John Gutfreund

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John H. Gutfreund is the former CEO of Salomon Brothers Inc, an investment bank that gained notoriety in the 1980s. As CEO, Gutfreund became the icon for the excess that defined the 1980s culture in America. In 1985, BusinessWeek gave him the nickname "King of Wall Street". Mr. Gutfreund was featured prominantly in the book Liar's Poker by Michael Lewis.

Since January 2002, Gutfreund has been Senior Managing Director and Executive Committee Member of C. E. Unterberg, Towbin, investment bankers. He is also President of Gutfreund & Company, Inc., a New York-based financial consulting firm that specialized in advising select corporations and financial institutions in the United States, Europe, and Asia.^[1] ^[2]

"And in a stunning turnaround, former Salomon Brothers CEO John Gutfreund—known as the "King of Wall Street" during the '80s—was named in a $230,440 warrant filed in March. Warrants are filed so the state can seize property or garnish wages."^[3]

[edit] 'One hand, one million dollars, no tears.'

One hand, one million dollars, no tears is a now famous quote by John Gutfreund, who said this to John Meriwether (founder of Long-Term Capital Management - an initially enormously successful hedge fund with annualized returns of over 40% in its first years, in 1998 it lost $4.6 billion in less than four months and became a prominent example of the risk potential in the hedge fund industry.).

This quote features in Michael Lewis' book Liar's Poker, and is about the game Liar's poker. Lewis states the following about the quote:

What Gutfreund said has become a legend at Salomon Brothers, and a visceral part of its corporate identity. He said: 'One hand, one million dollars, no tears.' Meriwether grabbed this meaning instantly. The King of Wall Street, as Business Week had dubbed Gutfreund, wanted to play a single hand of a game called Liar's Poker for a million dollars. He played the game most afternoons with Meriwether and the six young bond arbitrage traders who worked for Meriwether, and was usually skinned alive. Some traders said Gutfreund was heavily outmatched. Others who couldn't imagine John Gutfreund as anything but omnipotent - and there were many - said that losing suited his purpose, though exactly what that might be was a mystery.

The peculiar feature of Gutfreund's challenge this time was the size of the stake. Normally his bets didn't exceeded a few hundred dollars. A million was unheard of. The final two words of his challenge, 'no tears', meant that the loser was expected to suffer a great deal of pain, but wasn't entitled to whine, bitch or moan about it. He'd just have to hunker down and keep his poverty to himself. But why? you might ask if you were anyone other that the King of Wall Street. Why do it in the first place? Why, in particular, challenge Meriwether instead of some lesser managing director? It seemed an act of sheer lunacy. Meriwether was the King of the Game, the Liar's Poker champion of the Salomon Brothers' trading floor.

On the other hand, one thing you learn on a trading floor is that winners like Gutfreund always have some reason for what they do; it might not be the best of reasons, but at least they have a concept in mind. I was not privy to Gutfreund's innermost thoughts, but I do know that all the boys on the trading floor gambled, and that he wanted badly to be one of the boys. What I think Gutfreund had in mind in this instance was a desire to show his courage, like the boy who leaps from the high dive. Who better than Meriwether for the purpose? Besides, Meriwether was probably the only trader with both the cash and the nerve to play.

(...)

The code of the Liar's Poker player was something like the code of the gunslinger. It required a trader to accept all challenges. because of the code - which was his code - John Meriwether felt obliged to play. But he knew it was stupid. For him, there was no upside. If he won, he upset Gutfreund. No good came of this. But if he lost, he was out of pocket a million bucks. This was worse than upsetting the boss. Although Meriwether was by far the better player of the game, in a single hand anything coould happen. Luck could very well determine the outcome. Mertiwether spent his entire day avoiding dumb bets, and he wasn't about to accept this one. 'No, John,' he said, 'if we're going to play for those kind of numbers, I'd rather play for real money. Ten Million dollars. No tears.'

Ten million dollars. It was a moment for all players to savour. Meriwether was playing Liar's Poker before the game even started. He was bluffing. Gutfreund considered the couter proposal. It would have been just like him to accept. Merely to entertain the thought was a luxury that must have pleased him well. (It was good to be rich.)

On the other hand, 10 million dollars was, and is, a lot of money. If Gutfreund lost, he'd have only 30 million or so left. (...) So Gutfreund declined. In fact, he smiled his own brand of forced smile and said, 'You're crazy.' No, thought Meriwether, just very, very good.