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Where Are All the Customer�s Yachts? - Indeed!
on 25 April 2003
...long long ago, an out-of-town visitor to New York was admiring the elegant vessels harboured off the Financial District; "Those are the bankers' and brokers' yachts!" exclaimed the guide. "But where are the customers' yachts?" questioned the naïve visitor in response...
Where are the Customers' Yachts indeed, questioned Fred Schwed Jr, deciding to take a good hard look at the Wall Street and its activities and occupations to try and find an answer. Schwed is well placed to make observations of this industry, as he has been well placed for many years behind a trading table witnessing the exchanges over the wires of quotations, bids, and calls. And along with them, the fibs, bluffs, nonsense and downright lies - the latter two seeming to be a large part of what is traded in the Street, and the market in general.
Schwed offers an overview and appraisal of the different players and product that dominate Wall Street and the Financial Industry at large. This book was written over sixty years ago, and was reprinted fifteen years later. The author noted that little had changed in that period - indeed little has changed in the following forty-five years making this humorous and tongue-in-cheek analysis appropriate in today's digitally charged financial markets, as it was in the days of runners and tram cars.
Schwed offers some colourful judgement of various characters, a flavour of which I have outlined:
Brokerage houses amongst other services, offer market commentary. Commentary that befits Joycean scholars and theologians, much more so than the average man on the street turning to a brokerage house for guidance: "but after a one-day decline, volume dwindled, and the market presently appears to be engaged in a somewhat hazy consolidation movement, searching for dynamic forces..." (sic). The average man on the street might never benefit from this prose (nor might he understand it!).
Customers are loosely defined as anyone willing to part with money. Good customers are ones willing to part with lots of money, and these often have to be acquired through marriages or by being born into wealthy families. Customers however once acquired, can be a harsh bunch, and often carry old grudges. Many a customer will hold brokers responsible for the crash of 1929 (and all subsequent crashes no doubt!) - believing beyond persuasion that the brokers pocketed their customers' loses for themselves.
In conclusion the merits of the financial industry, its mechanisms, and capitalism itself, are called into question, but the recommendation is to leave well enough alone. The financial markets have applied economic law satisfactorily to itself and found its point of market equilibrium where buyers and sellers have found complementary markets, and of course brokers have found their calling. The advice to the general public is that if they are looking for a comprehensive investment programme that will protect them from inflation and deflation alike, and could contribute to long-term financial security, they should fear not, and take a visit to Wall Street - or better still to the offices of the author - where they will be directed to the appropriate department, called something other than what it really is... the Crystal-Gazing Department.
If you want to get into the financial markets, or just understand how they work without being blinded with boredom, this book is a good and enjoyable read!