Liar's Poker By Michael Lewis Preface I WAS A BOND salesman, on Wall Street and in London. Working beside traders at Salomon Brothers put me, I believe, at the epicenter of one of those events that help to define an age. Traders are masters of the quick killing, and a lot of the killings in the past ten years or so have been quick. And Salomon Brothers was indisputably the king of traders. What I have tried to do here, without, as it were, leaving my seat on the Salomon trading floor, is to describe and explain the events and the attitudes that characterized the era; the story occasionally tails away from me, but it is nonetheless my story throughout. The money I did not make and the lies I did not tell I still understood in a personal way because of my position. That was somewhere near the center of a modern gold rush. Never before have so many unskilled twenty-four-year-olds made so much money in so little time as we did this decade in New York and London. There has never before been such a fantastic exception to the rule of the marketplace that one takes out no more than one puts in. Now I do not object to money. I generally would rather have more than less. But I'm not holding my breath waiting for another windfall What happened was a rare and amazing glitch in the fairly predictable history of getting and spending. It should be said that I was, by the standards we use to measure ourselves, a success. I made a lot of money. I was told often by people who ran our firm that I would one day join them at the top. I would rather not make this boast early. But the reader needs to know that I have been given no reason to feel bitterly toward or estranged from my former employer. I set out to write this book only because I thought it would be better to tell the story than to go on living the story. Acknowledgments THE AUTHOR wishes to thank Michael Kinsley and The New Republic, Stephen Fay and Business, Starling Lawrence and W. W. Norton, Ion Trewin and Hodder & Stoughton, all of whom gave guidance and paid on time. Also Robert Ducas and David Soskin for intelligent advice. Finally, he wishes to thank his parents, Diana and Tom Lewis. They are, of course, directly responsible for any errors, sins, or omissions herein. "Wall Street, " reads the sinister old gag, "is a street with a river at one end and a graveyard at the other. " This is striking, but incomplete. It omits the kindergarten in the middle. -Frederick Schwed, Jr., Where Are the Customers' Yachts? I Chapter One Liars Poker IT WAS sometime early in 1986, the first year of the decline of my firm, Salomon Brothers. Our chairman, John Gutfreund, left his desk at the head of the trading floor and went for a walk. At any given moment on the trading floor billions of dollars were being risked by bond traders. Gutfreund took the pulse of the place by simply wandering around it and asking questions of the traders. An eerie sixth sense guided him to wherever a crisis was unfolding. Gutfreund seemed able to smell money being lost. He was the last person a nerve-racked trader wanted to see. Gutfreund (pronounced Good friend) liked to sneak up from behind and surprise you. This was fun for him but not for you. Busy on two phones at once trying to stem disaster, you had no time to turn and look. You didn't need to. You felt him. The area around you began to convulse like an epileptic ward. People were pretending to be frantically busy and at the same time staring intently at a spot directly above your head. You felt a chill in your bones that I imagine belongs to the same class of intelligence as the nervous twitch of a small furry animal at the silent approach of a grizzly bear. An alarm shrieked in your head: Gutfreund! Gutfreund! Gutfreund! Often as not, our chairman just hovered quietly for a bit, then left. You might never have seen him. The only trace I found of him on two of these occasions was a turd-like ash on the floor beside my chair, left, I suppose, as a calling card. Gutfreund's cigar droppings were longer and better formed than those of the average Salomon boss. I always assumed that he smoked a more expensive blend than the rest, purchased with a few of the $40 million he had cleared on the sale of Salomon Brothers in 1981 (or a few of the $3. 1 million he paid himself in 1986, more than any other Wall Street CEO). This day in 1986, however, Gutfreund did something strange. Instead of terrifying us all, he walked a straight line to the trading desk of John Meriwether, a member of the board of Salomon Inc. and also one of Salomon's finest bond traders. He whispered a few words. The traders in the vicinity eavesdropped. What Gutfreund said has become a legend at Salomon Brothers and a visceral part of its corporate identity. He said: "One hand, one million dollars, no tears." One hand, one million dollars, no tears. Meriwether grabbed the meaning instantly. The King of Wall Street, as Business Week had dubbed Gutfreund, wanted to play a single hand of a game called Liar's Poker for a million dollars. He played