but it’s funny nonetheless.
Regarding the second block quote, it is especially true about people in the stock market nowadays. A broker a couple of months back talked to me about forecasting. I looked at him and said quietly in my mind, trying to be polite, are you for real? Eh, I ended up explaining efficient market theory to him. And he wanted to sell me stocks.
Really, in economics, the best future price, given perfect information, is the price today. All those forecastings are bullshit. The only reason charting works is because laymen actually believe in those charts and then force the market to go the way the forecasters had forecasted. It’s a self-fulfilled prophecy. I still laugh at people that actually believe all the bullshits spew by so-called forecasters. Even the forecasters know its bullshit. Well, the forecasters with real economic know-how anyway. Some people may argue that information is not perfect. Yeah. True. But all know insider trading is illegal, eh?
Now, it’s time for me to get on with my reading. In my mind, there are three candidates currently.
One is Stiglitz’s The Roaring Nineties – I’ve read his Globalization and Its Discontent; yup, that Nobel Prize for economics winner; even attended his lecture at Michigan!). It has a cool cover by the way.
Two is Hujan Pagi by A. Samad Said. A. Samad Said needs no introduction in Malay literature and Hujan Pagi won, I think, the 1987/88 Malaysian literature award, or something like that. I’ve never read any proper Malay work so, I thought, if not now, when? But I’ve actually started the first page or two. I however find it hard to keep my interest alive – it was like when I first read Lord of the Rings (I must stress – before it came to the cinema, years earlier! I’m not a person that read a book because the book makes it to the movies – with the exception of , er, Star Wars. Star Wars is just different). Tough read in the first few chapters but as the story develops, well, we all know why Lord of the Rings is so successful in the cinemas.
Third is Thomas Friedman’s The World Is Flat. I’ve been wanting to read it since early last year but I kept getting myself sidetracked with other books and responsibilities.
So, we’ll see.