Transcript: Michael Lewis on MIB



The transcript from this week’s MIB: Michael Lewis is below.

You can stream/download the full conversation, including the podcast extras on  iTunesBloombergOvercast, and Stitcher. Our earlier podcasts can all be found at iTunesStitcherOvercast, and Bloomberg.




VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week on the podcast, I know you guys bust my chops for saying I have an extra special guest. But I have an extra special. Michael Lewis sat with me for nine hours. We talked about everything he’s ever written since he was nine years old, and it is absolutely spectacular. So with no further buildup or ado, my conversation with Michael Lewis.

I have an extra special guest today. His name is Michael Lewis. What can I say? You know about him from “Liar’s Poker,” “The New New Thing,” Moneyball,” “The Blind Side,” “The Big Short,” “The Undoing Project,” “The Fifth Risk.” He has a new project, Against the Rules, a podcast about referees in life and whatever happened to fairness, which I have to tell you I found quite fascinating.

Michael Lewis, welcome to Bloomberg.

LEWIS: Thanks for having me.

RITHOLTZ: My pleasure. We — I — I really enjoyed speaking with you in Florida at the — that the giant conference. And I felt we did not have enough time to fully flesh out …

LEWIS: That’s the reason you felt that way …


LEWIS: … because we didn’t have enough time.

RITHOLTZ: We did not have enough time.

LEWIS: Right.

RITHOLTZ: So tonight you’ll be free around midnight and you’ll get to go downtown and then we’ll — we’ll set you loose. Let’s set the table and start in the 1980s. You’re working on one of the hottest bond firms in the world, but you don’t care. You had started a diary and had delusions of becoming a writer. Explain what you were thinking about.

LEWIS: Before I went to work for Salomon Brothers, I had started publishing magazine pieces and then decide that’s what I wanted to do, to be a writer but had no sense that you can make a living doing this.

RITHOLTZ: You thought it was a hobby?

LEWIS: I thought that I didn’t know — I just I didn’t know, because I was being paid by “The Economist” magazine $90 for what amounted to three weeks work.


LEWIS: I didn’t see how this was going to work out as a living. So I — I thought — I — I thought I was going to write. But this job lands in my lap, I go take the job and it’s about six months before I realized that I’m going to write about the job, that it was such an – I was – you know, if you think back to where I …

RITHOLTZ: Early 80s, right.

LEWIS: It was 1985, Salomon Brothers is making so much more money than every other Wall Street back, it looks like it’s in a different business. I’m — I — I land as the sales — in the sales arm of John Meriwether’s derivative — his — his proprietary trading book, so I’m selling derivatives.

RITHOLTZ: That’s a fair way to start — start a career.

LEWIS: Sitting — sort of sitting right in the middle of the firm and right in the middle of what’s new. And, you know, it was just — it became pretty clear that — no, I’d say this glibly but actually – pretty clear I had stories to tell just from my experience. I published a few of them while I was there. I’ve had to write under a pseudonym because they caught me writing on my real name and they …


LEWIS: … sort of fired me and all.

RITHOLTZ: … let’s talk about that. You — under your actual name, while working at Salomon Brothers, you published a column in the Wall Street Journal essentially calling bankers “overpaid babies.” And you described what actually happened, what — who called you into their office and …

LEWIS: Also so I was in …

RITHOLTZ: … what was the compromise?

LEWIS: … so I was in London, and I got to my desk in the morning and waiting for me at — at my desk was the head of Salomon Brothers International to say that he had had just a horrible night because of this piece that I’ve written in the Wall Street Journal. And I was so pleased I had a piece in the Wall Street Journal. I thought everybody will be proud of me. But at the bottom of it, it said, “Michael Lewis is an associate of Salomon Brothers in London.”

And he said, “You don’t understand, Mike.” He said, “The Board of Directors has been meeting on — about this piece.” And for complicated reasons — well, maybe not that complicated reasons, they couldn’t find — they weren’t going to fire me. They weren’t going to fire me because I was generating a lot of money for the firm. I had a — I’ve locked into a really big customer. So they didn’t want to fire me. They wanted to reach some agreement that would prevent me from doing this again. And he basically said, “You should write.” And I said, “But you don’t understand, I’m going to write.”

And he was — Salomon Brothers is filled with interesting people. He was sympathetic to that. He knew — he understood it was like to like to do something. He said — he said, “Could you write under a pseudonym?” And I said, “That would work. I don’t care. Nobody knows who I am.” And we decided the pseudonym I should write under was my mother’s maiden name, Diana Bleeker. He — and he said, “That’s great because no one will ever guess that a woman is a man.”

RITHOLTZ: So you’re using — you weren’t writing as Michael Bleeker, you were writing as Diana.

LEWIS: Diana Bleeker, and I published a few pieces, not many under the — the name Diana Bleeker, but they got a lot of attention because I — because I felt liberated. I can write about what was happening right next to me now. No one would ever track it back to me.

And one evening — this was two years into my Salomon Brothers tenure — I got a call from Chevy Chase’s father, Ned Chase who was a …

RITHOLTZ: Ned — so Chevy Chase from Saturday Night Live and the movies, his dad …

LEWIS: Was a big shot New York editor, a book editor at Simon & Schuster, and he said, “I — I found out that Diana Bleeker is you, and I read these pieces, and you really have a book in you. Will you write a book?” And I didn’t know what they’re going to pay. I didn’t have — at that moment I realized I can — I can — I can eke out a living doing this. So at that moment, I was out — out the door in my head. I had to wait a few months for my bonus to hit the account. But once my bonus — my bonus arrived, I was out the door and I — and working.

But, you know, I say that I was going to just write a book about my experience, but the book I sold, “Liar’s Poker,” I recently saw the proposal. It really was just telling a history of Wall Street. I wasn’t even in the book proposal that I sold. And then when I started writing it, it was so clear to me that my experience was richer-material in all of this other stuff I was going to write about; they just took off in that direction. And — and that’s the beginning of my career.

RITHOLTZ: How did Ned Chase figure out that you were Diana Bleeker, like what was his clue?

LEWIS: It wasn’t — in the end it wasn’t that hard because the piece that had caught his attention was in the New Republic then edited them by Mike Kinsley. And Mike Kinsley refused to let me use a pseudonym without saying on the bottom, “Diana Bleeker is a pseudonym.” And — and so I think he called Kinsley and Kinsley get — called him.

RITHOLTZ: He gave you up.

LEWIS: He gave me up.

RITHOLTZ: That — so — so here’s the really interesting thing. You’re making so much money at Salomon Brothers. Friends and family say he wants to become a writer. We must stage an intervention. What — what on earth was that evening like?

LEWIS: So it wasn’t — it wasn’t even friends and family, it was — it was friends and family, but my boss is the Salomon Brothers. When I told them what I was going to do, hold me into a room and they actually — they could care less that I was going to write a book about Wall Street, which sounds naïve, right, but they’re just like, sure, go write your book about Wall Street.

They were worried about my sanity. They — they thought — they — they said, “Look, you made 250 last year. You’re probably going to make twice that next year and then from there you’re going to make lots of money here. You’re crazy to go do this. Don’t go do this. Do this when — do this later.”

And my father who — my father said to me the same kind of thing. He said — because he – listen — my dad is sitting in New Orleans, Louisiana, had a very nice career as a lawyer, but all of a sudden his son at age 24 is probably making roughly as much money as he is. And he’s — what are you doing leaving that job? And he said — and he’s never been one to give me advice, but he said, “Look, just wait — wait 10 years.” You’re 24 — I was 26 at that point — wait 10 years and when you’re in your mid-30s you can go, take your millions of dollars and go write a novel.

And the problem was that, you know, when you’re 26, 36 seems ancient …


LEWIS: … and I looked up to the people who were 36 at Salomon Brothers, and I could not imagine any of them leaving that you — you got so needful of the money, and the position, and the status. I was afraid I would become that and I wouldn’t — I lose this desire to do this other thing. So it was — I didn’t have any trouble. None of this — none of this advice had any effect on me whatsoever.

RITHOLTZ: The golden handcuffs, were that obvious? People had levered up their mortgages and they were trapped.

LEWIS: They were living a life that I didn’t particularly want to live, but they were all living that life. They were all living a life that required millions of dollars. And they were — and — and in addition, the other — I mean, my other dirty little secret was that — it was — the job was really interesting for a year, year and a half because I was learning so much. After a year, year and a half, you know, you’re not learning that much. You’re doing the same thing over and over.

And once I sort of got a sense of what this all — all was, coming and doing it again day after day after day was just (inaudible). I just — I — I didn’t actually believe deep down that if I’d stay 10 years I gotten rich because I thought my disinterest in it would eventually have revealed itself.

RITHOLTZ: Makes a lot of sense. I have to ask one more question about “Liar’s Poker” before we move on to some of the other books. You said very specifically that you thought “Liar’s Poker” would be an admonition, a warning to people about the evils of Wall Street. It turned out it didn’t really have that fact (ph).

LEWIS: So I didn’t actually say that.

RITHOLTZ: I said that.

LEWIS: You said that.

RITHOLTZ: So what did you say?

LEWIS: So what I — I had a different — I had a — I had a different view of the whole thing.

RITHOLTZ: And you — by the way, you and I have had this conversation.


RITHOLTZ: I’m coming around to your view that what you write may not be what other people read.

LEWIS: So I didn’t think Wall Street was evil. That wasn’t the point. I thought it was preposterous.


LEWIS: I thought that the idea that I was being paid that money to get financial advice was insane, so I thought it was absurd. And — and the only thing that really disturbed me about it at the time that got me upset, I mean, there were times I felt a little uncomfortable about what I was expected to do to my customers . But — but — but the thing that made me really queasy was saying people who cared about other things being drawn into Wall Street just because that’s where the money was.

I had friends in college who really just — but they were — I had a good friend who was like born to be an oceanographer, and oceanography just looked like something he couldn’t afford to do when Goldman Sachs is offering him this job coming out of Princeton. So that — I thought what — the purpose to the extent I had a social purpose with the book, I thought young people will read it, they’ll see what this is, they’ll understand it’s preposterous. They — if they have not — got nothing better to do with their lives, they go to Wall Street or if they have a passion for finance, go to Wall Street. But if they got some other plan, they won’t be distracted by the money. That’s not — that’s not how people read it.