the game most afternoons with Meriwether and the six young bond arbitrage traders who worked for Meriwether and was usually skinned alive. Some traders said Gutfreund was heavily outmatched. Others who couldn't imagine John Gutfreund as anything but omnipotent- and there were many—said that losing suited his purpose, though exactly what that might be was a mystery. The peculiar feature of Gutfreund's challenge this time was the size of the stake. Normally his bets didn't exceed a few hundred dollars. A million was unheard of. The final two words of his challenge, "no tears, " meant that the loser was expected to suffer a great deal of pain but wasn't entitled to whine, bitch, or moan about it. He'd just have to hunker down and keep his poverty to himself. But why? You might ask if you were anyone other than the King of Wall Street. Why do it in the first place? Why, in particular, challenge Meriwether instead of some lesser managing director? It seemed an act of sheer lunacy. Meriwether was the King of the Game, the Liar's Poker champion of the Salomon Brothers trading floor. On the other hand, one thing you learn on a trading floor is that winners like Gutfreund always have some reason for what they do; it might not be the best of reasons, but at least they have a concept in mind. I was not privy to Gutfreund's innermost thoughts, but I do know that all the boys on the trading floor gambled and that he wanted badly to be one of the boys. What I think Gutfreund had in mind in this instance was a desire to show his courage, like the boy who leaps from the high dive. Who better than Meriwether for the purpose? Besides, Meriwether was probably the only trader with both the cash and the nerve to play. The whole absurd situation needs putting into context. John Meriwether had, in the course of his career, made hundreds of millions of dollars for Salomon Brothers. He had an ability, rare among people and treasured by traders, to hide his state of mind. Most traders divulge whether they are making or losing money by the way they speak or move. They are either overly easy or overly tense. With Meriwether you could never, ever tell. He wore the same blank half-tense expression when he won as he did when he lost. He had, I think, a profound ability to control the two emotions that commonly destroy traders—fear and greed—and it made him as noble as a man who pursues his self-interest so fiercely can be. He was thought by many within Salomon to be the best bond trader on Wall Street. Around Salomon no tone but awe was used when he was discussed. People would say, "He's the best businessman in the place," or "the best risk taker I have ever seen," or "a very dangerous Liar's Poker player." Meriwether cast a spell over the young traders who worked for him. His boys ranged in age from twenty-five to thirty-two (he was about forty). Most of them had Ph.D.'s in math, economics, and/or physics. Once they got onto Meriwether's trading desk, however, they forgot they were supposed to be detached intellectuals. They became disciples. They became obsessed by the game of Liar's Poker. They regarded it as their game. And they took it to a new level of seriousness. John Gutfreund was always the outsider in their game. That Business Week put his picture on the cover and called him the King of Wall Street held little significance for them. I mean, that was, in a way, the whole point. Gutfreund was the King of Wall Street, but Meriwether was King of the Game. When Gutfreund had been crowned by the gentlemen of the press, you could almost hear traders thinking: Foolish names and foolish faces often appear in public places. Fair enough, Gutfreund had once been a trader, but that was as relevant as an old woman's claim that she was once quite a dish. At times Gutfreund himself seemed to agree. He loved to trade. Compared with managing, trading was admirably direct. You made your bets and either you won or you lost. When you won, people—all the way up to the top of the firm—admired you, envied you, and feared you, and with reason: You controlled the loot. When you managed a firm, well, sure you received your quota of envy, fear, and admiration. But for all the wrong reasons. Vou did not make the money for Salomon. You did not take risk. You were hostage to your producers. They took risk. They proved their superiority every day by handling risk better than the rest of the risk-taking world. The money came from risk takers such as Meriwether, and whether it came or not was really beyond Gutfreund's control. That's why many people thought that the single rash act of challenging the arbitrage boss to one hand for a million dollars was Gutfreund's way of showing he was a player, too. And if you wanted to show off, Liar's Poker was the only way to go. The game had a powerful meaning for traders. People like John Meriwether believed that Liar's Poker had a lot in common with bond trading. It tested a trader's character. It honed a trader's instincts. A good player made a good trader, and vice versa. We