Michael Lewis on His Journey to Wall Street

a kind's everything he does is just absolutely fascinating. I really enjoyed this conversation and I think you will also, with no further ado, My interview with Michael Lewis. This is Mesters in Business with Very Redhoults on Bloomberg Radio my extra special guests this week. You know him, you love him, You've read all of his books. Best selling

author Michael Lewis. He has written so many seminal books, so many seminal tomes on Wall Street, from Liars Poker, The New New Thing, The Big Short, Flashboys, The Premonition, on and on and on it goes. Uh. He is out with season three of his podcast Against the Rules, and he also created a series of short uh discussions about Liars Poker, which celebrated its thirtieth anniversary right before

the pandemic. You can get that either as an audio book, the print book, or listen to the audio companion that he's put out on other people's money. Michael Lewis, Welcome back to Bloomberg. Good to hear your voice. Same here, same here. So for for the people who may not be familiar with you, let's let's just do a brief background. You graduate from Princeton and you head to Wall Street to make your fortune, where you were pretty much rejected

by everybody, most notably Lehman Brothers. Tell us a little bit about that experience. Well, I was at that point. I was a senior Princeton, and everybody was showing up on odd days of school wearing a suit and going to the career services office and interview with the Wall Street firms. Because that's just what you did. And so this is what one two uh, and it was. It was kind of a new thing that you know, half

the class of Princeton wanted to go to Wall Street. Um, but half the class of Princeton want to go to Wall Street. So I thought, well, I must want to go to Wall Street. Too, and I rolled into a few of those interviews, one with Lehman Brothers, uh, not even knowing really what Wall Street was, and um, I didn't really understand why I was supposed to know what Wall Street was. But but it was humiliating, you know, uh like, do you know the difference between the stock

and a bond? No, I'm happy to learn the kind of thing. And but but I was doing it not I really, I kind of it's not it's probably too starting to say it was a lark, but I just didn't have anything better to do, so I thought, what the hell, I'll go go to these interviews. And it was only later, so three years later, after I've done a master's at the London School of Economics, that I really accidentally falling into a job at Solomon Brothers. Um and just to slush this out, at Princeton, you're not

taking economics of business courses. Was an art history major, you know, I was an art history major. But that that didn't stop anybody. I mean it was I mean, that's the beginning of the world we're still kind of living in today. I may I have a daughter who's a junior in college, and you know, a third of her class wants to go work in financial services. Where in financial services a little different. Back then, it really was very bank centric. It was Morgan, Stanley, Goldman, Sachs,

Lehman Brothers, Solomon Brothers, and so on. Uh, but but it was I mean it was strange, right, I mean everybody just takes it for granted. Now, you don't grow up learning the difference between stock and a bond. Uh, you don't grow up knowing what a difference between a commercial banker and an investment banker. That was a question that you had to have the answer to if you were interviewing for investment banks, because they really needed to

be flattered that you knew the difference. That investment bankers were like, you know, they're alpha, alpha dogs and the commercial bankers were Nobody's. Uh, you need to be able to explain that difference. So you did. I remember kind of cribbing for the thing, getting the cliff notes from a friend who really cared about it, Like if they what are they gonna ask me? And what I gotta say?

And it was like, well, if they asked you about the difference between investment bankers and commercial bankers, you tell them that investment bankers drive ferraris and and commercial bankers drive forwards kind of thing, and and uh and it was but but it was it was so I mean shallow. It was a It was a shallow as having a quick conversation with a friend and then ducking into an interview with Lehman Brothers to see if I could get away with it um And it wasn't any genuine interest

because you how could it be genuine interests? You no idea what they did. Now, my insight was that this was true of the other you know, seven d people in my class who were applying for these jobs too, that nobody knew what they did. Almost nobody knew what they did, so everybody wanted to do it even though they didn't know what it was. I found it really ironic that you got rejected by Lehman Brothers who then come back into your life with the big short Well.

I never really made that I didn't feel deeply embitter everybody being injected. Were followed me about the Lehman Brothers interview and his inn liars poker, and I feel this to the day is that there were two people interviewing me, and one of them was a young woman I really liked who was two years ahead of me at Princeton and we were like pals on the Princeton campus and she knew me well pretty well. And when I get into the interview, it's like she's a different person. She's like,

we've never met. And if I don't know, if I can't talk intelligently about stocks and bonds, she's giving me a cold stare. And she created a really chilly environment. And I thought, this is strange. It's strange to do that with someone who you probably know well enough already to evaluate whether this person is going to fit in or not fit in, or be able to do the job or not do the job, or you know, has anything going on between their ears or he doesn't. And

she it was this really artificial thing. She was in one of those at the time, the suits that women wore with a big boat the little puffy boat ie and uh, and I just thought that it's just it's just it's just a really uncomfortable, socially uncomfortable. And I did pick up. I don't know, probably every kid picks this up when they're moving from school life to work life. Just um, how how how artificial work life can be,

how artificial it can seem. Uh And and that was that was my first brush with it, and it was really unsettling. I can I can imagine. So, so you don't get by Lehman Brothers. But eventually, through a crazy story you telling liars poker, you end up at what actually is the hottest firm in the world, Solomon Brothers. How soon after you arrived at Sally did you realize this is a really unusual place. Well, I'll tell you. I'll tell you two stories and you can decide which

one is true, because I actually don't remember. But um, the first story is I told myself, I thought, I told myself, Look, I know I want to be a writer, but no one's paying me to be a writer, and a really and you know, I can get ninety dollars an article writing for the Economist of the Wall Street Jurnal up at page or I can go take this job for huge piles of money. I can make some money and then figure out how to be a writer.

