We admit, we wanted to read something scandalous in ‘Why I Left Goldman Sachs,’ the Wall Street tell-all by Greg Smith — writing about finance every day does not take away the thrill of an inside look at one of the most mysterious companies in the world.
But for the last 4 days or so, the financial media has torn the book limb from limb, saying that it reads like a diary, or as Andrew Ross Sorkin said, the lack of juicy insider information made it felt like a con.
And maybe it was for him, but for countless people who know very little about the Street, it could be helpful.
‘Why I Left Goldmanc Sachs’ isn’t for people who know the Street. It’s not even for anyone who’s read Liar’s Poker (that’s way more advanced). It’s for the millions of people who have no idea what Wall Street is. It’s for the people who only heard about Goldman Sachs or Lehman Brothers in 2008, when it seemed like the world was collapsing under the weight of Wall Street’s complex business.
This isn’t hard to pick up. Smith talks about complicated things like markets and hedge funds in simple terms meant to be understood by someone who’s never heard of a derivative.
From the book:
There was a whole segment of hedge funds that had the wrong trade on before Lehman Brothers went belly-up. These funds were almost always short volatility: In other words, they’d bet that, on average, markets would remain fairly calm, even though there might be some hiccups along the way… The problem was that these hedge funds were not anticipating “Black Swan” events, a term coined by Nassim Taleb to explain once-in-a-thousand-year-type events that people do not expect and that models can’t predict.
If that simple explanation doesn’t give away that this book isn’t written for the Street, the glossary of “Trader-Speak” in the back should. It includes words and phrases like “asset management”, “hit the tape,” and “smart money” — things every Wall Streeter should already have burned in their brain.
It also includes cultural things, like the Goldman Sachs dress code (two words: Brooks Brothers) and an anecdote about what happens when a trader (in this case Smith) executes his first trade. In that sense, the book is just a portrait of one of Wall Street’s many eco-systems.
‘Why I Left Goldman Sachs’ is not the damning indictment everyone expected, it’s a look into a secretive centre of power from the perspective of someone who takes the time to explain it to those who’ve never been anywhere near it — something that could have been useful before the financial crisis.
It’s not good Goldman, it’s not evil, Goldman. It’s just Goldman for dummies.