In Dillian's debut memoir, the author recounts his time as a Lehman Brothers' associate in the firm's final years. His experiences betting big with other people's money—as well as the psychological toll he incurred as a result—provides a scathing critique of selfish, scrambling men so driven to earn a buck that they lose all sight of the world beyond the tickers. Dillian's portrait of the mid-level Wall Street employee confirms all of the industry's clichés—that the stock market is, in fact, run by "men and boys,” many of whom understand little more than a single mantra: "Make money, good. Lose money, bad.” This simplistic approach causes Dillian to view Wall Street as a land of squandered talent, in which money-grubbing citizenry sacrificed their potential to play the numbers. "And here we all were," Dillian recounted," with our Ivy League educations and our social class and our pedigrees and our friends, and we were all in one big room on a daily basis pissing into the wind." Yet as a nontraditional student from the University of San Francisco, Dillian hardly fit the mold of the rich, Northeastern prep-schooler, and his outsider status served as a great attribute, offering him a clearer view of an industry both morally and economically bankrupt. However, the author often fails to bring readers fully into his colorful milieu.
A dramatic rendering of the financial crisis in which readers are often left on the outside of an insider's world.
Jared Dillian is a bipolar math whiz whose path to Wall Street led through the Coast Guard rather than the Ivy League. He also is an amusingly caustic writer whose new memoir pulls no punches about a financial career that nearly cost him both his sanity and his life.
Street Freak opens on September 11, 2001, when Dillian was scheduled to begin his first rotation as a trader after graduating from Lehman's training program. It ends seven years later, when Dillian quits amid the chaos of Lehman's sudden bankruptcy. But neither bookend gets more than a few pages of attention. Dillian wants us to understand what happened in between.
It's a bleak story, to be sure. Dillian's bipolar disorder -- not diagnosed until late in the book -- leads him to phone-smashing tantrums on the trading floor, alcohol-fueled blackouts after client meetings, and an unsuccessful suicide attempt.
And Lehman's trading culture seems to feed Dillian's sickness. The author portrays trading as a manic sprint of decision-making that is part mathematics, part intuition and part speed. Tens of thousands of dollars rest on every click of the button, hundreds and sometimes thousands of times per day.
The reader may not understand all of the mechanics -- Dillian sometimes tries to explain them, sometimes not -- but the dizzying pace is made palpable by dozens of pages of play-by-play on past trades. It's an effective technique, albeit one that compelled me to gloss over more than a few sections.
In some cases, Dillian revels in how he outsmarted competitors. For example, he realizes that the market seems to stand still for a couple of seconds whenever major economic data is released. What if he could trade just milliseconds earlier, by sitting with his finger at the ready? It was a strategy that would make millions of dollars for Lehman and help Dillian get promoted, eventually, to the firm's ETF trading desk.
At other times, however, Dillian makes clear that he only really cared about the money, which represented his standing within Lehman and, ultimately, his level of success. In this he was not alone. Lehman may have considered itself a scrappy team, but in the end, everyone was out for himself at the expense of everyone else. A smaller bonus for you means a bigger bonus for me, which is what I'm here for.
It is a corrosive mindset, and the accompanying pressures eventually became too much for Dillian to handle. In a way, Lehman's bankruptcy functioned as the author's personal bailout. Had the bank not collapsed, he might have had a tougher time walking away.
Street Freak's main failings are twofold. First, Dillian's wife barely makes a cameo. Here's a guy whose life changes in momentous ways over a seven-year stretch, but his spouse is completely absent apart from minor pop-ins. Did he leave her out intentionally? Or was Dillian's marriage more about the official stability than the day-to-day relationship? It's an odd omission in such a personal book.
Second, it's not always clear whom Dillian is writing for. Other traders? Lay people trying to better understand Wall Street before the crash? Or himself, as a sort of catharsis, not to mention promotion for the financial newsletter he now runs? The answer seems to change depending on the chapter, which may reflect how Dillian views both himself and the career he left behind.
Library Journal (10/6/11)
Writing in a kind of gonzo journalism style, Dillian recounts his years as an exchange-traded funds (ETF) trader at Lehman Brothers, beginning just before 9/11 and ending with the firm’s implosion in September 2008. While his book adds nothing to the literature of excess that documents the testosterone-driven, juvenile, and frequently grotesque corporate culture of Wall Street, two angles serve to differentiate this from similar titles. One is the author’s detailed descriptions of his work; the multimillion-dollar fluctuations in his profit and loss statements offer readers vicarious thrills, and the intricacies of big-league trading will fascinate financial voyeurs. The other is Dillian’s personal story, interwoven through his chronicle of victories on the trading floor, of his downward spiral into alcoholism and mental illness. He is diagnosed with bipolar disorder and spends a short time in a psychiatric ward before returning to work.
VERDICT: Dillian’s book will appeal the most to hard-core trading junkies or those who seek a comprehensive view of the post-9/11, pre-crisis Wall Street.
Ludwig Von Mises Institute (2/14/12)
Wall Street traders, like
high-stakes poker players, are a different breed. The constant pressure, the
appetite for risk, the ability to think and react in split seconds, all the
while calculating odds in their heads that most can't do with an HP12C.
"These guys are a
pretty weird bunch," Dr. Paul Zak says. "They're very rational and
very competitive." Zak is a neuroeconomist at Claremont Graduate
University who is studying the brains of traders to find out if this
personality type has a certain genetic signature.