all understood it. The Game: In Liar's Poker a group of people—as few as two, as many as ten—form a circle. Each player holds a dollar bill close to his chest. The game is similar in spirit to the card game known as I Doubt It. Each player attempts to fool the others about the serial numbers printed on the face of his dollar bill. One trader begins by making "a bid." He says, for example, "Three sixes." He means that all told the serial numbers of the dollar bills held by every player, including himself, contain at least three sixes. Once the first bid has been made, the game moves clockwise in the circle. Let's say the bid is three sixes. The player to the left of the bidder can do one of two things. He can bid higher (there are two sorts of higher bids: the same quantity of a higher number [three sevens, eights, or nines] and more of any number [four fives, for instance]). Or he can "challenge"—that is like saying, "I doubt it." The bidding escalates until all the other players agree to challenge a single player's bid. Then, and only then, do the players reveal their serial numbers and determine who is bluffing whom. In the midst of all this, the mind of a good player spins with probabilities. What is the statistical likelihood of there being three sixes within a batch of, say, forty randomly generated serial numbers? For a great player, however, the math is the easy part of the game. The hard part is reading the faces of the other players. The complexity arises when all players know how to bluff and double-bluff. The game has some of the feel of trading, just as jousting has some of the feel of war. The questions a Liar's Poker player asks himself are, up to a point, the same questions a bond trader asks himself. Is this a smart risk? Do I feel lucky? How cunning is my opponent? Does he have any idea what he's doing, and if not, how do I exploit his ignorance? If he bids high, is he bluffing, or does he actually hold a strong hand? Is he trying to induce me to make a foolish bid, or does he actually have four of a kind himself? Each player seeks weakness, predictability, and pattern in the others and seeks to avoid it in himself. The bond traders of Goldman, Sachs, First Boston, Morgan Stanley, Merrill Lynch, and other Wall Street firms all play some version of Liar's Poker. But the place where the stakes run highest, thanks to John Meriwether, is the New York bond trading floor of Salomon Brothers. The code of the Liar's Poker player was something like the code of the gunslinger. It required a trader to accept all challenges. Because of the code—which was his code— John Meriwether felt obliged to play. But he knew it was stupid. For him, there was no upside. If he won, he upset Gutfreund. No good came of this. But if he lost, he was out of pocket a million bucks. This was worse than upsetting the boss. Although Meriwether was by far the better player of the game, in a single hand anything could happen. Luck could very well determine the outcome. Meriwether spent his entire day avoiding dumb bets, and he wasn't about to accept this one. "No, John," he said, "if we're going to play for those kind of numbers, I'd rather play for real money. Ten million dollars. No tears." Ten million dollars. It was a moment for all players to savor. Meriwether was playing Liar's Poker before the game even started. He was bluffing. Gutfreund considered the counterproposal. It would have been just like him to accept. Merely to entertain the thought was a luxury that must have pleased him well. (It was good to be rich.) On the other hand, ten million dollars was, and is, a lot of money. If Gutfreund lost, he'd have only thirty million or so left. His wife, Susan, was busy spending the better part of fifteen million dollars redecorating their Manhattan apartment (Meriwether knew this). And as Gutfreund was the boss, he clearly wasn't bound by the Meriwether code. Who knows? Maybe he didn't even know the Meriwether code. Maybe the whole point of his challenge was to judge Meriwether's response. (Even Gutfreund had to marvel at the king in action.) So Gutfreund declined. In fact, he smiled his own brand of forced smile and said, "You're crazy." No, thought Meriwether, just very, very good. Chapter Two Never Mention Money I want to be an investment banker If you had 10,000 sheres [sic] I sell them for you. I make a lot of money. I will like my job very, very much 1 will help people I will be a millionaire I will have a big house It will be fun for me Seven-year-old Minnesota schoolboy, "What I Want to Be When I Grow Up," dated March 1985 I WAS LIVING in London in the winter of 1984, finishing a master's degree in economics at the London School of Economics, when I received an invitation to dine with the queen mother. It came through a distant cousin of mine who, years before, and somewhat improbably, had married a German baron. Though I was not the sort of person regularly invited to dine at St. James's Palace, the baroness, happily, was. I rented a black tie, boarded the tube, and went. This