A week ago I came across an interesting post which compared google’s arrogant and secretive demeanour to the hedge fund Long Term Capital Management. The fund, which imploded, lost over $4 billion in 4 months.
I found this posting pretty interesting as I’m actually a (tiny) shareholder of GOOG and, oddly enough, just finished reading the definitive book on LTCM entitled When Genius Failed. I first heard about the book while reading Smartest Guys in the Room. It turns out that every trader at Enron was required to read the book which details how greed and arrogance took down a hedge fund which employed couple noble laureates (one from Hamilton, Ontario of all places) along with the living legend of wall street, John Meriwether.
Meriwether was a bond trader in the 80s with Salomon Brothers and is a hero in the wall street classic Liar’s Poker. The book gets it’s title from a form of poker that uses the serial numbers on $1 US bills and for which Meriwether was considered the grand champion. According to the book (and wall street lore), one day Salomon’s CEO John Gutfreund came up to Meriwether and said “one game. one million. no tears”.
For [Meriwether], 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”.
Gutfreund just told him he was crazy and walked away.
What exactly did you mean by “from Hamilton, Ontario of all places”? I’ll have you know that some greats come out of the Hammer. Like, the Canadian Football Hall of Fame for example!