Friday, April 28, 2017

Friday Feature Book Review: “Traders, Guns and Money” Author Satyajit Das トレーダー、デリバティブ、そして金 : サティアジット・ダス

There is no holding back on any details in this book, so you really learn a lot about how finance really works. The author really opens up the kimono. It reads like a whistle blower diary of what happens inside a securities firm. I never strangely thought that an "insider" from any top investment bank would ever write such a book about what capital markets "are really like" and even educate those curious about them, and not familiar. 

This is a very eye opening account of a real derivatives professional who really understands a wide range of markets, and the true ways an investment bank functions within them. He has a realistic view of the financial world, and does not make any claim that it is perfect. Quite the opposite, in fact. It almost reads like secret notes any newcomer to finance should have from an older brother already there. That was the feeling I had when reading it anyway.

He really just tells the reader "how it really is" inside a global investment bank, and the people he worked with. The politics, the trade size realities, the profits possible, and who would push to make each trade happen, are all explained well. Off the top of my head, it is the kind of insight that anybody considering a career in finance after MBA school should use as a filter. 

In many ways, it also captures a moment in time for derivatives in general. This is before the positive pricing benefits of derivatives were totally tarnished by CDOs, and then became weapons of mass destruction in the post Lehman shock era. 

If you are a curious person and have never considered working in a global bank, but wanted to be a "fly on the wall" in order to know what could be really going on, this is for you. This book is a great first exposure and highly recommended with extremely well written detail. Ultimately, all financial products are a just a series of cashflows. The complication of any of them can be broken down into simple slices. There are no exceptions. 

Many within finance, especially those who know parts but not all aspects, try and give the impression that they are very difficult to understand. This is a weak excuse by some to cover up their own lack of clear understanding. It is a kind of offensive yet defensive style, that keeps many new to the area, from learning much of these sometime complex products that are becoming a growing part of business life.

The Top 3 Takeaways from this book that really impact any reader are:

1) There is a lot to learn about derivatives and how they are created, sold, and finally booked with clients. It may seem complicated, but each part, when seen alone is very understandable.

2) The integrity of derivatives has been suspect, but gets more clear when explained by an expert. The grey zone seen by outsiders can be easily removed.

3) The capital markets are always driven by many factors. Politics and personal benefits drive a lot of action. The IQ of many in global investment banks can often be overshadowed by the EQ of others taking advantage of another person's P/L.

Many people within investment banking need to be part of any economy, but morals and values certainly have a place. Markets do not always justify their prices. Market prices can actually replace difficult thinking or debate about more difficult questions. The reality of markets leaves it mark on the global economy especially with derivative products. Highly recommended!

Please visit us for our Friday Feature Review where TMJ Partners will review books, movies, services and anything else with a financial theme.  Follow us now for our free weekly updates, just click hereThank you for reading and learning more about how money is made in finance!

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