event was the first link in a chain of improbabilities, culminating in a job offer from Salomon Brothers. What had been advertised as a close encounter with British royalty proved to be a fund raiser with seven or eight hundred insurance salesmen. We fanned out across the Great Hall in dark wooden chairs on wine red carpets beneath sooty portraits of the royal family, as if auditioning to be extras on "Masterpiece Theatre." Somewhere in the Great Hall, as luck would have it, were two managing directors from Salomon Brothers. I knew this only because, as luck would further have it, I was seated between their wives. The wife of the more senior Salomon Brothers managing director, an American, took our table firmly in hand, once we'd finished craning our necks to snatch a glimpse of British royalty. When she learned that I was preparing to enter the job market and was considering investment banking, she turned the evening into an interview. She prodded, quizzed, needled, and unsettled me for about an hour until finally she stopped, satisfied. Having examined what good had come from my twenty-four years on earth, she asked why I didn't come and work on the Salomon Brothers trading floor. I tried to keep calm. I was afraid that if I appeared too eager, it might dawn on the woman she had made a terrible mistake. I had recently read John Gutfreund's now legendary comment that to succeed on the Salomon Brothers trading floor a person had to wake up each morning "ready to bite the ass off a bear." That, I said, didn't sound like much fun. I explained to her my notion of what life should be like inside an investment bank. (The description included a big glass office, a secretary, a large expense account, and lots of meetings with captains of industry. This occupation does exist within Salomon Brothers, but it is not respected. It is called corporate finance. It is different from sales and trading, though both are generally referred to as investment banking. Gutfreund's trading floor, where stocks and bonds are bought and sold, is the rough-and-tumble center of moneymaking and risk taking. Traders have no secretaries, offices, or meetings with captains of industry. Corporate finance, which services the corporations and governments that borrow money, and that are known as "clients," is, by comparison, a refined and unworldly place. Because they don't risk money, corporate financiers are considered wimps by traders. By any standards other than those of Wall Street, however, corporate finance is still a jungle full of chest-pounding males). The lady from Salomon fell silent at the end of my little speech. Then, in a breath, she said limp-wristed, overly groomed fellows on small salaries worked in corporate finance. Where was my chutzpah? Did I want to sit in an office all day? What was I—some numbnut? It was pretty clear she wasn't looking for an answer. She preferred questions. So I asked if she had the authority to offer me a job. With this she dropped the subject of my manhood and assured me that when she got home, she would have her husband take care of it. At the end of the meal the eighty-four-year-old queen mother tottered out of the room. We—the eight hundred insurance salesmen, the two managing directors from Salomon Brothers, their wives, and I—stood in respectful silence as she crept toward what I at first took to be the back door. Then I realized that it must be the front of the palace and that we fund raiser types had been let in like delivery boys, through the back. Anyway, the queen mother was headed our way. Behind her walked Jeeves, straight as a broom, clad in white tie and tails and carrying a silver tray. Following Jeeves, in procession, was a team of small, tubular dogs, called corgis, that looked like large rats. The English think corgis are cute. The British royals, I was later told, never go anywhere without them. A complete hush enveloped the Great Hall of St. James's Palace. As the queen mother drew near, the insurance salesmen bowed their heads like churchgoers. The corgis had been trained to curtsy every fifteen seconds by crossing their back legs and dropping their ratlike bellies onto the floor. The procession at last arrived at its destination. We stood immediately at the queen mother's side. The Salomon Brothers wife glowed. I'm sure I glowed, too. But she glowed more. Her desire to be noticed was tangible. There are a number of ways to grab the attention of royalty in the presence of eight hundred silent agents of the Prudential, but probably the surest is to shout. That's what she did. Specifically, she shouted, "Hey, Queen, Nice Dogs You Have There!" Several dozen insurance salesmen went pale. Actually they were already pale, so perhaps I exaggerate. But they cleared their throats a great deal and stared at their tassel loafers. The only person within earshot who didn't appear distinctly uncomfortable was the queen mother herself. She passed out of the room without missing a step. At that odd moment in St. James's Palace, representatives of two