Important Books from 2012: Backstage Wall Street
I always read extensively, and in the past I have provided
pointers to the best sources for investors. This year has been hectic
on many fronts, and I have been negligent in passing on my conclusions.
In an effort to catch up, I want to focus on a few books that I
regard as especially important for the individual investor. This is a
time of year when many people are re-examining their methods and
decisions. The books that I will highlight will provide a toolkit for
If Santa did not leave the right investment books in your (over-sized) stocking, you need to take matters into your own hands!
The second suggestion is —
A great book is effective for readers at many levels. This is a
special challenge in the investment world, but the author has
delivered. A key theme is to avoid getting scammed. A corollary is how to get good advice. Here are some important audiences and the takeaway for them:
- The average investor will learn all about cold-calling brokers, their incentives, and the pitch. Just reading Part 3 would save most investors thousands.
- Wealthy investors will learn all about special situations and private placements. Chapter 21 is the big news for them.
- Young people who want to get into the financial business should read this book. They do not know it, so we parents and grandparents should give them a copy. Aspiring young employees want to trade and to analyze stocks. Josh Brown explains the reality of working for most firms.
- And even the experts will learn something. I knew something about everything from this book, but I still learned more. The explanation of the inside story at most firms is a look behind the curtain, even for market professionals who took a different career path.
This is book is a real page-turner in some chapters, but less interesting in others. None of the material could be skipped by the author, since what is relevant differs for each reader. My advice is to spend a lot of time on the portions that are most relevant for you. You will find yourself both laughing and crying for Josh and also for the investors.
What I Personally Liked Best
My background is much different from the author's. I already had a body of expertise and knowledge, and that is why I was recruited. My experience was with really smart people who needed to trade effectively. Everyone had personal money at stake. The focus was performance. I had a secondary role in helping our wealthy traders evaluate the hundreds of business pitches they got.
Josh Brown provides a frank and colorful description of the Wall Street perspective, told by a reformed broker. The stories are graphic and compelling.
There is a difference in the "Chicago" tradition, but any of us would be proud to tell that story as effectively as Josh has.
And most of all, there is the conclusion. Josh Brown offers important advice on how to find investment advice. It is important that your manager's incentives are completely aligned with your own.
What Most Readers Should Learn
As I noted, this is a book with different lessons for different people. With that in mind the key takeway is: Don't get scammed!
Let me count the ways —
Do not get sucked in by cold calls.
Do not get drawn into high-commission private placements or special deals.
Do not follow a dead-end career path.
Successful investing begins with avoiding the traps. I have a few ideas of my own for additional traps to consider. If I get them into book form, I hope that my presentation is as compelling as this author's.
About the Author
"Downtown" Josh Brown has gone from zero to sixty faster than anyone.
I do not know of any blog that exploded onto the scene faster than The Reformed Broker. Josh combines the key elements of chemistry:
- and not least, a colorful, irreverent style.
It is why both investment professionals and traders read his blog every day.
Josh's blogging success and investment skill have been recognized with major media gigs and columns, his position at Fusion IQ, and his daily CNBC appearances.
In our office we give Josh our highest accolade: We "unmute" the TV and back up the TIVO to hear what he has to say:)
You can order the book here, via the author's site.
This is Book #2 in my series for the new year. I have five planned, but a full agenda.
A reader asked me if I was compensated for these reviews.