I think that's what was on my mind. And but but but I walked into I knew even before I walked into the place that it was a really interesting place. I mean, it was if you just go back and look at how much at Solomon's profits compared to the rest of Wall Street in say Night four they made, it was like they made more money than all the rest of Wall Street. Like it was just you were

they were clearly in some other business. Even if you didn't know what it was, you'd say, something weird is going on here, and I get there and it's raucous. I mean, it's crazy. The training program as a frat house. The trading floor is an even better frat house. It's

it's it's intellectually stimulating. It's actually the the the false kind of presentation of Wall Street at the time was that these investment bankers and the people in the investment banking department start out as analysts and become associates, and that worked their way up to vice presidents and they're always they're meeting with CEOs and they're doing the M and A transaction and all that. That that's where the actual intellectual life was. If you were a really good student,

that's where you went. And if you were like just had greasy elbows, you went to the trading floor. The truth was that the real intellectual work was being done on the trading floor. It was pricing these figuring out how to price and value and and trade these all these new complicated securities, and it was riveting. And also understanding how global markets were working. I mean just just they are all these new markets opening up everywhere, and

their relationships. It was far more intellectually stimulating than then the stuffy stuff that was going on inside the offices of the investment bankers. So instantly it's like, wow, people are wild here, and wow, it's actually intellectually interesting. So that the training class, which goes on for five months or wherever it was was, was one of the best

courses I've ever had in anything. It was absolutely riveting, and I sat there taking notes and asking questions and feeling like I was getting the world's best survey course in how the financials and worked. Um so I was so the second story. So the first story is I'm gonna go make some money and then figure out how to be a writer. The second story. And you can decide whether this ring is true or not. I have a friend who was in that training class, that first

training class that I was in. His name was Keenan Damon. He was an earnest young guy from Minnesota, and I never met him. I sat down next to him the first day of class, he says, and he said, and he says, I sat down and I said, Hey, who are you and what are you here for? And he said, I'm Keenan Damon and I'm here because I want to sell mortgage bonds and this is the place to sell mortgage bonds, which I thought was strange because how would anyone know they know me wanted to sell mortgage bonds.

But anyway, uh, and he said, he said to me, who are you and what are you here for? And according to him, I said, I'm Michael Lewis, and I'm here to write a book. Uh. Now, I can't believe I would have said that the you know, the first day of class as Solomon Brothers. But it is possible that I was already thinking this material is so good that this is what I'm gonna do. I'm gonna spend a few years here to write a book about it. But it was messy because I was kind of like,

I got very engaged with it for a while. If you'd asked me a year in what I was gonna do, I probably would have said I was going to stay five years. So you also kept a diary well during your days at Solomon Brothers. That that might suggest that you had a book on the mine. When did you start keeping that diary. Yeah, I'm not really a diary keeper, so that's true. If I was, and I was keeping a diary, diary is a little strong. It wasn't like, you know, I'm sad today and because my my best

friend said something mean to me. I didn't do it, none of that stuff. It was. I was just recording what I saw, and um and my thoughts about what I saw, and by the and and by the I mean, I do remember that by the crash of U when I just by chance was wandering around the New York trading floor, I worked in London but had been flown back to New York, and all hell was breaking loose. I I wandered around with a notebook out, just writing everything down. Uh, And I knew that I was going

to write about this at that point. I left three months later, But I think that what I was doing was going I was. I was still writing while I was there. I was going home at night and trying to publish, write magazine articles, so I think at the same time I was just kind of kind of keeping a record in my computer of what I was seeing and and so that does suggest that at some point I realized this was material for me. So you touch

on so many things. I have to ask. First, good trade leaving Sally three months after the eighty seven crash? Was that was that good timing? Well, the timing wasn't to the crash. The timing was to my bonus, which landed in the bank account at the end of January. So I had to hold my breath until that money hit. Um. At the end of eighty seven, I already had a book contract. I didn't sign it, but so I'd already I'd already sold an idea for a book and gone in And so at the end of January I went

and told my employers that I was leaving this good trade. Um, well, if my literary career hadn't worked out, it had been catastrophic, I was. I was. It looked anyway like I was gonna make a lot of money Solomon Brothers. I was paid. Then they told me I was gonna make a lot of money. Um. And I tell you, there was a really funny moment, and this tells you something about the spirit of that moment. It's very different from now. It's hard for people to believe that. You would think right

anybody was within like Goldman Sacks. Now we think there's no way I can like walk out of Golden sacttions and write a book about what I just saw. Goldman Sacs are gonna assume me. I will have signed all these non disclosure agreements. I'll be discredited every which way. Actually, there were no non disclosure agreements that Solomon Brothers. There was. I told when I told the bosses I was leaving, they took me. They took These were very senior people. They took me into a room and I told him

I was leaving. I was gonna write a book about Wall Street. I didn't know what the book was gonna look like exactly, but I said, I'm gonna go write a book about Wall Street. They didn't say, oh, like, what's in the book, and don't write about us. Nothing that was like furthest from their minds. They were worried about my mental health. They were sincerely worried. It was really sweet. If you're there, you just be thinking, these people really care about this young man they really thought.

They said, look, you just made whatever, a quarter of million dollars, You're probably gonna make twice that next year. They actually said, now, this is probably b s. But they did say, we think you're someone who might run the firm one day. And and I was just like, wow, you know, this is so nice of them to care so much, um and the and it was like, they just just don't do this, Like they said, wait ten years, wait five years, you get rich and then go write

your books, which is also what my father said. And uh, and I said to them, you know, I just can't. I just feel like I got to do this thing. And it was does a really sweet departure conversation, and they're just worried. They thought I was insane. So at the moment, it looked like in the moment, it looked

like a totally insane trade. But but you know, when you're twenty seven years old and you are full of passion and you think you know what you want to do, I think you really, I think it's smart to honor those ceilings. Ceilings. I really had a I mean I had a head of steam. I had no real justification for thinking that I was going to be a big success as a writer, but I had a head of steam. So so there are two points I have to sort

of annotate what you said. First, I think it's fair to say that liars poker is to some large degree why Goldman Sachs has non disclosure agreements. You kind of you kind of force that on the rest of the street. I think that's pretty fair, right, So I I ruined it for everybody. You did. Hey, listen, someone has to break the glass. And then second really end up on

the bottom of the sea and concrete shoes. But yeah, but secondly, you had already published a coliment the Wall Street Journal while you were working at Sally that got you into trouble that had the most hilarious resolution. Tell us about the compromise that was reached when you published under your own name. So this you have to do

a tiny bit of back story you need here. It was so I was writing while I was there, and things would get into print, and maybe a year and a half into my journey there, um I published an article on the op ed page of The Wall Street Journal arguing that investment bankers were overpaid. And it said at the bottom Michael Lewis is an associated Solomon Brothers in London, and um and I know, so this actually gets to you really kind of can't believe the spirit

of the thing. But I remember exactly how I felt. I was so excited I was in the Wall Street Journal. I thought when I came in the next day, like people would be slapping on the back, going, wow, you got a piece of the journal. All that I thought.