proud institutions had flown their finest colors side by side: The unflappable queen mother gracefully dealt with an embarrassing situation by ignoring it; the Salomon Brothers managing director's wife, drawing on hidden reserves of nerve and instinct, restored the balance of power in the room by hollering. I had always had a soft spot for the royals, and especially the queen mother. But from that moment I found Salomon Brothers, the bleacher bums of St. James's, equally irresistible. I mean it. To some, they were crude, rude, and socially unacceptable. But I wouldn't have had them any other way. These were, as much as any investment bankers could be, my people. And there was no doubt in my mind that this unusually forceful product of the Salomon Brothers culture could persuade her husband to give me a job. I was soon invited by her husband to the London offices of Salomon and introduced to traders and salesmen on the trading floor. I liked them. I liked the commercial buzz of their environment. But I still did not have a formal job offer, and I wasn't subjected to a proper round of job interviews. It was pretty clear, considering the absence of harsh cross-examination, that the managing director's wife had been true to her word and that Salomon intended to hire me. But no one actually asked me to return. A few days later I received another call. Would I care to eat breakfast at 6:30 A.M. at London's Berkeley Hotel with Leo Corbett, the head of Salomon recruiting from New York? I said naturally that I would. And I went through the painful and unnatural process of rising at 5:30 A.M. and putting on a blue suit to have a business breakfast. But Corbett didn't offer me a job either, just a plate of wet scrambled eggs. We had a pleasant talk, which was disconcerting, because Salomon Brothers' recruiters were meant to be bastards. It seemed clear Corbett wanted me to work at Salomon, but he never came right out and proposed. I went home, took off the suit, and went back to bed. Finally, puzzled, I told a fellow student at the London School of Economics what had happened. As he badly wanted a job with Salomon Brothers, he knew exactly what I had to do. Salomon Brothers, he said, never made job offers. It was too smart to give people the chance to turn it down. Salomon Brothers only gave hints. If I had been given a hint that it wanted to hire me, the best thing forme to do was call Leo Corbett in New York and take the job from him. So I did. I called him, reintroduced myself, and said, "I want to let you know that I accept." "Glad to have you on board," he said, and laughed. Right. What next? He explained that I would start life at "the Brothers" in a training program that commenced the end of July. He said that I would be joined by at least 120 other students, most of whom would have been recruited from colleges and business schools. Then he hung up. He hadn't told me what I would be paid, nor had I asked, because I knew, for reasons that shall soon emerge, that investment bankers didn 't like to talk about money. Days passed. I knew nothing about trading and, as a result, next to nothing about Salomon Brothers, for Salomon Brothers is, more than any other on Wall Street, a firm run by traders. I knew only what I had read in the papers, and they said that Salomon Brothers was the world's most profitable investment bank. True as that might be, the process of landing a job with the firm had been suspiciously pleasant. After some initial giddiness about the promise of permanent employment, I became skeptical of the desirability of life on a trading floor. It crossed my mind to hold out for a job in corporate finance. Had it not been for the circumstances, I might well have written to Leo (we were on a first-name basis) to say I didn't want to belong to any club that would have me so quickly for a member. The circumstances were that I had no other job. I decided to live with the stigma of having gotten my first real job through connections. It was better than the stigma of unemployment. Any other path onto the Salomon Brothers trading floor would have been cluttered with unpleasant obstacles, like job interviews. (Six thousand people had applied that year.) Most of the people with whom I would eventually work were badly savaged in their interviews and had grisly stories to tell. Except for the weird memory of Salomon's assault on the British throne, I had no battle scars and felt mildly ashamed. Oh, all right, Iconfess. One of the reasons I pounced on the Salomon Brothers opportunity like a loose ball was that I had already seen the dark side of a Wall Street job hunt and had no desire to see it again. As a college senior in 1981, three years before the night I got lucky in St. James's Palace, I applied to banks. I have never seen men oh Wall Street in such complete agreement on any issue as they were on my application. A few actually laughed at my resume. Representatives from several leading firms said I lacked commercial instincts, an expensive way, I feared, to say that I