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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!
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on 29 August 2013
Having worked in the City of London 40-50 years after this book was written, I recognised everything it was saying as still absolutely true. Technology may have changed a bit, but everything else hasn't and it just shows the truth of the old adage, that the only thing we learn from history is that we don't learn from history!
It is a great read. Very easy to read and written with a wonderful cynical wit and sardonic style which just kept me turning the pages. Don't expect to learn deep truths about investing, except that there are no deep truths in investing. It is an amusing read for anyone, but to someone who has worked in high finance it is even more amusing as it is so true - but those who haven't worked in finance wouldn't believe it.
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on 15 November 2009
What a funny book describing to readers the way Wall Street and its customers behave, think, and act. Even thought it was written in 1940, I still found it relevant today because people never change as far as temptation, fear, and greed are concerned.

This book really shows true reality of stock market investing. Customers are excited about the possible riches investing can generate and Wall Street simply takes full advantage of their gullibility. The truth is that over a long period of time, the majority of customers get miserable returns. Brokers, on the other hand, make money no matter what. That's why they have all the yachts and the customers have none. I found it amazing to learn what Wall Street does to separate customers from their money.

I appreciate how the author did not just portray one-sided arguments that Wall Street is the bad guy, and customers are the victims. Customers deserve to take responsibility for their own lack of education, shortsightedness, and greed.

This book provides investors invaluable lessons about how Wall Street really works and the true risks of stock market investing. Wall Street has it purpose, but investors should realize what Wall Street can and cannot do for them. This book fills in all the answers.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
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on 17 March 2006
This book gave me a marvelous look into the stock market from an insider's viewpoint. Through humor and cartoon drawings it makes one laugh wryly so that one can better understand why only a few reap the huge benefits of stock market investing. For all those who worry about investing in high-tech firms these days, I also recommend the insightful book, "Management By Vice". In short episodes with sharp, satiric humor and some fab cartoon drawings, it points out the "behind-the-scenes" reality in high-tech firms, deftly revealing how R&D staff struggle to produce new profit-making products, who in a company ends up with the "yachts" and why...or rather, who gets the "Doughnut Deal"! Armed with such unique, truthful books, an investor becomes more market savvy and definitely forewarned!
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This book clearly deserves more than five stars for exposing the folly of Wall Street in the most humorous possible terms.
This book's fame far exceeds the number of people who have read it. Almost every experienced stock investor will cite examples from the book, without even knowing their source.
The title refers to an ancient story (which the author finds is probably at least 100 years old by now) about a visitor to New York who admired the yachts that the bankers and brokers had in the harbor. Naively, he then asked where the customers' yachts were. Naturally, there were no customers' yachts.
Let me set the stage. The author spent two years on Wall Street in the 20s, but knew it better than that and continued to invest in stocks. He wrote the book in 1940 after the horrible bear years of 1929-1940. The memories of the 1920s were still fresh. Then he updated the book in 1955 in the midst of the 50s bull market with a new introduction in which he explained that the book did not need updating.
Although commissions are no longer fixed, and few spend the day sitting in a broker's office, many of the other observations in the book remain as timely as those in The Madness of Crowds. Human nature doesn't change.
Behind all of the hype about getting rich with stock investments is a sad reality. Over a lifetime, the vast majority of people get poor results from their stock investing. Around 90 percent of professionals will also underperform the market averages over their careers.
But the desire to outsmart everyone else is almost universal. Raging bull markets, like the one we had until March 2000 on the NASDAQ, only tend to reinforce these ultimately expensive urges.
I have been around professional investors for over thirty years and all the big scores I remember involving stocks came after someone who was a founder or worked for a company that went public cashed in their stock and stock options after many years of service. These are not stock-investing events, they are entrepreneurial compensation. In the Money Game, Adam Smith pointed that out, and it remains as true today as it was then.
One of the classic stories in this book is about what would happen if 4000 people started flipping coins against each other. You are eliminated from the competition after one loss. Although by definition, half would win and half with lose with each flip, those who had won ten times in a row (as must happen for some in this format) would soon start to give lessons in coin flipping techniques. That story nicely captures the folly of Wall Street. Even though some may win, it usually doesn't mean anything.
The book contains other investment classic stories that you must have in your repertoire. The book is brilliantly illustrated by the classy cartoons of Peter Arno. It is worth acquiring the book just for those.
The subjects covered include Wall Street's passion for prophecy, financiers and seers, customers (or the sheep to be shorn), mutual funds, short sellers, options, speculators and the bull market of the 20s, and the excuses handed out to those who are relieved of their money.
The writing style is urbane and witty. For example, there is the usual disclaimer on not following the advice in the book in the beginning. Except, it is illustrated by two hands with fingers crossed. And, the warnings are a just little different. The information in this book "while not guaranteed by us, has been obtained from sources which have not in the past proved particularly reliable."
The author had discovered that titles cannot be copyrighted, and he had thought about using a strong title like The Adventures of Huckleberry Finn.
The author's favorite review of the book contained a reference to not being J.P. Morgan and was signed by the author of the review, Mr. Frank Sullivan. The subsequent witty correspondence between them is included in the introduction.
If you are a fan of Louis Rukeyser, you will find the humor here comparable with the badinage on Wall $treet Week during the opening comments.
Seriously, the humor in this book will help you to better understand the risks associated with stock investing. There is a wonderful quiz you can take that will tell whether or not you should be a stock investor. Most will not pass that quiz.
If you still want to own stocks, I suggest that you advance to John Bogle's book, Common Sense About Mutual Funds. It can make you some real money.
If you do not want to own stocks, go instead to Rich Dad, Poor Dad. Follow on to Cash Flow Quadrant.
I also suggest you think about where else folly is taken seriously. This will also put things in perspective for you. My favorite location is the Congress of the United States.
Keep looking for those yachts when you make your investments! To whom do they belong?
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on 2 February 2016
Humorous, yet very serious book on Wall Street.
The author was a broker for many years and over that time tried to find someone who could consistently make money through investing.
He was disappointed in what he saw around him and conveys this in numerous funny anecdotes through out the book.
Take it as a refreshing warning on the pitfalls on investing - and then read books on Mr. Buffet , Mr. Graham and on Mr. Munger. They are complimentary treaties.
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on 8 December 2012
I know nothing about Wall St or investment, but I bought this on the strength of reviews I read elsewhere. Despite the fact that it was written over 70years ago I found it a really entertaining, witty read/
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on 7 November 2015
Brilliant. Funny from start to end, gives a good insight on finance people's lives in the recent past, which are not so different from today's.
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on 9 October 2016
Well received by critics but i found it a little tiresome with the same old criticisms of the financial industry being repeated.
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on 23 June 2015
Perfect proof that a book about investing doesn't need tot be boring.
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