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The King Of Wall Street

The King of Wall Street

Chapter 41 in the exclusive series for Dynamic Commodities- becoming a commodities trader

John Gutfreund was a master operator. He agreed to sell the Salomon Brothers partnership to Philipp Brothers and got rid of many of his partners in the days before the takeover. Then he knocked off the buyers in short order to take total control of the firm.

In 1985, Gutfreund’s picture appeared on the cover of Business Week magazine under the title “The King of Wall Street”. Salomon’s bond and financial trading business were printing money in the 1980s and John was perhaps the most powerful man in American business.

At Philipp Brothers, many employees called the King the angel of death as they prepared to lose their jobs. So many Philipp Brothers employees who had survived the horrors of the Holocaust did not survive the downsizing at the company. The big boss rarely ventured uptown to Philipp Brothers office in the McGraw-Hill building but went he did he left his mark. The distinctive smell of the cigar that rarely left his hand remained for hours after the King took a lap around the office. If you looked closely enough at the carpet there would be other evidence of his presence and path as the occasional cylindrical ash would remain after he had long departed. Michael Lewis documented Gutfreund’s trail in Liars Poker as “turdlike”.

The old management at Philipp Brothers was gone, Ray Nessim was gone and Marty Kaufman and Henry Schachar were in charge. John Gutfreund sent his henchman to Philipp Brothers to clean up the commodities mess. I watched the parade of these characters from the options desk; it seemed that each day a new group arrived. Sid Gold, who spent years on Salomon’s equity trading desk, knew John well. On his occasional trips to visit he would always stop by to say hello. Sid and Gutfreund had what appeared to be a typical trader relationship, they teased each other. Sid was not an easy character to deal with in those days and John would tease him, Sid gave it right back to the boss and the two would laugh.

Gutfreund had an air of obnoxious and raw royalty, he had an affectation. His accent was a combination of proper British and New York street urchin. He oozed wealth. Ralph joked that he probably shit gold coins.

With the oil traders gone and tucked away in Greenwich, Connecticut the precious metals department was the one business Salomon understood and liked. It helped that the department was a money maker but it did not exempt our area from the Salomon microscope. John Gutfreund was larger than life and he led a cult of clone-like Salomon staff. As the Salomon MBAs and Ivy-leaguers descended on the precious metals and options area barely a question or comment was uttered without mention of or reference to “John” the King of Wall Street.

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Post Series: Origin Of A Commodities Trader

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