What happened instead was two months after the book come out, I had a stack of letters as high as my knee on the floor from kids at colleges say — they all read kind of the same way, “Dear Mr. Lewis, I love your book about how to get in on Wall Street. I think I’ve got all the principles, but I really want to know some things that other people don’t know so that I can get there quicker. Is there anything you left out that will help me like make it on Wall Street?” So it became a how-to manual.

RITHOLTZ: So you and I have had this discussion before you have made the claim that very often the book you write and set out into the world is very different than the book that people actually read. They bring their own biases and filters, and they see things differently than perhaps you expect.

LEWIS: I’m willing to make an even stronger case and …

RITHOLTZ: Exactly.

LEWIS: … it would be that if a book is any good, it has the capacity to be misunderstood. And — and — and it’s — and it’s for this reason, that if I had been all aflame about the evils of Wall Street instead of just kind of funny about it, nobody would read the book as a how-to manual. No one read the book in any way, but they wouldn’t have read the book.


LEWIS: It would have been tedious, like who cares what you think. Tell me the story.

And if you tell a story and you’re telling it kind of honestly you’re leaving room for people to think different things about the story just as people naturally would about any story, you tell 10 people the same story and then you have 10 different stories. They emphasize different things in their minds. You leave — you try to leave holes for the reader to have their own point of view. Now I didn’t — I didn’t do that intentionally with the first book, but I think the fact that I was feeling kind of detached about Wall Street — you know, I didn’t — I wasn’t — it wasn’t a moralistic diatribe about Wall Street.

RITHOLTZ: And the book is very funny, it’s a clear …

LEWIS: And I like — what I enjoy were the people and the humor.


LEWIS: Right? It was that the characters and the situation was — it was — it was rich and funny and interesting, and I was at some level always grateful that Salomon Brothers gave me a job, and at some level always kind of love the place because of how curious it was. It let — it let me in. It let all kinds of characters in who wouldn’t naturally fit into a more ordinary corporate kind of environment.

RITHOLTZ: How much did that shape what you looked for in future books? Because all of your writing contains interesting oddball quirky characters. Every book has that person as a driver.

LEWIS: They all have teachers as drivers. I mean, the — some of them — you’re right, some of them are odd, but they all — all of them …


LEWIS: All the main characters have the capacity to teach the reader something. I say that’s what they had in common. I would say like Brad Katsuyama in “Flash Boys” is a wildly quirky character.

RITHOLTZ: You — on the podcast, which we’ll get to later, you described him as this unique bird in the …

LEWIS: He — he’s a completely ordinary Canadian. You put him on Wall Street, he’s a freak …


LEWIS: … because there are no completely ordinary Canadians on Wall Street. So that — that …

RITHOLTZ: But he was working at Royal Bank of Canada, which is headquartered what, in Toronto? I mean, he’s kind of in the midst of it.

LEWIS: He was there while it was down here in New York.


LEWIS: He was their — their U.S. stock trader — Head of U.S. Stock Trading. But — but — so what — “Liar’s Poker” — the only — it had one very specific effect on what I wrote so subsequently. It made it possible for me to write “The Big Short” that a lot of the people who were in the middle of the financial crisis, people who had made a lot of the bad debts at the banks, I got into the business after reading “Liar’s Poker.” So they — they — they felt a a connection to me that led them to open up and talk to me. So that — it was really important. It led — it really did lead to that book.

But other than that, most of “Liar’s Poker’s” effect on the rest of my writing life has been negative. I just don’t want — and that — and that I don’t want to write the same book twice …


LEWIS: … so I’m not looking for another “Liar’s Poker” …


LEWIS: … but just the opposite, looking for something completely different.

RITHOLTZ: And — and if we just take the course of — the course of your bibliography, well — well, clearly “Moneyball” is something completely different. “The New New Thing” is something totally different. I mean, it’s not too hard to see how you go from subject to subject. There’s a read through all of these things that are fairly recognizable, but they’re clearly different topics and different approaches.

LEWIS: Right. And — and — virtually all the others, with the exception of my little parenthood book in the book I did about my high school baseball coach, someone else is the main character and not me. I — it’s fun to have me as the main character. It makes it easy in some ways, but that’s what I had in “Liar’s Poker.” I could — I myself could stand in for Billy Beane or Brad Katsuyama or Jim Clark or — I mean, that I could carry the book because I had had that experience.

RITHOLTZ: Makes perfect sense. I want to ask you about “The Fifth Risk,” what — what motivated you to suddenly take on the transition of the newly elected president.

LEWIS: Rick Perry, in short, when Trump appointed Rick Perry to be Secretary of Energy, I just — something clicked in my brain and it was — it — it was — well, first, the memory of Rick Perry calling for the elimination of the Department of Energy when he was a presidential candidate …

RITHOLTZ: Oops, right.

LEWIS: … but not being able to remember its name on stage when he was calling for its elimination, and he did it so cavalierly. I was just going to get — if I was President, that’s — I get rid of that. I thought, well, that’s curious, pick a guy who says he wants to get rid of the thing to run the thing.

He clearly — and then he came – then he came full circle and said, “I just didn’t know what the thing did. I’m sorry I said that. Now I’m glad to be running it.”

RITHOLTZ: He thought he actually was involved in Energy as opposed to nuclear weapons and cleaning up the toxic waste.

LEWIS: He said, “I think, you know” — so I realized at that point, whoa, I don’t know what the Department of Energy does. What does it do? Like what if we just hand this guy who doesn’t know what it does and it really should be called the Department of Nuclear Weapons. It’s — it’s a vast science project that — that, among other things, manages the nuclear arsenal. So I — so then I thought what happens in the society in a government where you’re putting people so ill-equipped to run the thing into the position of running the thing.

And it led — you know, once I started digging, it led to the story of the transition, which was an incredible story that essentially wasn’t one, that — that there’s meant to be a — a — a pretty elaborate hand over the government from one administration to the next, and that the Obama administration had prepared essentially this great course on how the government works like 1,000 people, and the Obama administration has spent six months preparing these books, preparing these talks so that whoever won …


LEWIS: … would come in and they can say, “Look, this is — this is how we dealt with the Ebola virus. This is how you assemble a nuclear weapon. This is the (inaudible) nukes that we’re worried about in Eastern Europe. You know, there’s lots of practical information.

And the Trump administration — Trump had fired his entire transition team moments after the election. The trump administration not showed up to get that knowledge. I thought, well, this — it’s given me first the device, I’m going to go get — I’m going to go get these briefings. I’m going to get hear these things that they didn’t bother hearing.

RITHOLTZ: And, in fact, you’re the only person who actually heard some of these things

LEWIS: Many. I think — I think the majority of the briefings I heard, I’m the only one who heard them.

RITHOLTZ: That’s astonishing.

LEWIS: It would — no, it’s more than astonishing. It’s — it’s — and — and they — they weren’t boring. You know, you would think government — if you said if we did like a word association game two years ago and you’d say “government,” I’d say “boring.” And today, I’d say actually “riveting.”

RITHOLTZ: Riveting.

LEWIS: Riveting, it is especially riveting when it’s in the hands of people who have no idea what it does. But — but the — the degree the — what the U.S. government does in so many different sectors is so incredibly important, and including places where you don’t much think the government has a place — basic science clients research. Largely corporate America has a ban in long-term scientific research.


LEWIS: And so it’s moved into the government. And there — there are mission-critical science projects scattered around the governments that if we don’t do them, you know, we don’t have a food supply in 30 years kind of thing. And — and it’s a data collection. There’s data in the — the census, the weather data, so on, so forth, unbelievably valuable.

If — if we don’t have prescription drug data the government collects, we probably still don’t know there’s an opioid epidemic. You get people — you got thousands of people dying every year, tens of thousands of people dying every year overdosed, and the only reason it was found out was the federal government made available all the prescription drug data and geeks started hacking it and they said, “Well, this is a lot. This pattern — the pattern of distribution of — of opioid prescriptions doesn’t make any sense like more pills being dismissed in West Virginia than there are West Virginians.” And so — it’s the — the government is like the source of — like important things are going on there, and so it’s a — that surprised me.

The other thing that surprised me if you just ask me to play that word association game, government worker, I said sleepy, maybe a little ambitious beta. I don’t know what I — it would have been flattering terms.

The people I met — and there’s like permanent civil servants were the best people on the planet. They were like …


LEWIS: … it was — they were mission-driven passionate people.

Go to the — the weather — if you spent two days in like the Storm Center at the University of Oklahoma where they track tornadoes with the National Weather Service people there, you will find yourself in a room with like the really smart kid from the fifth grade who’s — who’s — who’s — who’s like dog was killed when a tree blew over in a storm that no one warned them about and became obsessed with predicting weather events so no one — so no one got hurt. And they’re — they’re like they could lmake you money, twice as much money doing something else, but it’s in the National Weather Service where their — where their passion has the biggest consequence.

RITHOLTZ: In — in the book, you write a number of really fascinating factoids and I’ll come to some of them, but on weather prediction you described this as one of the great unsung achievements of the 20th century is how far our ability to forecast dangerous storms as — has advanced.

LEWIS: Not just dangerous storms like whether it’s going to be sunny or rainy five days from now. Your — your fifth day forecast now is as good as your one day was like 25 years ago. It’s gotten that much better. And I don’t know, I grew up in New Orleans so, you know, hurricanes used to — when I was a kid — used to like come out of nowhere and you didn’t know where they’re going to hit. And you just kind of go out with a Frisbee and wait until it got too windy you could …

RITHOLTZ: And that was your warning system.

LEWIS: That was your warning system. But — but it’s the — the precision with which these storms now can be tracked is a — it’s a — it’s a great intellectual achievement, and it’s an achievement maybe more to the point that it’s not just the government. Without the government, it doesn’t happen. The government collects all the data.

RITHOLTZ: So — so let’s talk about that because in the book you described a congressman who wants to get the government out of the weather forecasting business and turn it all over to one of the private …

LEWIS: The private sector.

RITHOLTZ: Right, which — which uses all of the government data.

LEWIS: Yeah, it’s like …

RITHOLTZ: Which is like a $3 billion a year …

LEWIS: And the congressman said to the Head of NOAA, the National Oceanic and Atmospheric Administration in a hearing and the Weather Services inside NOAA said, “Why don’t I need you? I can get my weather from AccuWeather?” And she said, you know, “Where do you think AccuWeather gets its weather? It gets it from us, you know, that — that without us AccuWeather can’t make a forecast. They don’t have the buoy data, they don’t have the satellite data, they don’t have radar data, plus the weather models all originate out of the National Weather Service.