I thought like everybody could be happy for me. And I rolled in to the London office and the next morning and Charlie mcpayh, who I had adored, who ran the whole of Solomon Brothers International and had been the one who hired me, was waiting at my desk ashen faced, and he hadn't slept, and he said, we've had meetings with like the board of directors overnight about your piece because it's being apparently gonna be reprinted all over the

country and people are talking about the clients are calling. And he said, he said, you can't. I mean, my god, you've created crisis. And now you would think, oh, Michael, you're fired. There is the next line, But actually I think this is the backstory. I was in a very odd position I had at that point, maybe the second or third biggest customer of the whole firm who would speak only to me. Uh, it was it was a it was a proto hedge fund in London. Jacobroth's child

was the was the firm. But and the guy who ran the money there. Um thought it was amusing because I acknowledged to him how little I knew. He said, well, nobody knows anything. You want to at least try to sell me stuff. As long as don't try to sell me stuff, he said, I'll do my business through you, and he made me like the most successful salesman and

in in in the London office overnight. He was just channeling a huge volume through me and would refuse to like speak with anyone else at the firm, including John good Friend, the chairman. When he would show up in London, he'd say, I only talked to Michael. So I had this situation where that guy, he was probably generating ten million dollars of profits for Solomon Brothers, they were going to fire me because of him, and so it was sort of like, how do we deal with this problem?

And the boss of all of the bosses was sitting there at my desk and he said, I said, I'm not stopping writing that. That's you know. I made to do this. I'm gonna do it. And he said all right, he said could we do could you do it under? Could you leave us out of it? I said, yeah, I'm sorry, Ibou sad and he said, he said, uh. He said could you use another name? And I said, well,

how about if I used my mother's maiden name. I don't know why that popped into my head, but my mother's main name was Diana Bleaker Monroe, and Diana Bleaker Monroe wrote several pieces, a couple for the New Republic, a couple for a magazine in London about and I'm still using the material around me. It was just disguised and um and I would come a couple of times the New Republic rand pieces. I'd come into the office or the evening. They'd come out kind of thing that

someone would fax them over to the London office. They would be reprinted a thousand times and all over the desk, and no one knew it was me who wrote them, and they were everybody was reading him. So I had market testing for this stuff before I wrote. War was poker. I knew that people fought what I was writing about Wall Street was kind of funny and like on point. But that's that's so I had a little literary career rolling alongside my my career on the Solomon Trading for

because of this conversation with this guy. So not a total leap of faith. You had an idea, Hey, I have some traction as as a writer. I just you know, it seemed to me when I published a couple of things I published that were about Wall Street, that everybody on Wall Street wanted to read them. I wasn't thinking. I didn't know how big the audience was exactly, but I thought that was a good sign. Really interesting. Season

three of Against the Rules just dropped. Season one was about umpires and all the interesting things they go through and how umpire has changed. Season two was about coaching. Tell us a little bit about season three and experts. Why did you choose experts as a topic. Well, so the idea is to pick some role in American life.

So referees are coaches very broadly defined, like referee is also regulators for example, um or or you know, art kind of sours people who are making making calls about things and with experts, and the key to the role is that it be important and then it be a little volatile, and you're asking the question like, what's happened to this role? And there are a couple of things about experts that got me into it. Well one, I mean,

just to hook it up to the liars poker. I have been bewildered by people's willingness to accept other people ex experts since I was on Wall Street. But when I was on the phone selling stuff to people and professional investors would take what I said seriously when I knew I didn't know what I was talking about. That because I was at Solomon Brothers, I was the expert, and so I I got So I think my interest actually dates back to that, to the just how how

how fuzzy the whole concept is. And then of course, like my whole literary career is based on finding true the best experts. I mean, it's one way of looking at all the books I find. I find people who actually know what's going on, who you might not think are the people who know what's going on. Certainly true the big short moneyball, I mean, it happens over and over the PREMNISI exactly. It's it's it's it's surprising where you find the expert I have found over and over again.

And it's often not the high status people. It's often people who are buried away and no one knows who they are. And so I wind up writing whole books about people characters that the world thinks are in the beginning at least obscure until they make the movie about them.

But they are obscure to begin with. And and but there they shouldn't be, because they are the one who actually knows, say, how you value a baseball player, or how you should manage a pandemic, or what's going on on in in in sub prime mortgages in two thousand and six, um. And so I think that's another source of interest. Um. But but so that's got that got me into it. But they are all these questions that

just seemed really worth exploring, starting with like the pandemic. Um. Before the pandemic, the United States was like judged to be by far the most expert in managing pandemics of all countries on earth. But in a in a survey that had been done, and you know, a year into it, we have we have four pent of the world's population. Of the world of death. We clearly didn't whatever that expertise was, it didn't quite work. And I kind of look at the world and I think over and our country,

and I think over and over again. We're demonstrating this very strange ability to generate expertise, to generate knowledge and not use it, or not understand it, or not identify it or not respected. Um. So that gives me in and and the nature of the podcast is different from what you and I are doing, right, I mean, these are I'm writing film script. Every episode is is I mean a pain in the ass. It's every episode is.

It's what everyone's like. Everyone takes me about as long as a long magazine article tak I interview a bunch of people and try to make sense of some aspect of this problem and try to tell it as a story. And um, and so the seven episodes, each one is a different story. And UM, I mean, like the one that dropped this week to just give you, just to

give an idea of how it works. One that dropped this week is an attempt to make a kind of argument in story, um about why about this paradox and the paradox is, they're all these fields where you can see expertise has improved, where the experts are getting better and better, but where people trust them less and less or think they're actually say they're more. They're all I think less and less of them. So medicine is a

really good example. Nurses and doctors will tell you that for the last you know, fifteen years, they've felt they're clearly more likely to help you than they were. You know, every day they're learning stuff and uh, and yet every day the people who walk in their office are more likely to be armed with something from like web m D they read that says the doctor doesn't know what he's talking about. And um, but but you know, really so that's complicated example, but a really simple example that's