would spend the rest of my life poor. I've always had difficulties making sharp transitions, and this one was the sharpest. I recall that I couldn't imagine myself wearing a suit. Also, I'd never met a banker with blond hair. All moneymen I'd ever seen were either dark or bald. I was neither. So, you see, I had problems. About a quarter of the people with whom I began work at Salomon Brothers came straight from college, so passed a test that I failed. I still wonder how. At the time, I didn't give trading so much as a passing thought. In this I wasn't unusual. If they'd heard of trading floors, college seniors considered them cages for untrained animals, and one of the great shifts in the 1980s was the relaxing of this pose by the most expensively educated people in both America and Britain. My Princeton University Class of 1982 was among the last to hold it firmly. So we didn't apply to work on trading floors. Instead we angled for lower-paying jobs in corporate finance. The starting salary was about twenty-five thousand dollars a year plus bonus. When all was said and done, the pay came to around six dollars an hour. The job title was "investment banking analyst." Analysts didn't analyze anything. They were slaves to a team of corporate financiers, the men who did the negotiations and paper work (though not the trading and selling) of new issues of stocks and bonds for America's corporations. At Salomon Brothers they were the lowest of the low; at other banks they were the lowest of the high; in either case theirs was a miserable job. Analysts photocopied, proofread, and assembled breathtakingly dull securities documents for ninety and more hours a week. If they did this particularly well, analysts were thought well of by their bosses. This was a dubious honor. Bosses attached beepers to their favorite analysts, making it possible to call them in at all hours. A few of the very best analysts, months into their new jobs, lost their will to live normal lives. They gave themselves entirely over to their employers and worked around the clock. They rarely slept and often looked ill; the better they became at the jobs, the nearer they appeared to death. One extremely successful analyst working for Dean Witter in 1983 (a friend I envied at the time for his exalted station in life) was so strung out that he regularly nipped into a bathroom stall during midday lulls and slept on the toilet. He worked straight through most nights and on weekends, yet felt guilty for not doing more. He pretended to be constipated—in case someone noticed how long he had been gone. By definition an analyst's job lasted only two years. Then he was expected to go to business school. Many analysts later admit that their two years between college and business school were the worst of their lives. The analyst was a prisoner of his own narrowly focused ambition. He wanted money. He didn't want to expose himself in any unusual way. He wanted to be thought successful by others like him. (I tell you this only because I narrowly escaped imprisonment myself, and not by choice. And had I not escaped, I surely wouldn't be here now. I'd be continuing my climb up the same ladder as many of my peers.) There was one sure way, and only one sure way?, to get ahead, and everyone with eyes in 1982 saw it: Major in ecomomics; use your economics degree to get an analyst job on Wall Street; use your analyst job to get into the Harvard or Stanford Business Schiool; and worry about the rest of your life later. So, more than any other, the question tlhat my classmates and I were asking in the fall of 1981 and the spring of 1982 was: How do I become a Wall Street analyst? Over time this qiuestion had fantastic consequences. The first and most obvious was ai logjam at the point of entry. Any one of a number of hard statistics cam be enlisted to illustrate the point. Here's one. Forty percent of the tlhirteen hundred members of Yale's graduating class of 1986 applied tco one investment bank, First Boston, alone. There was, I think, a sense iof safety in the numbers. The larger the number of people involved, tHie easier it was for them to delude themselves that what they were dosing must be smart. The first thing you learn on the trading floor is that when large numbers of people are after the same commodity, be it a sstock, a bond, or a job, the commodity quickly becomes overvalued. Unfortunately, at the time, I had never seen a trading floor. The second effect, one that struck me at the time as tragic, was a strange surge in the study of economics. AVt Harvard in 1987 the course in the principles of economics had forty :sections and a thousand students; the enrollment had tripled in ten yeairs. At Princeton, in my senior year, for the first time in the history of th«e school, economics became the single most popular area of concentration. And the more people studied economics, the more an economiics degree became a requirement for a job on Wall Street. There was a good reason for this. Ecomomics satisfied the two most basic