F.I.A.S.C.O.: Blood in the Water on Wall Street

Rating:
Summary: Flawed, but superb nonetheless
Review: A very good introduction to derivatives (and even some general finance for novices) and one of the better looks at how degenerate Wall Street culture can be. Though comparisons are frequently made to Liar's Poker, I found FIASCO to be a more useful read, even though it's not quite as funny as Liar's Poker was at its best. The usual tales of arrested development among Wall Street's community are here, but there's a much more gripping and sobering tale of how rapacious greed knows no bounds, and how a large number of actors, including large multinationals and even governments, ultimately pay the price.

Partnoy doesn't tell his story as smoothly as he could, and his narrative sometimes feels larded with anecdotes that don't add much color or relief. He also struggles at times to weigh his role in the big picture. Overall though, he describes his experiences and general Wall Street culture with enough insight that you can feel his disgust, and applaud when he eventually steps away from it all.

A great business book, flaws and all, and a perfect antidote to all the puffery surrounding coverage of financial markets and Wall Street these days. Now when will we see a book of investment banker/derivatives trader jokes, to add to all the great lawyer joke books?

Rating:
Summary: It's like watching how hotdogs are made....
Review: F.I.A.S.C.O. offers a look at the ruthless game of derivatives trading on Wall Street, and the devastation of losses upwards of billions suffered by the fools off Wall Street. In this fast paced book, Frank Partnoy chronicles his journey as a derivatives salesman at Morgan Stanley. You will learn how institutions ranging from banks to governments got "blown up" or had their "faces ripped off" by Wall Street's army of fierce derivative salemen. You will cringe at how many organizations that touch your life may be involved in trading these complex, highly leveraged, instruments when they may not even know it or be legally allowed to invest in them.

Portnoy tells his story in a fluid style, leaving the reader wanting more, page after page. This book exposes the greed and ignorance of the market's fools, or customers, and the eagerness of the Wall Street investment firms to offer ever more enticingly packaged derivative instruments to help them achieve their ruin. Everyone who has money in the markets should read a few books like this to get a more realistic idea of what these venerable Wall Street institutions really think of their customers.

Rating:
Summary: Here's why derivatives become more and more complex
Review: The book has the merit of going through the most complex derivatives and structured products explaining to a fair extent business motivations behind the deal, an information that is not only confidential, but that constitutes the bread and butter of investment banks.

I loved the book until I got to the last chapter. I would have rated this book ... if it wasn't for this last chapter that the author has added in more recent editions.

I would like to make two comments:
The book tends to explain the concept of present value in simple words, but still wants to go through the most complex derivatives. As a result, certain parts are boring to someone without the financial background, but I would doubt that anyone without the financial background would make it to the second chapter or even be attracted to the book.
My second criticism is regarding the last chapter, "Epilogue". This chapter ruins the book. The author develops an anti-derivatives theory that turns to be amusing. As everyone knows, a tool is neither good nor bad by itself. It is what one achieves with the tool that is good or bad. This principle is also valid for derivatives. It is useless, not to say irritating to go through a list of lawsuits and settlements. This is not proving any further that derivatives are bad or that investment banks are evil.