kind of fun. Um talked to a really old weatherman, someone who's been a meteorologist on TV for the last say, fifty years, as we did, and they'll tell you that, um, look fifty years ago, my forecast is basically sticking sticking my head out the window and saying with the weather was that that, yeah, I could kind of do it a kind of okay, two or three day forecast, my ten day forecast was just as good as guessing and

no better. And I certainly could and tell you like where when tornadoes were gonna happen and where they were going to hit. They can do all this stuff now. They can be very precise about extreme whether their ten day forecasts are pretty good, their three day forecasts are multiples more accurate than they used to be. But they used But they'll also say, we used to get on TV and speak with total certainty, like Ron Burgundy. We were like puffed up, important, confident people. Now we speak

because we understand that we really understand things. We're kind of talking in terms of probabilities and uncertainties, and we're expressing uncertainty and the audience. The way the audience has responded is you like to doubt the more. Uh. So the podcast is about how people don't really think probabilistically and and if you give them, if you tell them there's uh chance of rain and it rains, they think you don't know what you're talking about it they don't

understand what that means. And so I think so much modern expertise. One answer to the question why the expertise is getting better and better and why people understand it

less and less is the nature of the expertise. The expertise is very is probabilistic and data based, and it's it's a you know, in grand historic terms, data is a relatively new phenomenon, and people really don't understand when Nate Silver says, you know, Hillary Clinton has a seventies seven percent chance of beating Donald Trump and Trump wins. They think Nate Silver doesn't know where he's talking about.

What they should say is well, Nate Silver was actually a little more bush on Trump than all the people on TV, and in his model, Trump won almost three out of ten times. So it's it's um, it's so it's exploring this phenomenon, this this problem people have with problems with experts who talk in terms of probabilities. And you and I discuss this when we did the podcast after the Undoing Project that if someone goes on TV and says something bold with a lot of confidence, they're

believed more by the audience. And the person who comes out and says, well, you know, there's a sixty percent chance this could happen, and there's a probably if that can happen, they're perceived as wishy washy not. Not only does the person who expresses certainty, usually stupidly, um, get believed, they're much more likely to be on TV. When the TV producer calls you up if you say maybe this and maybe that, they just don't invite you on TV. TV wants you to come on and be certain, uh

and bold and interesting. Uh So it's um, it is. It's screwy how we don't we should respect experts who expressed doubts, even in their own understanding of the world, far more than experts who seem really confident. Uh. That should be like a that should be the bias, not the opposite. Um. And instead we were we reward this phony certainty, this phony confidence. We think we think it is, we think it reflects a deep understanding. We sort of we sort of get bluffed all the time at the

poker table. Um, instead of realizing that this is a bluff. Um. And the person, of course, oftentimes the person who's expressing

total certainly thinks they're right. It isn't that they're lying, it's that they actually actually they know they they know little enough about what they're talking about to sound certain about it, often wrong, never in doubt, often wrong, never in doubt that there is Um a quote of yours from I don't remember it was the first or second episode this season about how challenging it is to find the experts, and the line that you uses your job is to find the L six explain what the L

six is. And and this I specifically is the person who ends up saving thousands of lives via the Coast Guard because he changes the way we look for missing voters. So those are you're conflating two episodes here, Uh yeah, the ALL six. The L six episode is about a woman, a woman who figures out how to get money out of insurance companies. Me. But but you know what, the it's also true that the guy in the Coast Guard is an L six, uh six, and L six is

six levels down in the organization. And this is an insight that I first heard from an entrepreneur named Todd Park. And Todd Park had Um has created I think three different multibillion dollar companies in the healthcare industry, and in addition, he was chief Technology Officer for the United States and

the Obama administration. And Tod Park said to me, and the story we tell in the first episode is his first company and it's the story of he's trying to create um a business where he makes pregnancy less dangerous, more pleasant for women and and cuts the cost of catastrophic outcomes by basically caring for the mom better and

buys a pregnancy clinic in San Diego. And it's catastrophe because it's a catastrophe because one the insurers won't pay him and make pregnancy more pleasant, and to the clinic itself isn't getting paid for the work it's doing. And he realizes that the problem he really needs to solve is medical billing, that all around the country the insurance industry has gotten so complicated, and how it responds to

doctor's claims that doctors aren't getting paid. And he finds burying a basement in the hospital in Boston, this woman who has mastered the complexity the thousands of different insurance programs and the thousands of different permutations on the programs, and it's just got a gift for getting paid, uh knowing how to handle the complexity. Her name is Sue Henderson. And he realized that like on the ORG chart of

the hospital, she's six levels down. But without her, the hospitals that goes bankrupt, and the hospital itself doesn't think, it doesn't understand why it's business is working. And Todd extrapolates from this and realizes that in big systems and big corporations and big agencies and government that at when there is a crisis, when there is a problem and you're looking for the expertise to solve the problem, to answer the question, it's never at the top of the organization.

It's always some someone low in the organization who has some specific knowledge. And when you have, when you have uh, hierarchical organization, not a flat organization, that knowledge, the expertise has unbelievable difficulty in finding its way into the decision maker's hands. Um. And so Todd sets out to kind of build a career on this insight, and they're really

spectacular results he gets. He gets called in when when Obamacare fails on the first day, when the website crashes, and it's a it's like one of the one of

the catastrophes of the Obama presidency. Right, he goes all the trouble of getting getting the thing passed and and now the website crashes to is I think it's that point CTO of the country, and he knows, don't ask the people who are a top goes go go six levels down to ask who understands how this software works, and he finally finds six levels down contractors for the

government who who can solve the problem. But over and over he finds that you've got to go to these people, and so it raises like this bigger issue about expertise. I think, um, when you live in a society that's more or less equal, where where the persons six levels down is not all that far away in status from the person at the top and pay in the way people look at them in their sense of self importance,

there's a freer flow of conversation information. It's easier for the L six to get what they know into the head of the all one. But when you literally live in an increasingly unequal society where the CEO is being paid thirty million dollars and the L six is being paid fifty thou and is regarded as you know, an interchangeable art um, it's harder. And I think that part of our problem in unearthing expertise is a problem with inequality. UM. But we that that we get it, that only elliptically.