Now it’s true that each of these private weather companies now has its own little wrinkle on weather prediction, but the bulk of the — both the information you need to make the prediction and the intellectual work about how to handle that information came out of the government. So it’s — it’s insane to say you give it over to the private sector. The private sector wouldn’t, in the first place, collect the data.

Now having said that, it’s also true that the private sector has made contributions; it’s important. And the government encourages this partnership. It opens — it gives all this data in every way for free. Hack your way at it. You can find a better way to predict like when the tornado is going to happen. We’re all ears. But it’s a kind of like an open source thing that everybody has to have access to this.

And into the position of running this operation, Trump has appointed the — the former CEO of AccuWeather who has campaigned for 20 years to essentially prevent the National Weather Service from communicating with the American people on the grounds that if you can make money with this in the private sector, the government shouldn’t be competing with you, which is — I mean, nuts. The American taxpayers paid for all of this data.

RITHOLTZ: How much have — have we paid for all that data?

LEWIS: It’s — I mean, several billion dollars a year. It’s a running cost. It’s a — it’s — it’s close to half the budget of the Department of Commerce, just weather data collection.

And the idea that the Weather Service like he prevented them from having an app …


LEWIS: … they — they shouldn’t have a website, they shouldn’t have it, it is insane.

And if you restrict the access to the data to a handful of companies that have — have an inside track right now, The Weather Channel or AccuWeather, whatever it is, you prevent the next smart geek in his basement from finding new patterns in the data that they help us predict the weather. So it’s a — it is a — there’s a public enterprise side to this, just like there’s a public good side to this and just like there’s a public good side to long-term scientific research, and that is in — that (offers) a natural role for the government and that attracts some really interesting people, and that’s what surprised me.

You know, and I think I — I had felt I have the luxury of not paying much attention to it because it seemed it like kind of run itself badly or well and whatever I thought or said about the government was going to have any effect, but now all the sudden it feels like it’s at risk of being seriously disabled, so all of a sudden it’s gotten to be kind of interesting material.

RITHOLTZ: So some of the — some of the specific factoids you bring up in the book, I just pulled five or six aside because I was just fascinated by these. There are two million federal employees, 70 percent of whom work in national security. That’s a mind blowing stat. I assumed they were all these bureaucrats and pencil pushers. Most of the government spends their time working — and personnel working to keep everybody else safe.

LEWIS: Safe, that’s the basic function of the government. And …

RITHOLTZ: How is that …


LEWIS: … and it’s also — it’s also — you know, another kind of misunderstanding is that the federal workforce is just out of control. There are fewer federal workers per capita than they were 30 years ago. The thing that’s really alarming about the federal workforce is how it’s aged that young people don’t like to go work there anymore. And you got — so you got, in information technology alone in the federal — in — in the federal government, five times more people over the age of 60 than under the age of 30.


LEWIS: So, you know, no tech company could function that way.


LEWIS: And so this is — when you look at what’s — what’s happening is we’re kind of living on borrowed time with the federal government, running on fumes. And — and it’s all a consequence of this enterprise being basically demonized. And — and a lot of that …

RITHOLTZ: So decades now.

LEWIS: Yeah. And — and allowed partly by Congress to atrophy. I mean, it’s — it’s just too hard to hard hire or fire people. It’s too — who wants to go work for a place where only — the only time you ever recognize is if you do screw up.


LEWIS: And if you screw up here in the front page of “The Washington Post” but — but — but if you do something great, right, no one is paying attention and actually I can get rich. So it’s — it’s …

RITHOLTZ: Why — why can’t we find out more sort of the next Michael Lewis book, why aren’t more a perfect example? I didn’t know until I read the book that fracking — the technology for fracking, which has brought out so much gas and — natural gas and — and crude oil and allowed United States to effectively become energy-independent, that was the brainchild of the Department of Energy Research.


RITHOLTZ: How was that not known by people other than you or people who read your book?

LEWIS: Or — or — or that — or that the entire solar power industry begins with funding from the Department of Energy or that the Tesla factory that makes cars in Fremont, California starts with a loan from the Department of Energy.


LEWIS: And that they are — that they are both big loan guarantee programs and essentially a — a — essentially a venture capital fund run by really smart people who come in and out from industry, from universities to fund kind of very long — ideas that aren’t going to pay off in the long-term. I mean, that’s the gap in the market, right? If — if a — if there’s research that will pay in like two or three years, corporations will fund it. But if there’s research that — that may not pay off for 30 years, there’s no — there’s — you know, they used to be more of that in corporate America — Bell Labs or Xerox …


LEWIS: … PARC or — but the markets have encouraged or discouraged long-term — that kind of long-term investment would mean the government is even more important.

RITHOLTZ: China is (heading) to make long-term investments.

LEWIS: You know, that’s exactly right. This is exactly right. I think — so here’s what I think, I think we’re in an inflection point. I think that the society, if it’s going to succeed, can’t be hostile to its own government (inaudible) in this way. And there isn’t another democracy where people think the government is — is evil or — or — or the problem.

Now, people in Europe might say — the French might say or the British might say the — the European government is a problem. But — but now you are kind of turning your ire or — on your own government it’s — it’s like self-defeating. I think someone is going to emerge who can sell the government. I think a politician is going to emerge because it’s not that hard to sell. Once you start — once you start explaining people what it does and we — and once you trot out some of the people who are doing what they’re doing, it’s an inspiring place in many ways.

RITHOLTZ: So like a Mayor Pete (ph) or a …


RITHOLTZ: … Abeto (ph) or (inaudible) …

LEWIS: I think a mayor — I think Mayor Pete (ph) might be the ideal person to do this, so yes.

For me, I’m just an opportunist. I’m looking for story. I’m — I am looking for stories to tell that surprise and interest me, that might surprise and interest a reader. And Trump was a gift because his willingness to entirely neglect this enterprise — two million-person enterprise — he’s tasked to run, left an opening to go learn about it.

RITHOLTZ: So last three bullet points from “The Fifth Risk” that I’m fascinated by, either tech or A&M, so anytime you see Texas A&M or Virginia Technology, all these colleges were formed on the basis of the U.S. land grants?

LEWIS: Yes, back in the mid-19th century. The same body of legislation that created the Department of Agriculture creates these — these schools. And it’s — it’s Lincoln’s observation, I think, that we need to make — we need to bring science to agriculture.

RITHOLTZ: And — and let’s talk about that because, again from your book, in 1872, the average farmer fed four people, and due to the ag colleges and the A&M colleges, they — the average farmer now feeds 155 people.

LEWIS: Yes. So think about that. What that does is it enables a modern life, that you free people from the farms and the burden of having to grow stuff, and they can do other things.

RITHOLTZ: So 60 percent of the labor pull used to be farm-based and now it’s single — low single-digits.

LEWIS: Tiny, right.

RITHOLTZ: It’s amazing. And then the last one I just have to ask you about disposable diapers, invented by NASA. Is this true?


LEWIS: Yes, that was a throw-away line. That’s right. One of the characters in the book is Kathy Sullivan who ran — who was the head of the National Oceanic and Atmospheric Administration, so ran the National Weather Service under it. And she was, before that, the first — she was an astronaut and she was the first American woman to walk in space. Extraordinary character.

RITHOLTZ: Absolutely.

LEWIS: But — but this is an illustration of my general point that you’d be amazed you find in government when you start banging on the doors.

RITHOLTZ: Quite fascinating. His latest project for reasons unfathomable to me a podcast by the name of Against the Rules. You’re — you’re a writer. You’re — you’re an author. Why dabble in — in this podcast thingy?

LEWIS: You don’t feel like threatened, are you/

RITHOLTZ: Yeah, that’s what I’ve — just a competitive concern.


By the way, I’ve listened to your whole first season except for Episode 6, which wasn’t ready for me. It’s great. I really love it. It’s totally your voice. I mean — I don’t mean you speaking which is also takes place, but it’s so Michael Lewis-y, it’s just infused throughout that each one of these segments, each of these podcasts are like a chapter in a Michael Lewis book which kind of raises the question, why not a book?

LEWIS: It’s a really good question. And the answer is that so there’s some kind of material that seemed to be very naturally a book. Narrative material is what I really prefer, and that’s where you have a character that you can follow from beginning to end. And that’s most of the real books I’ve done. There’s a — it’s — the structure is not all that different from a novel.

This was an idea and the idea was referees in American life, it’s people whose job is to maximize fairness …


LEWIS: … enforce the rules, not just sports referees but judges and government regulators. And I mean, we kind of wonder with the idea.

But each — this was essay material, this wasn’t narrative material.


LEWIS: Each chapter and there are seven episodes, so there is seven chapters in the book. It all go together, but you wouldn’t feel like you are reading exactly the same story.

RITHOLTZ: There’s a theme that connects everything.

LEWIS: Everything …

RITHOLTZ: They’re all distinct.

LEWIS: They’re all distinct. It’s like a bunch of short stories around — it sat in the same place.

RITHOLTZ: Right, although not always. Some of it’s New Jersey, some of it’s Berkeley.

LEWIS: But — but it’s — right, but it — but I thought this material, I’ve — I’ve wondered about your medium, I’ve wondered about, you know, whether I could pull off a podcast.

RITHOLTZ: It’s a lazy medium to do what I do, which is con people to come in here and have a conversation with me. So I have it easy. Yours is a very well produced …


LEWIS: It’s narrative — it’s narrative but it’s — it’s — it’s like — it’s a series of short stories that are — are essays that are strung together. And I had the feeling if we did it this way, it would feel more like one story because you have that person’s voice there all the time. And — and it was just — it was material. I never would’ve written a book about it. I never would have written a book about it.

RITHOLTZ: So let’s start with the first episode about referees, which is kind of — I mean, literally …


RITHOLTZ: … referees in the NBA.

LEWIS: Right.

RITHOLTZ: I found it amusing that you’re bringing your son in who — who seems to not be thrilled with — with the officiating in — in his league.

LEWIS: He plays for — he play — he’s moved on. He play for a Japanese Buddhist temple …


LEWIS: … I mean, Japanese Buddhist temple league, and he was getting thrown out of games. I mean, he got — he got booted from fouling up, but he come out and it would be steam from his ear, he would be screaming at the referee. He’s 10 years old or 11 years old.

