BOOK REVIEW: “The Greatest Trade Ever” by Gregory Zuckerman

We all know the story.  Housing prices got way overheated and eventually had to come down.  Unfortunately, not everyone realized that while it was happening.  In fact, very few people realized that.  Even fewer had the access to the financial instruments that would allow them to profit from the inevitable fall.  “The Greatest Trade Ever” tells the story of a few of those men.

The book has the feel of a roller coaster.  However, it’s a roller coaster that consists completely of one really big hill.  The first half of the book is a series of profiles of investors that were sure that the housing market was due to fall.  Each of the stories follows the same basic premise: investor can’t believe how many subprime loans are being made, investor buys insurance on the bonds issued supported by those CDO’s, investor vents frustration that the housing market hasn’t fallen yet, investor is giddy when the housing market falls and makes more money than he ever imagined, investor is unsatisfied and looks for the next way to make even more money.

While the topic that there were those on and off of Wall Street that could plainly see what the “rational market” mavens like Greenspan couldn’t see is interesting, this book would have been more readable as something like a New Yorker feature article with a lot of the more mundane and repetitive details ably edited out.  A truly skilled author is able to take known history and still create tension as to how in addition to what happened.  Zuckerman does not do this.  Furthermore, the heroes in the book are not easy to root for.  It takes a bit of psychic disconnect to feel good about very rich people getting grotesquely richer as a result of hundreds of thousands of people losing their homes because of financial time bombs created by other very rich people.

For a bit of history by someone profiled in this book, check out the opinion piece by Michael Burry recently in the New York Times.

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