The story of this woman kind of coming in a completely unknown, unsung person and what's in her head, going into software and creating a multi billion dollar company called the Sene Health is a spectacular story. And and so that's the first episode of the season. So now you're you're almost done with season three. How do you like the sort of scripted podcast format that you're doing it? It seems a whole lot more collaborative than sitting alone

and typing in your your office at home. It's a perfect palate cleanser cleanser between books because it does a couple of things, and it is collaborative. It does work different muscles because you're writing for the year rather than the eye, and the year is a more. It's a more, it's got a it's it's got a different emotional palette than the It really responds differently to emotion you hear,

you hear the emotion in people's voices. It rewards emotion um and so I like being pulled in that direction for the podcast. I love I love the storytelling challenge of writing these scripts. I think it's just really useful for me. It's just it's a different it's it's um it's in some ways looser some way it's tighter than what happens with with when I'm writing a book. But it's it is cross training. It's like working different muscles. So I really like doing them. I wouldn't want to

just do them. I think alternating between books and podcast seasons is a really good thing, is really good for me, really healthy. A year ago, or barely a year ago, you released The Premonition, a Pandemic story, which was all about America's history with pandemics and how well prepared we were for the coronavirus rest. So, so it's been a year since the book has come out, and probably two years since you first sat down to start writing it.

How do you think it's held up in the ensuing decades. Well, it was a story that was designed to hold up in this way that I knew that it ended in May of two thousand, of two thousand and twenty, So it ended once it was clear that the United States had screwed up its response. Uh, and that most of what comes before is characters kind of showing you why the response was going to be screwed up. So and that's and so it didn't depend It didn't depend on

anything after that. It really is. It was the story was kind of over when I wrote it, which sounds strange because the pandemic is not over. Um the UM. I'm disappointed with the the the effect of the book in that I thought I'd watched the big short have a very big effect. I don't know it was exactly the right effect, but I thought that there was such

an obvious response to the stories. It wasn't you know what I was saying with the characters were saying, who were clearly the people among the people we should have been listening to going into the pandemic, uh, and that they were saying that the CDC has ceased to do what it what you think it does. It does not control disease. It observes and reports on disease. It's not

set up to be battlefield command in a pandemic. And so the first thing you do is create this creates something new that does respond uh to a pandemic, and you acknowledge this isn't what goes on in the CDC, and instead sent it's trying to pour more money into into the CDC. That surprised me. I thought I thought the book might stop such stuff from happening. So I'm

kind of disappointed. I'm kind of disappointed in that. Um the second and kind of this isn't the fault to the book, but it's it's it's a curious aspect of our society that one of the things the book points out that I find riveting. One of the characters had gone back, you know, uh, this was now fifteen years ago. He'd gone back and looked at what happened in nineteen eighteen in the pandemic and realized that the people then at the end of their pandemic hadn't fully understand what

it actually happened that they did. They didn't understand, in particular, that the things they had done to slow disease and prevent death, like closing churches and schools and saloons and social distancing stuff wearing masks, had actually really worked and explained differences in death rates between cities in America. And they hadn't. They hadn't. They just thought, well, there were deaths everywhere, it's hard to see the effects of these things.

They didn't have the data whatever, um, But they hadn't really done a postmortem that enabled them to be prepared if it happened again, like what worked and what didn't? And it seemed to me, I described that what this guy does and some at some length it seems to me like a natural thing for us to be doing now and we're not doing it. Uh, And I can't

I can't. I can't quite believe it. I mean, I can't believe that no one's asking why the death rate in Miami is three and a half times the death rates in San Francisco, or or why the death rate in in the red counties out here in California that didn't comply with public health orders is double or triple the death rate in the blue counties that did you know? I It may it may not be that the social

distancing worked. There may be some other explanation, but we need to know it because there were really different outcomes from place to place, and it's and I think we need ununderstand why. So so let's bring this back to our previous conversation about experts. It seems that the pandemic has led to even greater mistrust for experts, Or am I saying that backwards? Did the pandemic reveal a mistrust

that was already there. You know, what it revealed was an L six problem, that the that there was so little honest concern about pandemics for such a long time, that we had shoved the that the role, the actual job of controlling communicable disease, of preventing disease from moving from person to person, had been shoved down on local public health officers who had very who had very little social cloud, poorly paid, no one knew who they were, uh,

you know, not important people, and so they You know, if you want to find expertise in actually controlling communicable disease, you go inside you're really who nobody does, inside your local public health office, and you talk to the local public health officer who handled the measles outbreak at the school, or or or the you know, drug multi drug resistant tuberculosis outbreak in the bad neighborhood. You know, it's it's um.

They've been doing this and they have been very aware of the political consequences of trying to constrain people's movements and very aware of how you actually stop people from getting sick and dying. And they've been they're they've been fighting battles. So this war breaks out and to this day we have not acknowledged to those are the people who should be in front of the Senate talking about it, or or on a commission riding up a plan for the country. It isn't kind of grand pubas who are

floating around Washington. It's people at the local level who who we should surface as the experts. And they were the experts going in and they got slaughtered because they didn't have the social authority that you know. And what happened is in various states around the country, their their legal authority is being dialed back, which I think is

a catastrophe. I think that that that that removing the authority from the expert to do what needs to be done if there's a disease operak in your neighborhood is really a bad idea. To leave it in the hands of politicians is really a bad idea. Well, let's talk about one of those local experts who you surfaced. Um. Charity Dean is one of the key characters in the book.

