Michael Lewis at a glance: Michael Lewis graduated in art history from Princeton University, worked as an art dealer, furthered his education at the London School of Economics, got a job at the hottest investment bank in New York, was promoted, resigned, wrote a bestseller about the dark inside of the financial world and became world famous.
Deregulated financial industry
His breakthrough book – commonly referred to as "the financial world's bible" – was Liars Poker (1989), which he wrote shortly after leaving Salomon Brothers bank at the age of 27. The book is partly autobiographical and described the culture that prevailed on Wall Street in the 1980s, after state deregulation. At the time, Salomon Brothers was the largest and most profitable investment bank in the United States, known for its 'alfa male' culture and for being a place where expressions such as "Big Swinging Dick" were coined. Among other things, Salomon was the first bank to launch new financial instruments such as mortgage-backed securities.
Neither the banks nor investors fully understood the risks they were taking. In Forbes magazine, Lewis commented on his time at Salomon Brothers as follows:
"To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue."
At SKAGEN's New Year's Conference 2021, Lewis will offer a unique look at the investment world against the backdrop of the corona pandemic and the US presidential election. With his charismatic style and deep insight into current societal issues, he will share his views on the risks and undiscovered opportunities that lie on the horizon in 2021.
Please note: Michael Lewis' presentation is subject to strict restrictions - there will be no opportunity for the media to reproduce the content.
Then came the crash
Little did Lewis know then that the financial world of the eighties would appear almost idyllic 20 years later, when the financial crisis struck.
The book The Big Short, which has also been made into an Oscar-nominated film (2015) starring Christian Bale, Ryan Gosling and Brad Pitt, is about those who saw the crisis coming. It describes the intricate mechanisms that banks created to inflate the housing market in the mid-2000s and make money on borrowers' growing debt mountain, until the system inevitably crashed.
Over the years, Michael Lewis has published a number of books on a seemingly wide-range of topics, but where the recurring theme is injustice and the risks inherent in the social system.
His latest book, The Fifth Risk, addresses the Trump administration's greed and lack of knowledge. Not least, Lewis describes the major threats that no one suspects in advance, such as how to stop a pandemic.
In his book, The Undoing Project, Lewis describes the friendship between the Israeli psychologists Daniel Kahneman (Nobel Prize winner in economics in 2002) and Amos Tversky, and their groundbreaking research into behavioural economics and how people handle risk. The Blind Side is the story of Michael Oher, a black boy living on the streets of Memphis, and how life changes after he is adopted by a white family. In Flash Boys, the main characters discover that the stock markets are rigged to favour people with inside information, and that after the financial crisis, Wall Street has in reality been more than controlled by the largest financial players in the US. Moneyball is based on the true story of American baseball league's poorest team, which managed to win 103 games in a season by finding underrated players who were considered too old, too injured or "too ugly" - and which beneath the surface is a story about how the market assesses people.
In 2019, he launched the podcast Against the rules with Michael Lewis. Here, too, injustice is central, something he often combines with his characteristic dry sense of humour and two of his big passions: sport and finance.
One particular episode focuses on the painting Salvator Mundi (Saviour of the World) which depicts Jesus and is attributed to the Renaissance artist Leonardo da Vinci. The painting is thought to date from around the year 1500, appeared on the market in 2005, and set a world record twelve years later as the most expensive painting ever sold at auction. Many experts doubt that it was da Vinci himself who painted the picture, but it was still sold by Christies in New York in 2017 for 450 million dollars to an unknown buyer (rumours have it that the Saudi Crown Prince Mohammad Bin Salman is the mysterious buyer). Since then, the painting has not been seen.
Over the course of the episode, Lewis questions art experts who themselves have everything to gain from confirming the painting's authenticity. The episode is just as much about the market for used cars, the rating companies being pressured into put high ratings on dubious securities in 2008, and finally about the modern world's lack of justice.