RITHOLTZ: That’s not very zen.

LEWIS: But he picked it up from the Warriors. That’s where he got — that’s where he got it.

RITHOLTZ: So he’s watching TV, right?

LEWIS: He’s watching — he’s watching Steph and Klay …


LEWIS: … and Durant, they’re screaming at the refs, too. And so, you know, that was one of the things that got me interested because he’s — otherwise, my son is actually very mild mannered, kind of sweet and detached, but refs drive him nuts. And he’s always sure he’s a victim like he’s — they — they’re — it’s always against him, which — which is preposterous. The guy in the court is like a Buddhist. He’s (not against) anybody …


… and it makes no sense. So — so …

RITHOLTZ: You tell the story about the Replay Center in New Jersey …


RITHOLTZ: … which was mind-blowing.

LEWIS: So there’s a bigger point. The bigger point is there’s more friction now between — especially the star players, but the players on the court and coaches and the NBA refs than there’s ever been that — that it’s — the NBA has started to regard this as a kind of crisis like this problem, this conflict. And, of course, this bleeds into the way the fans treat the refs …


LEWIS: … the way the refs are treated on the street, and the bodyguards to go back and forth to their hotels.


LEWIS: It’s insane.

RITHOLTZ: But you also point out that the officiating has never been better.

LEWIS: There’s no question. I mean, there’s no — if you back away from it, it used to be a handful of kind of dumpy white guys, a lot of whom went to the same high school, who are not — who were there because they are a part of a club, who didn’t get any particular training, who — who — who — those were the refs and it didn’t — they were not really checked in any way.

We have now a highly professional, highly-trained workforce that has video replay to go to — to fix its — some of its mistakes when it makes mistakes, acknowledges it makes mistakes so we’ll fix them, has to review any error it makes after the games so they’re — you know, they’re told where you made mistakes. In addition, they’ve been studying every which way for racial bias, for …


LEWIS: … home court bias, for all these — and they’ve been informed about their various biases. There’s no way that referee is not more accurate than the referee of 20 or 30 years ago.

RITHOLTZ: So the home court bias was a real thing much less so today than it once was.

LEWIS: That’s a really good example that it’s a — it’s a good example of — of why you weren’t good independent refs. It’s a good example of how independence gets undermined.

Home court — a large part of home court advantage was simply the refs favoring the home team. And they do that because if you don’t, you get screamed at, right? That’s …

RITHOLTZ: It’s just human behavior.

LEWIS: It’s human behavior. They now do it much less. There is less of a home court advantage in the NBA. The home team is not as likely to win as it — as it used to be. And the refs are mercilessly treated by the — by the crowd.

RITHOLTZ: So — so let’s talk about another segment because I have to talk about that. We’ll come back to basketball later. So you talk to a woman who has an issue with her student loan. She’s a teacher and she believes she’s qualified to get a waiver after 10 years of the bounce (ph) …

LEWIS: So there’s a program. So Congress created a program in 2007 to relieve the student debt of public servants.

RITHOLTZ: So teachers …

LEWIS: So public school teachers, firemen, policemen, soldiers and — and set-up, you know, the criteria for qualifying for this program. And this was a woman who did, in fact, qualify for the program whose servicer, Navient …

RITHOLTZ: A publicly-traded company …

LEWIS: A publicly-traded company whose interest is keeping her in her student loan. They get paid for having her there.


LEWIS: Made it virtually impossible for to get into the program. And — and this program that was created, 30,000 people have applied to it and …

RITHOLTZ: Out of how many should that — how many are eligible …

LEWIS: They’re probably another — they’re probably another — another 30,000 who were eligible, who don’t even heard of it. Ninety-six people have qualified for the program.

RITHOLTZ: That’s astonishing.

LEWIS: And — and the broader story was — this was a story about the Consumer Financial Protection Bureau. It — it’s — it’s like who should referee this space between big finance and ordinary Americans who are dealing with big finance. And this — it seems to me very obvious that this space needs a referee.

You know, every other aspect of our consumer lives is a referee. There’s Consumer Product Safety Commission. Your toaster doesn’t blow up because — because you got people who were there who pull it off the market if it does. And — and the Consumer Financial Protection Bureau was created in the backend of the financial crisis …


LEWIS: … to essentially be a referee.

And the — I think the story of the Consumer Financial Protection Bureau is how hard it is to create a referee in this world even when it’s obvious that you need one because what’s been happening in the last two years is Trump has been getting it. And …

RITHOLTZ: They even tried to rename — rename it the Bureau of something something.

LEWIS: Blah blah blah, just …

RITHOLTZ: And just to …

LEWIS: … just to distract people from …


RITHOLTZ: … and it was a multimillion dollar project to waste money doing that to make it less attractive to the consumer of that.

LEWIS: Right.

RITHOLTZ: You talked about that. It’s …

LEWIS: Yeah. And …

RITHOLTZ: By the way, the theme in all of this which kind of is a theme in — in — in “The Big Short, ” it’s a theme in “Moneyball,” it certainly is a theme in “Flash Boys” is how unfair so much of this life is, and here’s a person who just wants to make it right. That — that is absolutely consistent throughout all of Against the Rules and so many of your books or do you disagree?

LEWIS: No, I agree. I agree and the — the curious thing about the podcast was you got — it’s about the — it’s the story of this character, the referee, who’s under attack at a time when — when issues of fairness seem to be more heated than they have ever been in American life, I mean, maybe not since — since like a century ago that — that national politics, that the political campaigns have gained traction to Sanders — to Bernie Sanders’ champion of the Trump campaign where all — all got their energy from anger about unfairness.

And that in this environment we’re making it hard for a referees, it’s perplexing. I think there’s an answer — there’s a reason but …

RITHOLTZ: What you — what’s your pet thesis?

LEWIS: My pet thesis is referees have a hard time the more unequal the environment they’re refereeing is. So if you have two people who were just — who are basically the same power, money and so on, it’s easy to ref that situation compared to having Lebron James versus a benchwarmer. And — and I think it’s — the pressure — one of the sources the pressure on referees is — is inequality in the society.

Another source of pressure is — is technology. I mean, that — that when they screw up now, it’s all over the — it’s all over the Internet. And — and people who are upset by whatever the mistake was can gather together to cause more trouble for the referee.

RITHOLTZ: Sure. Look what happened pre Superbowl with the blown call.

LEWIS: Yeah.

RITHOLTZ: Perfect example.

LEWIS: It’s — it’s a really good example, right? That — those kind of calls probably happened all the time in the NFL.


LEWIS: But we’ve gotten — the forces that are there to assault the referee had gotten stronger and stronger and stronger, and there’s no — there’s no counterbalancing force to protect the referee. So you have the city of New Orleans out on the s during the Superbowl instead of watching, boycotting. That’s when — you know, if that — if a similar sort of injustice had taken place 20 years ago, it would have been you would have been angry for a moment and forgot about it.

RITHOLTZ: So what was your experience like doing the podcast? Did you enjoy it? Was it fun? Was it more work than you expected? Shall we expect another seven episodes next year? Tell us about that — that experience you had creating this.

LEWIS: It was — it was both more work and more fun than I thought it was going to be. I got into it because my two friends, Jacob Weisberg and Malcolm Gladwell who’ve created …


LEWIS: … podcasting company basically said …

RITHOLTZ: Pushed an industry, of course, everybody …

LEWIS: … it will be — it will be a lot of fun and it’s not that big a deal, it’s not that hard. In fact …

RITHOLTZ: No, no, this — this craft that you and I are doing, this is easy. This is — I — I live a — a …

LEWIS: Yeah.

RITHOLTZ: … gentry — gentrified life. What you did, that’s serious production, writing like there’s — you can tell a boatload of work went into that.

LEWIS: A lot of work went into it. So I don’t know if I’m going to do another season. It’ll be — that decision will be driven entirely by the reception to this one. If people are — if I can get to people in this medium, I’ll try again. But if I can’t, pointless to try again because it really was a lot of work.

RITHOLTZ: So I could tell you so far you have an audience of one like I really enjoyed it. But to be fair, I listen to it a few weeks after our conversation in Miami in a — I’m sorry, a few weeks after our conversation in Hollywood, Florida, and in anticipation of this, so I kind of crash course, but I — I really enjoyed it. Your — your pal Malcolm Gladwell is doing a revisionist history. I’ve heard that he could not tell you it wasn’t a lot of work because that sounds like a lot of work also.

LEWIS: You know, he said afterwards that maybe he’d underestimated the amount of work.



I’m serious. This is fun for me. This is easy, I put it. I — I read all your books, I put some questions together, you do all the heavy-lifting and my job is to just get out of your way.

LEWIS: Creatively, it’s an interesting experience that it’s different from writing a book in a bunch of ways but — and a bunch of little ways. I think that one of the big ways is when you can hear the voices of the characters …


LEWIS: … when I write the voice of the character, you know, just quoting them, you don’t really here the voice, you don’t hear how — what it sounds like. When you hear what someone sounds like, you learn a lot. You — you, you know, you hear the woman whose student loans have crushed your life.

RITHOLTZ: Her teeth are falling out of her head.

LEWIS: Her teeth are falling out of her head. She got three little kids and she’s a public school teacher. You know, she’s grinding her teeth and they’re falling out of her head.

RITHOLTZ: She’s that stressed out over this.

LEWIS: And you don’t think that person is a fraud.


LEWIS: You don’t think that person is lazy. You don’t think that person is anything but in a sad state that no one should be in.

RITHOLTZ: It’s an unfair situation …

LEWIS: But in — in a way I could never get across in print because you just wouldn’t believe me, but you believe her. So there’s something about those voices that enable you to cut through prejudice or preconceived ideas that it’s harder to do as an author. A lot of what I do as an author, in a funny way, is — is (inaudible) converted. I don’t know how many minds I change when I am writing. I think — I think this form can change minds.

RITHOLTZ: Well, I have to tell you I really enjoyed it. I hope you bring it back for a second season. I am looking forward to hearing the finished product. What I heard was like three-quarters done.

LEWIS: Yeah.

RITHOLTZ: I — I can easily — I can strongly recommend that it was really interesting. Can you stick around a little bit? I have some more questions for you.