I actually got to interview her at a conference last weekend of all places, Miami, since you mentioned it, and she is saying that given the b A to omicron variant that's starting to show up both in hospitals and in in waste treatment um plants, which she believes we should be checking lots and lots more of. She's looking for a surgeon in May and June. Tell us a

little bit about how you found charity Dean. Yeah, the the charity Dean was a is a wonderful character because she dramatizes the central problem is just how brave you have to be as a local public health officer to really do your job. Well, nobody should have to be as brave as she had to be. And um, she

but I found how I found her. It's kind of funny. Um. At the beginning of the pandemic, I thought I should be looking into this as a subject because I the book before the Premonition was the Fifth Risk, and was about how the government manages or doesn't manage or uh existential risks, how the federal government, how the tools we have at the federal level have been allowed to decay and offify and so so, and what were the consequences

of that. Well, here this existential risk pop pops up, and I think, well, it's an example of kind of what I was writing about. Let's see, let's see if there's a story here, And Charity was the last character I found of the main characters, and every other main character, UM Joe to you see a prominent viral prominent um virus hunter. Basically at UCSF UM a group of doctors they called themselves the Wolverines who had written the US

Pandemic plan um uh. Various people all said to me, Look, if you want to get to the guts of this, you've got to meet Charity Dean, because we met her, and she knows more more about like how to actually manage this in the middle of you know, in the fog of war than anybody. But Charity Deane herself was an L six. She was buried inside the State of

California Health Department, and she wasn't even running it. She was she was actually exactly six levels down from Gavin Newsom and and was being in January of two thousand twenty forbidden from using the word pandemic and banned from the meetings where they were discussing what would happen if this was this thing that was happening in China was

actually serious. She had already figured out it was very serious, and it was already thinking about strategies to deal with it, and she was being excluded from the conversations that that we're happening in California for the first couple of months of this thing, and um, and so I wrote her, I have an email somewhere where I wrote to the Department of Public Health in like, oh, I don't know May, April or May, and said I really want to interview Charity Dean. And I got a note back saying she

doesn't want to. She's she's unable to talk to you. I'm afraid that that's not going to happen. And it wasn't from her, so I put it to one side. I thought it was too bad, you don't want to talk to me, And then I got it annoyed me, And like a month later I managed to get her cell phone and I texted her and she said, they never sent me, they never asked me, they never told

me that you would call it. I'm happy to talk to you and uh and thus began this, I mean, an exploration of the character who I would argue might be the best character I have ever had for any book. Um, just spectacular and and who took que two to the nub of the problem in our pandemic response. UM, And I tell you what among the other things that A

surprised that surprised me about writing the premonition. When you go and spend time with someone who is a local public health officer, just asked them to tell you stories from their day or their career, it is so dramatic. I mean, it's it's guns and violence and scary stuff and people dying of disease and squirrelly doctors who were with dirty needles who are giving people hepatitis. It's it's it's one drama after another. And I couldn't figure out

why no one had done the TV show. I mean it was just the material was so good, I thought, And it was. It was naturally dramatic, naturally anecdotal material. I couldn't figure out why we didn't know about these people. UM. It was it was an arbitrage. It was like finding it was like finding a stock. No one's paid attention to UM and she was the stock. Uh. And I went along say the very least the last last premonition question.

We're recording this two days after a Trump appointed judge who the A b. A Described as not qualified, overturned the CDC mass mandates. What what are your thoughts on this? I think with the judges with effectively saying I didn't read I need to go read the you know, sixty page decision, but um, I glanced at it. Uh. The is that's that the Congress, not the CDC, has the power to do this, And it's sort of a version of which happened at the local at the state and

local level across the country. That the political process, and it's the it's the right wing removing the authority from the public health expert to do public health. I think it's really a really bad idea. However, inapt to see DC has been um for for sort of these sort of federal decisions. They really you know, until we get something better, that they kind of need to be the expert who's making the call on this, not not not a Congress. Uh. And I think, um, effectively, what what's

what what's happened is she's killed a lot of people. Um, she's doing this just as there is a rise in the number of cases she's making. She's making public trends. I don't want to wear a mask. So you're talking to someone, but half of my brain says, God's great, I don't have to wear a mask on an airplane anymore. I'm not at risk. I got I'm vaccinated, I'm Elsie nothing, I don't have any I'm none of them, none of the risk buckets. So who Yeah, great, I don't have

to wear a mask. You you actually do have a risk bucket because sixty plus is a co morbidity. Yeah, but I'm sixty one with the body of a thirty year old. So so so I actually don't think I'm in the risk bucket. You feel and it's it's um and so I just I don't. I don't myself. I really my first reaction is that, wow, great, thank God enough to wear my mask. But the second reaction is this is really bad public policy. This is like if you're just looking at what's going to happen because of this,

and I mean, I just it's a shame. It's a shame. It's a shame. And I think that that bold people will pay the price and what. But this gets back to the question of we need a post mortem at the end of this to show why people died where they died and were like what and why they were saved where they were saved, not for purpose of the retribution, not for purposes of blaming this judge for people dying because they caught it on an airplane, but for purposes

of going forward into the next one. We're not we're not using this as a learning experience. We're using is an arguing experience, and that it is such a shame because it's going to happen again. Cherry's right. I think Cherry's write about this. I mean, all my characters they say, look, this steals anomalous, this steals once every century. But actually the last twenty years, these these things have been jumping

from animals to people at a greater rate. And there's a reason our relationship with nature is broken, and and we're watching the result of that. Uh, and it's there's no reason to think it's not going to keep happening. So we need to learn. We really really need to learn. Our experts need to learn. And you're not learning if you're not asking honestly why things happened, really really really fascinating.

When the audio rites for Liars Poker reverted back, you decided to make a complete audio recording of the book. I just reread it for the first time since the mid nineties. Tell us what your experience was rereading your own work unsettling. I just I don't reread my books. Sometimes I feel like I should, and I pick them up in the first sentence that I got, I can't

do this. And I did that with Liars Poker. I remember, right on the paperback tour year after it came out, I thought I gotta go read it and remember what was in it, and I couldn't even do it. Um, So this really is the first time I've reread it, And I thought A couple of things were instantly obvious. One I was in the hands of an amateur um and I could actually hear. One form the amateurism took was the pros is infected by the voices of whoever is book I was reading while I was writing it.

So at one point I was reading from George Orwell and other Mark Twain or or Tom Wolfe or Rebecca West or. I remember what I was reading at the time because I can hear their voices in my prose, and that's it's a pale imitation of their voices. But I could see that the voice was wavering in in the book, and particularly early in the book, and not the first chapter because I wrote the first chapter last.