needs of investment bankers. Firstt investment bankers wanted practical people, willing to subordinate their educations to their careers. Economics, which was becoming an everr more abstruse science, producing mathematical treatises with no obwious use, seemed almost designed as a sifting device. The way it was itaught did not exactly fire the imagination. I mean, few people would claim they actually liked studying economics; there was not a trace off self-indulgence in the act. Studying economics was more a ritual satcrifice. I can't prove this, of course. It is bald assertion, based on what ^economists call casual empiricism. I watched. I saw friends steadily drained of life. I often asked otherwise intelligent members of the prebanking set why they studied economics, and they explained that it was the most practical course of study, even while they spent their time drawing funny little graphs. They were right, of course, and that was even more maddening. Economics was practical. It got people jobs. And it did this because it demonstrated that they were among the most fervent believers in the primacy of economic life. Investment bankers also wanted to believe, like members of any exclusive club, that the logic to their recruiting techniques was airtight. No one who didn't belong was admitted. This conceit went hand in glove with the investment bankers' belief that they could control their destiny, something, as we shall see, they couldn't do. Economics allowed investment banking recruiters to compare directly the academic records of recruits. The only inexplicable aspect of the process was that economic theory (which is, after all, what economics students were supposed to know) served almost no function in an investment bank. The bankers used economics as a sort of standardized test of general intelligence. In the midst of the hysteria I was suitably hysterical. I had made a conscious decision not to study economics at Princeton, partly because everyone else was doing it for what sounded to me like the wrong reasons. Don't get me wrong. I knew I'd one day need to earn a living. But it seemed a waste not to seize the unique opportunity to stretch your brain on something that genuinely excited you. It also seemed a waste not to use the rest of the university. So I landed in one of the least used departments on campus. Art history was the opposite of economics; no one wanted it on his resume. Art history, as an economics major once told me, "is for preppy girls from Connecticut." The chief economic purpose of art history was clandestinely to lift the grade-point averages of the economics students. They dipped into my department for a course a term, which appeared on their resumes as only one component of that average. The idea that art history might be self-improving or that self-improvement, as distinct from career building, was a legitimate goal of education was widely regarded as naive and reckless. And as we approached the end of our four years in college, that is how it seemed. Some of my classmates were visibly sympathetic toward me, as if I were a cripple or had unwittingly taken a vow of poverty. Being the class Franciscan had its benefits, but a ticket onto Wall Street wasn't one. To be fair, art was only the start of my problems. It didn't help that I had flunked a course called "Physics for Poets" or that my resume listed bartending and skydiving as skills. Born and raised in the Deep South, I had never heard of investment bankers until a few months before my first interview. I don't think we had them back home. Nevertheless, Wall Street seemed very much like the place to be at the time. The world didn't need another lawyer, I hadn't the ability to become a doctor, and my idea for starting a business making little satchels to hang off the rear ends of dogs to prevent them from crapping on the streets of Manhattan (advertising jingle: "We Stop the Plop") never found funding. Probably the real truth of the matter was that I was frightened to miss the express bus on which everyone I knew seemed to have a reserved seat, for fear that there would be no other. I certainly had no fixed idea of what to do when I graduated from college, and Wall Street paid top dollar for what I could do, which was nothing. My motives were shallow. That wouldn't have mattered, and could even have been an advantage, if I had felt the slightest conviction that I deserved a job. But I didn't. Many of my classmates had sacrificed the better part of their formal educations for Wall Street. I had sacrificed nothing. That made me a dilettante, a southern boy in a white linen suit waltzing into a war fought mainly by northeastern prep school graduates. In short, I wasn't going to be an investment banker anytime soon. My moment of reckoning came immediately after the first interview of the 1982 season, with the Wall Street firm of Lehman Brothers. To get the interview, I had stood in six inches of snow with about fifty other students, awaiting the opening of the Princeton University career