RITHOLTZ: We have been speaking to Michael Lewis. He is the author of — you know all his books and his new upcoming podcast is Against the Rules. If you enjoyed this conversation, well, be sure and come back to the podcast extras where we keep the tape rolling and continue discussing all things Michael Lewis-related. You can find that iTunes, Overcast, Soundcloud, Bloomberg, Stitcher, wherever your finer podcasts are sold.

We love your comments, feedback and suggestions. Write to us at Check on my daily column at You can follow me on Twitter @ritholtz. Check on my daily column at Follow me on Twitter @ritholtz. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.


Welcome to the podcast. Michael, thank you so much for doing this. I — I have to share a funny story with you about the referee segment in — in Against the Rules.

LEWIS: Yeah.

RITHOLTZ: The NBA referee segment and you’re the perfect person to tell this. Here’s — here’s a little bit of NBA officiating and behavioral economics all wrapped up in one. So I’m a long suffering Knick fan during the Ewing — Patrick Ewing, Charles Oakley, John Starks, Anthony Mason era. I lived a few blocks from The Garden. I had season tickets, I go all the time.

The officiating made me crazy. You — you mentioned in the podcast, you mentioned Larry Bird. Really, Michael Jordan was the guy who had his own set of rules unofficially and — and he got away with everything. He was constantly tormenting the Knicks. And then a few years later up comes this monstrosity Shaquille O’Neal and he’s — Patrick Ewing is a big guy — Shaquille O’Neal was constantly butting and hitting him, fouling him, no calls, and I just couldn’t understand how completely unfair and terribly officiating is. Put a pin in that a second.

A buddy of mine invites me to an NIT invitational game at The Garden, the next year of college players below the — the March madness. You know, I’m not a crazy college basketball fan, but they’re on the floor, I’ll go. Big Joe Besecker of Emerald Asset Management, he’s six-five, he’s 300 pounds, and his team is in — in this — this game, so we’re sitting there courtside. You can’t miss him. He’s a mountain of a man.

And I’m watching the game and I have no vested interest in the outcome. I could not care less who wins or loses, but these are fantastic seats. The players are great. I have a front row. Wow, this is awesome. I’ve never seen a game — I was up in Section 205 normally. Courtside, awesome, except for the fact that Joe Besecker screaming at the ref (inaudible), “Ref, you’re walking.” I go, Joe, that’s one and a half (inaudible), “That’s a foul. What are you doing?” No, Joe, the ball is part of the hand. And every — and he’s pulling his hair and say, “Oh, my God, this is worse.”

And all of a sudden I just had this like 15 years ago. I have a realization you were that guy.


I was that guy, that subjective, lack of ability to pull out my rooting for my team for any objective ability to evaluate the game. So take your son to a game with two other teams that he doesn’t care about and see what he says about the officiating.

LEWIS: You know, that’s exactly right. No one ever has a problem if they don’t have a — a …


RITHOLTZ: If it’s not your team, you — you know …


RITHOLTZ: … why is it that the officials suck with your team but with the rest of the league where your team is not involved, they’re not bad.

LEWIS: And why is that that both sides think the ref suck. Both sides think the ref screwed them in some way. That’s not possible. If somebody got screwed, the other person is the beneficiary. It’s zero-sum.

RITHOLTZ: One would think, right?

LEWIS: Right.

RITHOLTZ: It’s — it’s amazing so …

LEWIS: You would think for everybody who’s upset with the ref there’d be someone on the other side who’s happy with the ref, but that’s not the way it works.

RITHOLTZ: So as I listen to the first episode of — of Against the Rules, all I can think of was Big Joe Besecker screaming and me saying, you know, there’s a subjectivity and a lack of — of ability to separate yourself from your desires and goals and …

LEWIS: So then throw into that in addition to that the idea that you’re making that the rest are actually getting better, that they’re actually making more accurate calls. Who’s going to be furious when that happens? People who are used to getting the — who used to getting the calls.


LEWIS: So the — the problem there on this case …

RITHOLTZ: The superstars.

LEWIS: … the superstars are furious …


LEWIS: … because they’re not getting as many calls as they used to get, and they and expect them.

RITHOLTZ: So you describe in — and you — we — we kind of passed by this too quickly before, you described in the podcast the Replay Center that every time there’s a basketball game not too far from where the high frequency collocated trader servers are is a giant warehouse filled with hundreds and hundreds of screens …

LEWIS: 110 television screens and nothing on them but direct feeds. Fiber optic — there’s fiber optic cable from that Replay Center in Secaucus to the 29 arenas in the NBA where — where they play. And — and the pictures on the screens are nothing but the cameras, the angles of the court …


LEWIS: … so you don’t get — you don’t get the scores, you don’t — you don’t even — you don’t even know who’s playing.

RITHOLTZ: No announcers, no …


LEWIS: No announcers, no commercials, no — it’s whatever is happening in that arena. So if you went and dance naked in the middle of the floor in — you know, on Sunday …


RITHOLTZ: A bunch of people would throw up in New Jersey, I got you.

LEWIS: … where they see you in New Jersey …


LEWIS: … no matter when you do this, just — and so that said it was built to defend referees from this growing chorus of outrage. They reason — I mean, 15 million bucks, it cost to build that center, and they only change two calls a game.

RITHOLTZ: Two calls a game they would change (ph).

LEWIS: Right, but it’s to create — it’s just a weapon that — to try to defend the refs from these growing attacks. That’s — that’s what you needed because if you don’t have it, the refs — the refs are doing a pretty good job anyway …


LEWIS: … and they’re only changing two calls a game here, but it’s — it’s like — it’s needed in order to assure everybody that they’re — that they — they know stuff you don’t, that there’s someone objectively is looking at this over and over and giving you the right answer because they don’t — you know, nobody trust the refs anymore.

RITHOLTZ: So — so let’s stay with basketball, I’m going to shift gears on you away from the podcast and back towards “The Undoing Project.” You tell the story in the beginning about essentially the Billy Beane of the NBA, Daryl …

LEWIS: Daryl Morey.


LEWIS: G.M. of the Houston Rockets.

RITHOLTZ: So — so again, there’s a theme that seems to run consistently through your work, which is he is a really interesting guy in a challenging job who wants to approach it very, very differently. Tell us a little bit about how you discovered him and how that got worked into “The Undoing Project.”

LEWIS: So he got in touch with me after “Moneyball” came out to thank me because he thought the book was responsible for him getting hired to run a basketball team.

RITHOLTZ: Really? That’s amazing.

LEWIS: And because he’s — the owner of the Rockets have read the book and said, “Nobody is using data in the NBA as well as it could be used and there’ll be inefficiencies that we can exploit to. And Daryl was part of the business side of the Boston Celtics of the — of the ownership group that have bought the — the — the Boston Celtics. And I guess he — the owner heard about him and said, “You know about this analytics come here, and he gave him the job.”

So Daryl — and so from that moment I started paying more attention to what Daryl was doing at the Houston Rockets. And it’s been riveting because, for him, it’s like one big lab experiment. I mean, he’s trying to win, but he’s also trying to learn. He’s trying to just kind of create new basketball knowledge. And where he came into the “The Undoing Project” was he was a person who was sort of state-of-the–art in — in both — both analytics and in sort of being aware of the mistakes people make when they’re making judgments about basketball or basketball players.

RITHOLTZ: And, by the way, the parallel back and forth between “Moneyball” and “The Undoing Project” what some of the scout said in — in “Moneyball” is he doesn’t have a — a player’s body, he’s got an ugly girlfriend like the — the clichés and — and prejudices were absurd, but there are different set of clichés with the basketball players.

LEWIS: Right. And so — what interested me was he was a person who had been right, by the time I walked into his life to write that check for “The Undoing Project,” he’d been on the job for seven or eight years. And he had purged the operation of the kind of dumb scouting approach.

RITHOLTZ: Give us some — some examples.

LEWIS: Well, I mean, he …

RITHOLTZ: Nicknames what …

LEWIS: You know, so — so — but — but even in his scouting, even with all smart people he had around the table, they had an incredible difficulty keeping the mistakes that the human mind makes when it’s making judgments out of the room, and he had to be — they built — they would — they built in kind of rules to try to guard against errors in judgment.

So, for example, they — when they saw — when they made a mistake, he would analyze the mistake. And when they made a mistake, they had opportunity to draft Mark Gasol, Paul Gasol’s little brother, a future NBA all-star. And one of the scouts pull up a picture of Gasol on the Internet and he was without a shirt on, and he had man boobs, fleshy, flabby boobs. And the scout gave — whenever he was referred to — from then on he was referred to as “man boobs” and they didn’t draft him.

RITHOLTZ: And you think that’s why.

LEWIS: He thinks there’s no question in the fact that they gave him a nickname distorted everybody’s judgment. From the moment he was called “Man Boobs,” there was no way they’re going to draft him.

RITHOLTZ: Amazing.

LEWIS: So he banned nicknames. He said no nicknames. It distorts our judgment of the person.

Another example, he — he noticed that when scouts were arguing for a player, they draw analogies and say, he looks like Michael Jordan or he reminds me of Magic or, you know, he looks like Shaquille O’Neal, whoever it is.


LEWIS: Invariably, he noticed the analogies were within the same race. Black guys always reminded people of black guys, and white guys always reminded people of white guys. And nobody thought, oh, a black guy reminded him of Larry Bird or a white guy reminded him of Magic. And he thought that we — that — that – he say he — he banned analogies within race. So you can compare a player to another player and say, oh, he plays a lot like X if the guy is a different race. And he said at that moment, oh …

RITHOLTZ: It just stopped.

LEWIS: … it just stopped, it just stopped.

RITHOLTZ: So I actually love my favorite part of the genesis story of the book came about because you — you write the — you write was it “Moneyball” or “The Big Short” that Thaler and Sunstein write and say, hey, you guys left that.

LEWIS: It was “Moneyball.” So then I’ve written “Moneyball” and that, you know, I knew — I thought I — I knew what that book was about and it was about this — this front office and found using data, better ways to value baseball players and baseball strategies and reveal that markets make huge misjudgments when they value people.

When the book came out, Richard Thaler and Cass Sunstein wrote a review on the New Republic basically saying that I didn’t know what my own book was about. And then what — what it really was was a case study of Kahneman and Tversky’s work. And I went, who? You know, I didn’t who they were. And this was Danny Kahneman and Amos Tversky, and Kahneman had won the Nobel Prize in Economics the year I wrote “Moneyball.”

RITHOLTZ: Right. You have to be alive to win the prize. Tversky had passed away early, right?