In his "Head Case"
column in the Wall Street Journal, Jonah Lehrer writes that Dr. Zak and
fellow Claremont neuroeconomist Steve Sapra have analyzed the genes of 60
professional traders working at five major Wall Street firms. Zak and Sapra
focused on the genes known to affect the activity of dopamine.
Dopamine is a
neurotransmitter in the brain that "helps to regulate decisions involving
risk and reward," Lehrer writes, "allowing us to experience both the
thrill of getting what we want and the pain of losing it all."
Traders who manage to last
on Wall Street for a long time, "tended to hit a sweet spot of dopamine
activity: their genes kept them from experiencing either very high or very low
levels of the molecule," explains Lehrer. "These prosperous
professionals were much more likely to have so-called Goldilocks genes, placing
them solidly in the middle of the dopamine distribution."
Goldilocks is not what comes
to mind as we watch the frantic activity on any trading floor. In fact, it's
just the opposite, with people yelling, screaming and gesturing wildly. As
Jared Dillian says in this video clip
promoting his book Street Freak:
Money and Madness at Lehman Brothers, "For someone who has
bipolar disorder, being on the trading floor is the absolute worst place to be,
because no one's going to notice that anything's wrong, because everybody is
crazy." If Dillian had been working at Starbucks, his mercurial behavior
might have called attention to his disorder. As is was, at Lehman, being manic,
yelling and screaming, was "considered functional behavior on the trading
Dillian tells his story in a
fast-paced style that sweeps the reader up into the author's two worlds: the
bare-knuckle world of price discovery on the trading floor, along with his
descent into depression and the constant coping with his nearly debilitating
obsessive-compulsive behavior. All of this makes the book hard to put down.
Street Freak is a great American success story — with a twist. A young man
gets out of the Coast Guard and dreams of having a Wall Street career, working
in the center of capitalism — the World Trade Center. But he doesn't have the
top-tier college pedigree that paves the way to the brass ring. The competition
is fierce in the Lehman Brothers training class. He has a slim chance of
earning a position.
His training is rudely interrupted
by 9/11 and the author must live with the memory of watching the second plane
ram into the second tower right above him. Training resumes across the Hudson
and would eventually include performing security-guard duties. But while his
classmates don't take the menial job seriously, Dillian does, and it serves him
He's granted an interview
and tells of reading Burton Malkiel's A Random Walk
Down Wall Street, a book extolling the virtues of
efficient-market theory. "I read the book," Dillian tells the
interviewer, "decided it was loathsome, nihilistic, academic bullshit, and
set out to spend the rest of my career proving it wrong."
Dillian gets his start in
index arbitrage, only watching at first, then calculating his mentor's P&L,
and finally was allowed to trade. When the firm moves back to New York, and the
head man Dick Fuld abolishes business casual, the author goes on a cheap suit
shopping spree at Men's Warehouse, spending for five suits what his coworkers
pay for one. But his frugality put him on the wrong side of the "Lehman
Handshake." (You'll have to read the book.)
The author has a gift for
math, while knowing little about finance when he began. As he writes, "I
just wanted to create money out of speed and pure intimidation." He says
he had no idea what the market was doing, but tick by tick Dillian developed an
extraordinary sense for the direction of the beast that is the futures market.
Street Freak is chalk full of market jargon and trading lingo and,
occasionally, Dillian stops to explain a trade that tells you all you need to
know about modern finance.
I was expressing a view, not
just on interest rates but also on forward interest rates, through a
cash-settled future. Furthermore, I was doing so in a nonlinear fashion, using
options on futures. I'd used a derivative of a derivative to express a view on
an imaginary concept. It was downright magical.
While Dr. Zak calls traders
very rational, Dillian writes that to get anything done on Wall Street you have
to not only act irrationally but also be insane: "Only insane people do
exactly the opposite of what common sense tells you to do."
Very little of Dillian's
recount of trading resembles deliberate rational thought. But perhaps there is
no distinction between rational and otherwise. Ludwig von Mises wrote that
there is only purposeful behavior or human action. "Praxeology does not
employ the term rational," Mises wrote in Money, Method,
and the Market Process, explaining that the
"opposite of action is not irrational behavior, but a reactive
response to stimuli on the part of the bodily organs and of instincts, which
cannot be controlled by volition."
In Mises's view, economics
doesn't deal with homo economicus at all, but with homo agens:
man "as he really is, often weak, stupid, inconsiderate, and badly
overtake him. He attempts suicide unsuccessfully and later on exits the trading
floor suddenly, checking himself into a psychiatric hospital. He emerges
medicated but healthier, bolstered by the insight that he can write.
However, the Lithium wrecks
his concentration (and sex drive) and the patterns and flows that he once saw
so naturally are fuzzy and incomprehensible. He must learn to trade all over
As impregnable as its
employees thought it was, Lehman Brothers was allowed to fail for its
overexposure to real estate. While its trading floor was making millions,
Lehman brothers amassed a real-estate portfolio that was, in Dillian's words
According to rumor, Dick
Fuld refused an offer of $40 a share for Lehman from Korean Development Bank in
its dying days. But unlike his traders, Fuld allowed his pride to get in the
way of making the best trade possible.
When capitalism is allowed
to work, liquidation creates new beginnings. This was the case for Lehman. The
New York trading operation was bought by Barclays, and Nomura Securities
purchased the overseas operations. Most everyone kept their jobs.
As for Jared Dillian, he's
created the financial newsletter the Daily Dirtnap
and is doing what he enjoys most.