But but when you start at chapter two, you're seeing me in the beginning of my career, and it's kind of interesting. It's not until I get to about I can't do the passage in like chapter eight where I thought, huh, I'm liberated. This is actually more me. I recognized this and it's subtle, but it was watching. It's sort of like I was, I don't advise anybody to do this. I was learning how to write a book by writing a book. And um, and you can see it in

the pages of the book. So that surprised me. Um. I mean, let me jump in here because I just have to tell you I had the same experience rereading this in that it's clear in the beginning it's not truly you hadn't discovered your voice yet, but towards the mark or so, and I read this on a kindle, which I normally I prefer hard paper. But UM, I noticed that where you start talking about the mistakes that Salomon Brothers Management made, like the beginning of the end

of Salomon Brothers, Your you're becoming Michael lew. Listen that you're making these broad observations about other people's judgment errors and your voice really rings true there and my own judgment errors. I mean, I think the moment I said, the moment I first recognized, really recognized myself on the page is um an eight page or ten page story where I it's the first time I rip off a customer and I don't I'm so stupid. I don't know

I'm ripping them off. I think that the trader has just given me a smart thing to do, and um, and that that's the first time I thought, oh god, this works. I wouldn't actually change this, and this feels like me. Uh So that's you know, that's um. It was so that So that was the first takeaway was it was just I was I was figuring out how to trust myself as I was writing the book, and I came to trust myself eventually. Uh So that first

that's observation number one. Observation number two, UM was how much the financial world had changed since then. That I remember thinking as I was reading, I was thinking, God, I was so lucky that people actually shadowed at each other and prove telephones at each other, and and and we're actually doing trades face to face, because that's you know, without that, the book just has no life. And you walk into a trading floor or edge fund now and

it's just like silence. It's like people staring screens and tapping away and al goes are doing the trades. And I would be very hard to make it interesting now as it was. It's just I think it was just a more lively place. But but there was the butt was you could see the seeds of what Wall Street is now in what Wall Street was becoming. Men. Uh that there are big macro things happening, and they're happening

in the book. That are big changes starting with like half the class of Princeton wants to go work on Wall Street. Uh, these changes that are happening in the culture. Uh, that are happening right then. And so in that way there was a current, there was still some currency to it. Um that was That was the other reaction had lots of other little reactions. The main little reaction was, and this is like a rule, is that it was when

I thought I was being funny, I wasn't funny. And the stuff that was funny I didn't realize was funny. When I was I was laughing when I was rereading my book. I was laughing in places where I didn't laugh when I wrote it, and I wasn't laughing in places where I did laugh where I wrote it. So so let me share one thought with you that I didn't I couldn't have picked up in in nine whenever I read it the first time. But but it was

very clear this time. Um not just that Salomon Brothers was was formative to Liars Poker, but Liars Poker very much foreshadowed your future books. The whole discussion of of how mortgage bonds were developed and other the IO p O bonds and other sort of things sort of uh presage the Big Short. That there's conversations about geeks and experts being ignored, presaging money boil and premonition. There's even some discussions about the computer guys coming in and they're

still ignored. But eventually that's flashboys. And am I wildly overstating this or are there seeds of of your future books present? There's no question that the Big Short is presaged in in the mortgage all the stuff about the mortgage market that's going on. I mean, Louis Rohnieri himself, the guy who who created the mortgage securities market when when the the financial crisis happens, blames himself. I don't think that's fair. It's like it's like it's like Dr

Frankenstein blaming himself for what the monster became. But it's uh, he it's um, he saw the connection. So that's there's an obvious connection between the innovation that occurred while I was at Solomon Brothers and the disaster that ensued twenty years later. Um. The intellectualization of finance, um is there is a connection between that and the intellectualization of sports. Um.

You know. First, I mean I would there's probably a great story in the undergraduate physics program at M I T. And if you go back forty years, I bet like they all become physicists. And if you go back thirty years, a few of them are trickling onto Wall Street. Uh. And you go there now and it's sort of like they either go to Wall Street or they go into sports.

It's it's it's it's uh. It's it's interesting how we've or maybe Silicon Valley, how we have channel that kind of intellect in the enterprises that previously didn't see a need for it by complicating those enterprises. And you know, first finance got very complicated, and then sports got very complicated. Huh, really really interesting, Um, tell us, what was the law of the jungle which runs through the book so much.

I always thought of it as as you know, kill or be killed, which very much is a factor here. But but Solomon Brothers was a little unique in the way they managed that. And you point out later in the book how they allowed their biggest, best, most profitable traders to leave after they were no longer a partnership.

And you know, these guys are traders, and they made the trade to you know, to hit the bid and joined goldman Or or Morgan Stanley or somewhere else where they were Merrill Lynch where they would be paid millions more than the few hundred thousand they were getting, plus a bonus at Sally. Yeah, there was an odd contradiction in the solemn management theory. Um. John good Friend would say things like, um, you gotta get you're gonna come

work here. You have to be you have to wake up in the morning willing to bite the ass off a bear. Or he'd say, nobody here is gonna get stabbed in the back of people are gonna come at you through the front door with a hatchet. Uh. That he encouraged this red and tooth and claw free for all on the trading floor where everybody kind of for himself, all for the firm sort of thing. And um, at the same time, he's after he sold the firm, and so there was not the partnership stake to yoke people

to the firm. Um. He expected total loyalty and fealty from these killers who we had encouraged, and that that they weren't if they were being paid three thousand dollars and Solomon Brothers and Merrilynch offered him a million, it would have been it was it was regarded as treason to take the million, and that was crazy that you

couldn't have both. Um. So he sort of encouraged the very qualities that led people to look out for themselves and respond to market incentives rather than to other kinds of incentives like loyalty of the firm um. And and didn't see the contradiction. Uh, And it really cost him. I mean, he had virtual monopolies in markets that he just let's slip away by letting traders go and of course they wouldn't have been able to preserve the monopoly.

Eventually they would have lost their grip on the mortgage market or on the arbitrage trading or whatever it was. That they had an edge, but they had have kept it free some more time. And while they had it, it was so valuable. So it was, it was, It was. It was an odd situation, um and the whole firm,

the whole firm knew it was mismanaged. While I was there, I mean, down to the lowest geek, everybody knew whatever they thought about Good Fund personally, they realized that the thing was just not managed well and they couldn't quite understand why it was managed the way it was managed. But the effect for me was a really smoothly managed firm is much less fun to write about. The total chaos, just a total chaos. So the chaos that I got

to write about was much more fun. So I mean, in some ways I'm forever in John good Friend's debt because because he created an environment that was literary gold mine. To say the very least last question before we get to our speed round, and that is throughout the book. Because Sally was a bond shop there's a lot of talk about debt, government debt, consumer debt, mortgage debt, America's borrowers and and all, what an evil this is, how it will eventually weaken the dollar and cause all sorts

of economic mischief. But it's three decades later, and it's other than the financial crisis, which was very specific and not traditional debt driven. We really haven't seen a lot of the bad things come to pass from all that debt. What's your assessment of that era? Did everybody just repeat the same things and more or less out at wrong? Well? Yes, part of what was going on is it's such a departure from American historical historical American finance, uh that it was.