LEWIS: That’s right. And …

RITHOLTZ: And you, by the way, so I’m going to interject here, you were uniquely situated to write this book for a number of reasons. And you — you — you’ve pushed back about this, but you’re wrong and I want to get you to …

LEWIS: To write which book.

RITHOLTZ: And so you’re doing project because, first of all, you had written “Moneyball,” which was effectively a …

LEWIS: Case study and they were …


LEWIS: … sort of like the –what they had done is classify all the mistakes that the Oakland As were exploiting in …


RITHOLTZ: Right. But — but more importantly, you had a relationship with Kahneman or at least his family that you — you …

LEWIS: With …

RITHOLTZ: … barely even …


LEWIS: So — so, in some ways, before I write a book I do like to tell myself a story about why I’m the one who should be writing this book.


LEWIS: And usually that story holds up pretty well in my mind. In this case, the story I told before “The Undoing Project” was, yes, it’s got a connection to “Moneyball.” Yes, I know the Tversky family. Yes, Danny Kahneman lives up the hill from me in Berkeley.


But where I — where I hit a — where I hit a roadblock was, no, I don’t know a thing about the field of psychology and — and no, I don’t know a thing about the origins of the state of Israel, and — and the Hebrew University Department in which all this stuff got cooked up. And, you know, with most things I read most books — I mean, part of the joy writing a book is having to learn new things.


LEWIS: So that’s not — in and of itself, that’s not the problem. The big problem was I did have a sense with these two characters, Kahneman and Tversky, that I was writing about people who are so much smarter than I was, that I would never going to be able to get my mind around them, that — that it was — that it was going to always feel like the B student writing about the A student. And that caused me to hesitate …


LEWIS: … for years writing the book.

RITHOLTZ: I have to hear that.

LEWIS: I — I spent — I mean, normally from the moment I just get a — get like Jones (ph) for a subject to the moment I got a book out, for three years. And in this case, it was nine.


LEWIS: And I — I shoved it aside and said I wasn’t going to do it four or five times.

RITHOLTZ: So — so what made you finally pull the trigger and say let’s write this?

LEWIS: People started to die. The people who are — the people who are helping me with the book, I mean, they’re colleagues, they’re — the story was dying. And I looked around and I asked myself, well, who else is going to write this. And it became quite clear no one else is going write it.

RITHOLTZ: And it’s effectively a love story, isn’t it?

LEWIS: It is. It’s a love story between — it’s a platonic love story. The — the — these two guys, each of — each of them is a great literary character and you gather it’s this combustible, wonderful force.


LEWIS: And it’s — it’s about that relationship and how that relationship. You know, I framed the book in my mind a lots of different ways and lots of different moments, but one of the ways I framed it for a while was it’s just about the power of collaboration. Two — two minds can do together when they really fit together is just so different from what one mind will do on its own.

RITHOLTZ: One plus one is three.

LEWIS: It was that feeling, yeah.

RITHOLTZ: And — and you really bring it so — so richly to life the story of them being behind closed doors and just peals of laughter hours and hours at a time and everybody wondering what the hell is going on.

LEWIS: And also — but — but it’s a — Israel makes academics much more interesting than — than most other places because the academics are forced to interact with the society. Everybody’s got to be useful. Everybody’s got to be in the Army, so they were drawing their — their insights from rich interactions with the world around them. And that that helped bring — I mean, what was — what otherwise be a kind of a dusty academic story to life.

RITHOLTZ: Well, the whole thing with Tversky and the fighter pilots and the reversion to the mean like there’s still a giant leap that gets made from when you’re yelling at a enlistee or pilot or what have you, well, if they’re underperforming they’ll eventually mean revert, and if they’re over performing they’ll mean revert, so praise doesn’t help and yelling at them seems to work.

LEWIS: Yes. This is Kahneman’s insight that — that life has this horrible feedback loop. This lesson, it teaches us that we get response to our punishment but not to our praise because — because you’re praising someone naturally performing better than usual and you’re punishing them or criticize them when they’re naturally performing worse than usual, and mean version will make — will tend to make them better after you criticized them and tend to make them worse after you praise them.

So — so I took — I actually took — when I learned that from him, I changed the way I coached little kids. I basically stopped. I stopped all the criticism except — except when it was really lathered in — when it almost sounded like praise.

RITHOLTZ: And what was the results when you reached to that?

LEWIS: There’s much happier. I’m not sure anything I said ever had any effect, but everybody was happier.

RITHOLTZ: That — that makes — that makes a whole lot of sense. Last question on Kahneman and Tversky. They described the role of luck in life and they really emphasized it a lot. Tell us a little bit about — about that part of their beliefs, their writings. How important is luck to who we are and how successful we become?

LEWIS: You know, they — they — I think the way they would put it is that people — people have extraordinary pattern recognition abilities, and they see patterns even in randomness. So they don’t — they’re not good at seeing randomness and understanding what randomness means. I mean, you saw this with the — that was — that was sort of one of the themes that ran through the “Moneyball” story that one of the things that Oakland A’s front office was able to do was exploit other people’s misunderstanding of randomness that if a pitcher pitched a few innings and pitched them really well, they start to get overvalued, a very small sample with lots of randomness baked into it and they could sell them from (where it) was worth.

Conversely, someone who had a — a short bad streak would start to get undervalued. But the — so — so the — the general idea that — that Tversky and Kahneman do play with a bit is — is that people are mistaking random event for a meaningful event and vice-versa. The broader thing that interests me is the way people dismissing in their lives. I mean, I — there’s so much luck in life. And people, after the fact, are really good at telling a story about how it was inevitably so.

Tversky had this wonderful line that — that life isn’t a point, it’s a cloud of possibilities that — that, at any given time, anything could have happened just because it did happen didn’t mean it had to have happened. So we — but we — but we’re sort of like deterministic machines in a probabilistic world.

RITHOLTZ: There are certainly elements to that, but there’s also a whole lot of ego that if it’s locked then it wasn’t my genius and my hard work, and I made this happen. If you’re going to say it’s lucky, you’re taking my accomplishment away from me or so some people seem to behave.

LEWIS: Absolutely. I mean, it’s a really flattering — successful people …


LEWIS: … or people who feels successful don’t — or I think probably less likely to acknowledge the role of chance in their lives, right?

RITHOLTZ: I will — I will …

LEWIS: I don’t completely get this because it’s — I’m not sure it actually leads to happiness to ignore the role of chance in your life. I think that — I think that a great source of happiness is gratitude, and if you just think you did it all yourself, you got nothing to be grateful for.


LEWIS: It’s — and I think like seeing just how many different ways the ball could have bounced does leave you more grateful when it bounces your way.

RITHOLTZ: And that leads to better happiness. I can tell you from experience sitting in this chair I’m shocked that the number of really successful people have brought up the concept of, you know, you got to get lucky. Sometimes you get — you get a lucky bounce or a good call, and it’s life changing.

LEWIS: Yeah.

RITHOLTZ: And it’s nice to see certain people recognize that.

LEWIS: And the Congress is also true, unluckiness can have, you know …

RITHOLTZ: Oh, dire.

LEWIS: Yeah,


LEWIS: Yes, yes.

RITHOLTZ: So let me ask you about a book that you did not write …

LEWIS: Right.

RITHOLTZ: .. you did this giant article on long-term capital management and with all due respect to Roger Lowenstein “When Genius Failed,” which is one of my favorite books, you — that article you did for — I don’t member who it was.

LEWIS: “The New York Times” magazine.

RITHOLTZ: Well, OK, that was a monster piece. I — I very specifically remember that. That could have easily become that sort of book. Why did you not go down that rabbit hole?

LEWIS: I think I had been an aversion to going back to Wall Street from — for yet another book at that time.

RITHOLTZ: Was it too soon?

LEWIS: It was too soon. And I also felt like a magazine article — in a magazine article I had said everything I really wanted to say about it and didn’t have that much more interest. You know, often I start out — almost always, the book start out as magazine pieces, you don’t think, oh, I’m going to write a book about that. You — you think, oh, that’s interesting. We’ll write something about it and it gets even more interesting.

RITHOLTZ: So it’s 3,000 words, 5,000 words.

LEWIS: Mushroom and all of a sudden you realize I’ve written 10,000 words but really I wish I could write 80. And that didn’t happen with that subject.

I had already written a bunch of it in “Liar’s Poker.”


LEWIS: The — the stuff that might have fleshed it out into a book, and it wasn’t about this very narrow peculiar thing that happened to those guys at long-term capital when I just thought it would be useful to try to explain it to a lay audience in a way that it wasn’t being explained. And once I got it …

RITHOLTZ: And you know a lot of those players from Salomon Brothers, right?

LEWIS: They were my colleagues. I — I knew them quite well. I mean, really, there were people I talk to every day, so yes. If I had one of the alternative pass in my life, if I had stayed at Salomon Brothers and managed to remain interested and actually continue to do well …

RITHOLTZ: You have ended there?

LEWIS: … I’ve been there, I’ve been there.


LEWIS: I wouldn’t have been (inaudible) – let me trade anything, but I would have been — I would’ve been their sales arm because my — that’s where my boss was.

RITHOLTZ: That’s amazing. That’s what you could have been LTCM’s institutional sales rep.

LEWIS: Yes. That’s — that …

RITHOLTZ: That’s a different career path.

LEWIS: … a different career path.

RITHOLTZ: And — and …

LEWIS: And it would have been — it would have been, you know, as interesting a life in the financial sector as you could have had.

RITHOLTZ: Very lucrative until it all went to zero.

LEWIS: And then all of sudden went to — yes.


LEWIS: It all goes to zero.

RITHOLTZ: So they didn’t make the turn at the end. They — they …


RITHOLTZ: … set the record on the straight away, but they didn’t …

LEWIS: And so I have a question for you.


LEWIS: And my question for you is I’m a — and so I am now a — I’m just an interloper in — on Wall Street. When I …

RITHOLTZ: (inaudible) \.

LEWIS: … I dip back in every now and then when there seems to be a story to write and then got to educate myself all over again about what’s going on because I don’t follow it that closely day-to-day. If you were to drop me anywhere now into the financial sector to write stories, where would you drop me?

RITHOLTZ: Wow, that’s a really interesting question. Stories that you’re interested in or stories that I’m interested in?

LEWIS: You’re interested in.

