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Taming the Beast: Wall Street's Imperfect Answers to Making Money by Larry Light

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Chapter 4

From Mild to Wild: Bonds Take Wing

Nick Carraway, a proper young Yale man from a wealthy Midwest family, came to New York in the 1920s to work in the bond trade. This was a fitting calling for a well-mannered fellow from a good background, like Nick. He would deal with his peers, the grandees of Park Avenue and Long Island’s North Shore, using his pedigree and good manners to sell them bonds.

In those days, bonds were a genteel and boring asset. Benjamin Graham liked bonds for their stability—gilt-edged corporations like railroads or powerful governmental entities like New York City or the U.S. Treasury would offer pieces of paper that, after a term of several years, were redeemable at the amount invested. Along the way, they would dependably pay interest. Nick’s well-heeled customers would “clip coupons”—the certificates that they’d exchange for interest payments.

This was an undemanding line of work. Bonds were unexciting, as no one wanted them to be exciting. Bond prices were fairly stable and had no potential to vault to the stars, as stocks were doing in the Jazz Age. Their investors prized reliability, period. Nick, a bland, naive type who fancied himself “one of the most honest people I have ever known,” was the perfect bond salesman for his time, an icon of propriety and order amid the Roaring Twenties fast life in the wealthy North Shore towns of West Egg and East Egg. As the fictional narrator of F. Scott Fitzgerald’s classic novel, The Great Gatsby, he ...

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