Michael Lewis, author of Liar’s Poker, provides a concise account of how we got into the economic mess in Portfolio magazine.
In the middle of his story, Lewis offers insight on how, if you want to profit from something, you have to understand it, and how, if you want to understand it, you have to be persistent in asking questions—even the same question, over and over.
Illustrating that point is Steve Eisman, a brilliant and abrasive financier described by a hedge fund manager as “smart and honest and fearless.” (Sound like a leader so far?)
“Steve’s fun to take to any Wall Street meeting,” says one of his partners. “Because he’ll say, ‘Explain that to me,’ 30 times. Or ‘Could you explain that more, in English?’ Because once you do that, there are a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times, they don’t!”
Lesson: By relentlessly asking questions, Eisman was one of less than a dozen people who truly understood how subprime mortgages and their derivatives worked, tried (loudly and obnoxiously) to warn the world of impending doom, bet on the system to blow up and made a fortune.
— Adapted from “The End of Wall Street’s Boom,” Michael Lewis, Portfolio, www.portfolio.com.