RITHOLTZ: Well, first, you know I’m a giant behavioral finance junky, so you’ve already covered that space in two or three books. So there’s three or four things that are — are kind of intriguing, let me — let me tick them off. I’m fascinated by people who have a fundamental flaw in their model of the universe, and for whatever reason they become gold bubs, they become bitcoin fanatics, they become short sellers not that each of those groups are delusional as a — as any individual can be rational like gold or rational by bitcoin or whatever. But — but these like little societies, little communities grow up around these concepts that like if you think about bitcoin as no government and we’re going to — well, when the government really goes to hell and there’s no electricity and running water, good luck getting that little thumbdrive to buy you — you know, the — the — you know what I mean?


There’s no — the rationality sort of fades at a certain point, so that’s one area I’m fascinated about. It’s — and there was a book called “The Heretics” written by an Australian and it had a different name in the U.S. I’m drawing a blank on it. But all these people flat-earthers and — and Holocaust deniers and — like just, you know, we really crazy turns out they’re not crazy, there’s just something wrong with their basic model of the universe, and everything built on top of it is agenda that’s going to collapse. And so that’s one area.

The other area that’s really fascinating is — so there’s parts of Wall Street that’s incredibly successful, the rise of indexing, the rise of ETFs, the move towards lower cost. And everybody in those spaces are petrified that they’re going to be made obsolete, even though they are the drivers of this.



LEWIS: It’ll be replaced by robots.

RITHOLTZ: Yes, no, maybe. I mean, there’s this — I’ll give you another thing and you — you …

LEWIS: We can better understand why if it’s — if indexing is — is obviously a huge success, ETFs is a huge access, what are they worried about specifically?

RITHOLTZ: So — so if we just wiped out or — or if we fill in the blank, indexers passive ETF manufacturers, low cost advocates, if we just completely disrupted the old guard, then clearly there’s a cyclical who’s going to come along and disrupt us.

LEWIS: Right.

RITHOLTZ: And then the third area that I would drop you into, the issue of income inequality and wealth inequality that harkens back to the pre-1929 crash days …

LEWIS: Yeah.

RITHOLTZ: … is very much tied into what you’re writing about fairness and what you’re seeing in — about government. And we’re in an alternative timeline. We’ve kind of jumped our time line; we’re on a different track. And like you — if you’re a Star Trek fan, you remember the bearded Spock in the alternative universe?

LEWIS: Yeah.

RITHOLTZ: So I kind of feel that we’ve jumped the time line, and this isn’t our universe. We — we need to get back to the time line where the United States is a country that defeated the Nazis and that we haven’t demonized government, and that my God damn streak can be — isn’t filled with potholes because Grover Norquist hasn’t demonized the idea of, “How dare government paved the roads, what are you doing? It’s confiscation wanting to have an infrastructure. How dare you?” Like I think everybody should take blown out tires and broken axels and dump them on Grover Norquist’s front lawn, so it looks like a junkyard, a thousand-feet high of broken car parts.


And — but hold — hold that pet peeve aside, the — the income and inequality, the wealth inequality, there’s this fantastic chart — I’ll email it to you — that you ask people how badly they think the wealth distribution is and how much does the top 20 percent, and the top 10 percent and the top one percent, top tenth of the one percent own relative. And they lay out this — this picture of this really unequal society and they’re off by like a factor of 100. It’s much worse than people …

LEWIS: Right.

RITHOLTZ: … believe. It’s astonishing.

LEWIS: If people knew how bad it was in the revolution.

RITHOLTZ: Oh, right. And — and I would drop you if — if you’re going to say tell me what next book to write, but I don’t know if that’s so much a Michael Lewis book as something that would color a Michael Lewis book.

LEWIS: That’s right, that’s right. No, I think — I’m — the whole — I think inequality is going to be in the backdrop of the next thing I do. I’m figuring out what it is …


LEWIS: … but it does seem the subject of our time. It does seem — it does seem a subject that infects everything else. Name the topic, climate change, the politics …


LEWIS: … at the moment that our ability to grapple with it is hamstrung by inequality.

RITHOLTZ: Now — now, draw the Venn diagram of inequality and then draw the Venn diagram of all the cognitive errors and behavioral issues that Kahneman and Tversky have written about, and maybe you can explain to me why people don’t understand what’s in their own best interest, why they consistently are bamboozled by politicians. And — and I’m not picking one side or the other, but it’s pretty clear that most of America or at least tens and tens of millions of Americans every election vote against their own interest.

LEWIS: Their own economic interest.

RITHOLTZ: Their own economic interest.

LEWIS: Right.

RITHOLTZ: Right. And — and so what — what matters more is some gins up, you know, social divisional issue that — so if — so my issue …

LEWIS: Tribal identity matters a lot. I got (inaudible) go to a SEC football game, I mean …

RITHOLTZ: For sure.

LEWIS: Right.

RITHOLTZ: But — but there’s a difference between going to a football game and saying, “Look at West Virginia and — and the coal people. We’re going to bring back coal.” No, you’re not, that ship has sailed.

LEWIS: Right.

RITHOLTZ: Wouldn’t you be better off if we brought you solar jobs or some other retraining? Is everybody — is P.T. Bonham right, is everybody a sucker?

LEWIS: Enough.

RITHOLTZ: Enough are.

LEWIS: Enough are.

RITHOLTZ: That’s quite shocking. Now we’re getting into the depressing …

LEWIS: Right, yes, we don’t …

RITHOLTZ: So — so — but there is a joint overlap between your interest and behavior stuff, and unfairness and how it manifests itself …

LEWIS: Right, right.

RITHOLTZ: … in society. So what can be done to fix that? That’s the next book. Go — Mike, go fix them.

LEWIS: Go fix the society.

RITHOLTZ: Right, go fix it. Can you fix us? We need some help.

LEWIS: Done.

RITHOLTZ: All right.

LEWIS: Done.

RITHOLTZ: So that’ll be …

LEWIS: Going back in 15 years.


RITHOLTZ: So — all right now that we’ve depressed the hell out of everybody, let’s get to our speed rounds, our favorite questions.

LEWIS: Oh, right, OK.

RITHOLTZ: … that you refused to …

LEWIS: I didn’t want to see the questions.

RITHOLTZ: … the preview. You wanted to be kept objective.

LEWIS: Yeah, not objective, I just want to have a stew on.

RITHOLTZ: Surprise. All right.

LEWIS: Surprised, yes.

RITHOLTZ: All right. What was the first car you ever owned, make, year and model?

LEWIS: It was a 1975 CJ-5 jeep.

RITHOLTZ: Oh, really?

LEWIS: Bright yellow.

RITHOLTZ: Interesting. So you — I don’t know if you can answer this question. What’s the most important thing we don’t know about you? I kind of feel like you’re an open book. What don’t we know about you?

LEWIS: I am — I am insane sports dad.

RITHOLTZ: Yeah, you kind of wrote a book about that.

LEWIS: No, no, I didn’t really write about that. No, no, so the moment …

RITHOLTZ: So you kept a lot out of that …

LEWIS: My peak insanity is when …


LEWIS: … I’m watching my kids play sports. That is peak insanity for me.

RITHOLTZ: It’s the refs make you crazy, you don’t think?

LEWIS: No, it’s not the ref. No, no, no, it’s not the refs.


LEWIS: It’s my kids.

RITHOLTZ: You want them to do better?

LEWIS: Yes. I’m just too invested. So — so I tried to hide it, try to hide it.


LEWIS: I’m not — I’m not doing anything embarrassing, but I am pacing. I walk, I have my Fitbit, I’ll do 20,000 steps in the outfield during ball game …


LEWIS: … because I can’t be near anybody. It’s peak insanity.

RITHOLTZ: Really, yes, that’s quite — that’s quite fascinating. Your mentors, who — who mentored the way you thought about finance, writing?

LEWIS: So the people who are most influential are when I was a little kid, my dad easily is the most. And then after that, the baseball coach I wrote about Billy Fitzgerald, just kind of like the spirit, how you approach life.

When I finally got to putting words on a page for a living, the first editor who really got inside my head was Michael Kinsley, the editor of New Republic.


LEWIS: Yes. And it was — and the message he delivered was a really simple message is like what are you trying to say, like get rid all the fancy stuff, just tell me what is it, does that make any sense. And just he taught me a certain ruthlessness towards my own probes.

RITHOLTZ: That’s interesting. Tell us how you invest your own money.

LEWIS: Very, very simply. I mean, I — I do think that I do like to spend as little time as possible thinking about money. So what — so it’s — so it’s making some broad decision about asset allocation.


LEWIS: Usually …


RITHOLTZ: Meaning the proportion of bonds and stocks.

LEWIS: Yes, yes, sort of like I (inaudible) I have …

RITHOLTZ: Seventy-thirty.

LEWIS: Sixty percent in stock market.


LEWIS: So — and then probably 10 percent in California muni — muni bonds and the rest in kind of cash at any given time.

RITHOLTZ: Not bonds, cash?

LEWIS: Just cash. So — and the stock market stuff is either index funds or Berkshire Hathaway.

RITHOLTZ: Now, that’s kind of interesting because you used to kind of dunked on Warren Buffett.

LEWIS: I dunked once on Warren Buffett, but it made me famous because no one else would do when I did it. I — I’m invested in him for the same reason I dunked on him, and that was — that is he’s got — he’s got special deals. His capital gets a …


LEWIS: … special treatment in the market so …


RITHOLTZ: That’s — you want to be on that side.


LEWIS: … for free. So, you know, and — and I quite admire him and like him, and like the idea of him. And I think his model of a business is going to survive him. I think …


LEWIS: … I think they’d kind of got it right.

RITHOLTZ: Yeah, they put together a great team there.

LEWIS: And their capital will continue to be highly valued. So — so anyway, he’s my — but that’s why I’m feeling sexy and I don’t want to buy just in the next (inaudible), I’d buy some Berkshire Hathaway.


RITHOLTZ: So tell us about your favorite books, this is everybody’s favorite question, non-Michael Lewis books.

LEWIS: So these aren’t the best books. They are books …

RITHOLTZ: No, no, they’re your favorite books.

LEWIS: They’re the books that have hit me at a time in my life where they just stuck with me.