I mean the people who said this is all going to be fine have improved right so far. I think that there's still another shooter drop and maybe it's dropping now. I mean, eventually, you can't live beyond on your means forever and um. And the financial crisis was in some ways, of a lot of ways a byproduct of this American a willingness to live well beyond its means um and

using and using debt to do it. Um the machine, I mean, the crucial ingredients, the crucial parts of this enabled this machine to function, or things like the dollar is a reserve currency around the world which we're putting at risk, or um, I mean it's it's so I'm not I know, I'm not completely answering your question that people kind of get it wrong back then. I don't.

I mean I think people would. If you go back and talk to Henry Kaufman way back in three or eighty five, I think he probably would say that I'm surprised by what happened. I would have thought that. I wouldn't have fought the federal government will be able to run the deficits it's been running for as long as it's been running it. I wouldn't have thought the American consumer would get way with with the American consumer got away with in the run up to the to the

financial crisis. But and it's not going to end well, he would say, But it's still has it ended? I mean, we're still kind of in this period. So, um, the period the Great American debt explosion. So I have to point out that each of your books led to a subsequent expansion of American debt. You had Liars Poker and the big debt explosion we saw in the eighties and nineties, the big short look at look at how the FedEx been in the barrel battleship, and then the pandemic. So

I'm not suggestingzation, right, but but you're talking. Every time you describe one of these big issues in a book, it's often because the result of that issue was a huge expansion of debt. Yeah, it's true. So so I know I have a hard stop with you. So let me in the last two minutes jump to our speed round and score favorite questions. Five questions, seconds on the clock. Let's let's get this started. What are you streaming these days?

Tell us what's keeping you entertained? Well, oddly, I'm streaming a preview of the six part neck Netflix series called The G Word, which is based on the Fifth Risk. So I'm just started watching my own television show. I didn't make it, Adam kind of over made at the comedian, But um, I'm watching that. When when does that come out on Netflix? When can the rest of us dream that?

End of may? Alright, looking forward to that? So so you uh in in the new podcast in in UM season three, you kind of um reveal some of your mentors tell us a little bit about dash rip Rock and Alexander and the human Piranha. Um. I actually go back and talk to these pseudonymous characters, and they reveal themselves in the podcast. Um, it's it's kind of where they are now. That's interesting because you can see where

they were and then in the book. But the human piranha, who was ferocious on the Solomon training floor, has mellowed into just a sweet guy who is emotionally intelligent. He's just he's transformed in some ways. Um. Dash rip Rock spenting his career he made up up until very recently was in the bond markets and has watched essentially, he says, the death of the American bond salesman. He's watched his career,

his occupation just more or less banish. Uh and Alexander left Solomon Brothers, had a blew up, blew up at a hedge fund um and it has had a kind of interesting career as a private investor and lives in Singapore. Um. So they they're all, they they've all, they've all kind of mellowed. Uh. And they all I think I think it's probably fair to say, like everybody in my training class. Us. All the people who stand on Wall Street anyway, they

all made more money than me. Uh that I don't doubt. UM. Give us two books that you've read, either a longtime favorite or what you're reading right now. I've got two novels that I'm starting and I'm gonna I'm reading. I shouldn't do this, but I'm about to do it, uh, or read at the same time. One is a novel called Horse by Geraldine Brooks, who is an old friend and and is like a really great writer. And it's so much fun when one of your friends is actually

a great writer. Um and so, and that actually isn't out yet, that comes out next month. So I'm reading the galleys of that book. And I just picked up at the same time, UM, a book about my hometown and novel set in my hometown by a writer I don't know books called The Yellow House set in New Orleans. I think it won the Pulitzer Prize of the National Book Award. Sarah Broom is the name of the author. And it's a it's a it's a view of New Orleans as very different from the New Orleans I grew up.

It's it's it's um, it's black New Orleans rather than white New Orleans, and that always interests me. So you have said that Liars Poker had a very different impact on the world than you expected, and people requested advice of you after the book came out or thought the book was a how to guide. What sort of advice would you give today to a recent college grad who

was interested in a career on Wall Street? Um, ask why you're interested first, and go talk to people who were twenty years older than you who kind of remind you of how you, who kind of looked like they might have been like you when they were your age, and see what you think of their lives. Because they're really great ways to have careers on Wall Street, and they're really bad ways a career in Wall Street, and

people go in for the wrong reasons, for obvious reasons. Um. The other thing I'd say is figure out whether whether you're a job a career person, a job person, or a calling person. That if you need a calling as opposed to a job, um, uh, you can find it on Wall Street. But it's much more likely you got a job that pays real well and you're gonna be really frustrated with your life if you spend it in

a job when what you really need is a calling. Alright, Final question, what do you know about the world of either investing or writing today? You wish you knew when you first sat down to write Liars Poker thirty two years ago. This is damning. I don't think I've actually learned anything about investing in the last thirty two years. It's all at all useful. I think that's sort of like all the useful things are really simple, and I picked those up by doing the opposite back in with

other people's money. Um writing, you know, I'll give you one simple answer. It's and it's I think the best things I've done are because I've got the best characters. That I think that I underestimated the importance of character early on in my writing career, and I've I've gotten better and better at at at identifying characters who are really good and and writing them. So I think that

leading with character is what I've learned. We have been speaking with Michael Lewis, author of such seminal books as Moneyball, The Big Short, and Liars Poker. If you enjoy this conversation, be sure and check out any of our previous three prior discussions. You can find those wherever you get your podcasts. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Check out my daily reads at rid Halts dot com. Follow me

on Twitter at rit Halts. I would be remiss if I did not thank the crack team who helps with these conversations together each week. Justin no Her is my audio engineer. Attica Valbran is my project manager. Paris Walds is my producer. Sean Russo is my research director. I'm Barry Results. You've been listening to Masters in Business on Boomberg Radio