LEWIS: “Huckleberry Fin” when I was 17 years old, “Confederacy of Dunces” when I was 18 or 19, “The Moviegoer” by Walker Percy when I was 17 or 18, George Orwell’s “Collected Essays” when I was maybe 20, 21, Tom Wolfe’s “Radical Chic” and Mau-Mauing “Flycatchers,” and then “The Right Stuff” when they came out basically when I was — when I was a teenager. All — all of it — almost all of it is stuff that hit me between the ages of 14, 15 and 23, 24.

Since — since I became a writer, I just read more critically. It’s hard for a starter for stuff to get in quite as deeply the stuff I love when I read it, but it just doesn’t — it didn’t infect — it doesn’t infect me in the same way.

RITHOLTZ: Quite, quite interesting. Tell us about …

LEWIS: When you say quite interesting, does that mean it’s not interesting?

RITHOLTZ: No, it’s just the verbal tick to move on to the next question.


RITHOLTZ: As opposed to saying nothing in moving on, which is what someone who is professional would do, but after 250 of these I have now worked my way up to mediocre. I’m at that point in the Dunning-Kruger curve.



RITHOLTZ: Tell us about a time you failed and what you learned from the experience. By the way, I just get by on written charm and …

LEWIS: Yeah.

RITHOLTZ: … and actual skills are nowhere to be found.

LEWIS: A time I failed and what I learned from the experience, I mean, there’s lots to choose from.

RITHOLTZ: Pick one.

LEWIS: All right, I’ll pick one in the first grade. In the first grade, we walked over to the library every — every day for a library period, and the library had these chairs that kind of holes in the back, you know, cut out back — where your back — in the lower back.


LEWIS: And I spent the whole of library period wondering if I can climb out of my chair through the whole rather than just normally getting up out of it. And at the end of library, I had go through the whole and got so stuck that not only the whole class at the file all passed me as I’m wearing this chair, but the janitor that come with like a hacksaw …


… and cut the chair off me because they couldn’t pull it off me. And I’d say what I learned from that is you’re going to do something really radically different, do it alone in your home and don’t do it in front of a big crowd.

RITHOLTZ: Yeah, but that’s the …

LEWIS: It’s the first time.

RITHOLTZ: That’s — right, that’s the sample set at once. So if you were successful you would have been the hero, and everyone would’ve bene talking about it.

LEWIS: Do you think the upside of success in that case is probably pretty trivial compared to the downside of failure?

RITHOLTZ: Which is mortifying.

LEWIS: It was mortifying.

RITHOLTZ: So I know what you do for fun, which is basically coach your kids and — and do some travel, but what — what else do you do for fun outside of that?

LEWIS: I hike. I do a analyst kind of activity. I play tennis. I ride — I go out ride bikes with friends. I live in just like the best place to do this kind of stuff, the Bay Area, so — my — my work life is so sedentary, you know, sitting there writing. I can’t run and write, so everything else tends to be just like active.

I go off for a week every year with five guy friends into the woods. We have this annual trip that we’ve been doing for six to seven years. It’s like the best week of the year just hiking and biking in the wilderness, that sort of thing.

RITHOLTZ: It sounds like fun.

LEWIS: Simple. I’m not for — I don’t have hobbies. I’ve never had hobbies.

RITHOLTZ: Tennis is a hobby.

LEWIS: That kind of — I’d like to do — there’s stuff I like to do, but I don’t really have any hobbies. I don’t collect anything, I don’t collect stamps. I don’t — I don’t …

RITHOLTZ: I don’t collect stamps.

LEWIS: I don’t know. You know, I don’t collect books. I — I read a lot, but I don’t …


LEWIS: … I’m not interested in cars, stuff, like — stuff doesn’t me interest all that much.

RITHOLTZ: Experiences over stuff.

LEWIS: That’s exactly right.

RITHOLTZ: Right. That’s Thomas Gilovich and Alan Krueger both said, “If you want happiness, spend your money on experiences. Don’t be spending money on junk.” And I think that life experience bares that out.

LEWIS: It makes me happier. Stuff doesn’t make me happy.

RITHOLTZ: So a millennial comes to you and says I’m thinking about a career in either finance or writing, what sort of advice would you give them?

LEWIS: Some put it that way. I’m thinking about a career in writing when they’re young, I’d worry about them as opposed to I really love to write, I really love to write, what do I do?

RITHOLTZ: So it takes …

LEWIS: I’ll tell you why because so many young people who’ve come to me saying more or less I want a career as a writer, more or less they said how do I get to have your life. I asked them, do you do you actually want to write or you want to be a writer? And most of them to be a writer, they don’t actually …

RITHOLTZ: They have some romanticized notion …

LEWIS: … notion about what it is all about and you get to go on TV and talk about your books and, you know, all that stuff.

RITHOLTZ: Well, 40 writers do but, you know, but the 10 really don’t.

LEWIS: And so — so if you actually love to write, you’re just going to write and just — then I tell that person, go do something that interest you and write about it. Start there.

The — in finance, I don’t know what to tell people because it’s so moved on from where I was when I was coming in. It doesn’t — it’s not an obviously joyful industry. There was a quite a bit of joy in it when I wrote …


RITHOLTZ: I was going to say there are periods where it’s more joyful and periods where it’s less.

LEWIS: It depends where you are in it. I mean, the venture capital world, some of the hedge fund worlds, some of the private equity world, that seems kind of fun. Working for a big Wall Street bank, that seems freaking miserable.

RITHOLTZ: Well, it was fun back in the day …

LEWIS: Yes, but it’s …

RITHOLTZ: … but that was 30 years ago.

LEWIS: But, you know, people wrote books like mine and they — they shut down the fun because they’re afraid …

RITHOLTZ: It’s your fault.

LEWIS: It’s partly my fault. And just like — just generally working in corporate — publicly-traded corporate America is not my idea of fun …

RITHOLTZ: Except for the — those stock options people …

LEWIS: Yeah.

RITHOLTZ: … people can make real money with that.

LEWIS: That’s different from fun.

RITHOLTZ: For sure.

LEWIS: So I — I wouldn’t — I guess if I were — if like my son said to me, “Daddy, I really want to be a Wall Street person,” I would say — I’ll try to shift him down to Silicon Valley into a venture capital firm and see if he can be useful there, I think something like that.

RITHOLTZ: What do you know about the world of finance, trading, investing and writing today you wish you knew 30 years ago when you were first starting out?

LEWIS: Ask the question again. Let me think about it while you ask that question again. What — what do I wish I knew …

RITHOLTZ: So this isn’t I wish I knew to buy Amazon at a dollar.

LEWIS: Right.

RITHOLTZ: It’s what knowledge do you wish you had when you began your career in finance …

LEWIS: Right.

RITHOLTZ: … that would have been helpful along the 35 years, that perhaps you learned much later down the path.

LEWIS: You know that even the smart people on Wall Street didn’t really know what they were doing. I took — the biggest mistake I had in my head when I left Salomon Brothers was that the people at the top of Salomon Brothers, the people that — the people in the middle of the trading had some mystical knowledge that I lacked. And — I — I mean, the thing that shocked me the most about financial crisis was that these firms may be stupid, stupid bets that — in these, you know, with these zero-sum bets that they were all along one way or another the subprime mortgage market. It would have been — there had been some interesting writing to do about those firms between the time I left and the time I came back from the financial crisis if I had appreciated just how moronic the — moronically they were managed.

RITHOLTZ: What’s — what’s interesting is though many of those same people came to you and tried to convince you to stay in finance and you had enough confidence in your own understanding the world to say, “Thanks, but I got other stuff to do. You guys …

LEWIS: But I always had other stuff to do. That was right. So for me …


LEWIS: … for me, it was a really lucky detour into Wall Street because it gave me material, but it was always a detour. I mean, I could just as easily have gotten, I don’t know, a job selling insurance. I mean, I was going to need a job doing something, and this was really lucky I ended up on Wall Street. I didn’t have any particular passion for Wall Street.

RITHOLTZ: That just worked out that way.

LEWIS: It just worked out that way. And I — and so — so — but there’s no — like is there any great — I feel like my ignorance has been a huge advantage to me.


So knowing more starting out would have been a disadvantage …

RITHOLTZ: Because it forced you to go do the homework on into those …


LEWIS: Well, all that — all that. So I …

RITHOLTZ: And that homework — each — each of that homework segments became a book?

LEWIS: Yes, that’s right. So I don’t — I don’t actually honestly wish for some prior knowledge of any of the stuff that — especially in finance.

RITHOLTZ: So last question about Salomon Brothers, there was a gentleman in the training program with you named Hans Hufschmid. You both left the same training program in New York. You went to the same London training floor. You’re both supervised by John Meriwether and you had written that over the years you tracked your progress by how well you were doing relative to what Hans Hufschmid was doing and you frequently felt, “God, if I would have stayed there, look how much money he’s doing, so he’s doing so well,” and then one day long-term capital management blows up, he ended up there where you said you would’ve gone. And now his salary and — and net worth plummets to zero and you wrote, “I was once again satisfied to be paid by the word.”

Do you remembering writing that?


LEWIS: I do remember writing that. And I don’t want your audience to think that I was actually like stalking Hans Hufschmid and wondering how much money he made each year. I would just, every now and then hear that – did you hear that Hans Hufschmid is now worth $50 million? And I think what the hell. That was my — that was my — that was my …

RITHOLTZ: That’s the alternative grip.

LEWIS: That’s the path I would’ve maybe had. And I — I never actually thought I wished I had done that because I love what I was doing. It wasn’t quite that, but it was like that’s the opportunity cost. The opportunity cost of being a writer is that I don’t have Hans Hufschmid’s $50 million. And when that went to zero, it made being a writer feel even better.

Now I think the truth is since then Hans Hufschmid is going to remade his fortune, so I probably am still — I’m still finishing second here.

RITHOLTZ: Right. I got — I got to get some cash over to Hans because he seems to know what the hell he’s doing with …

LEWIS: He’s a great guy.

RITHOLTZ: … with capital.

Michael Lewis, thank you for being so generous with your time. We have been speaking with author and podcaster extraordinaire, Michael Lewis. If you enjoyed this conversation, well, be sure and look up an inch or down an inch on Apple iTunes, Stitcher, Overcast,, and you can see any of the other 250 or so of these conversations that we have had.

We love your comments, feedback and suggestions. Write to us at I would be remiss if I do not thank the crack staff that helps put together these podcasts each week. Madena Parwana is my producer/audio engineer. Our bookers are Taylor Riggs and Michael Boyle. Atika Valbrun is our Project Manager. Michael Batnick is our Head of Research.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

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