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As a individual retail investor, I found Backstage Wall Street to be an informative, entertaining and easy read of how Wall Street works and where its going in the future. There wasn't any chapter that was boring and the chapter detailing the pitches/scripts that brokers are taught reminded of The Wolf of Wall Street. Whether it be at home or on vacation, I highly recommended for anyone interested in wanting to better understand their own investments and the markets.
I was expecting more, but perhaps I was unfairly categorizing who the book was for. I watch CNBC every day and follow Josh on twitter, read his blog every day, and for the most part I have a good pulse of the markets.
Pretty much everything in this book I already knew. His satire and manner of information-sharing is typical Josh Brown excellence (and why I bought the book in the first place), but it's not ground breaking. He doesn't say anything I don't already know, but I still enjoy his style of writing. His way with words really makes topics easier to grasp - and humorous - without dumbing down the information.
I think this book is meant for the novice investor who does not know much about the financial industries. If you're an advisor, day trader, or pay attention to the markets regularly - there's not much in here you don't already know. It's never bad to hear Josh's take on things, but the "insight" seems more geared to those who aren't able to follow the markets day-in and day-out.
Maybe I misunderstood who the book was meant for, and being a Josh Brown fanboy I just bought it without taking the time to research first. Good for new investors or those not already familiar with markets. Rather redundant information if you're market-savvy.
This book was long overdue and different than any of the many books on the financial service industry I've read over the years. Anyone who is seriously interested in investing will enjoy this book. The writing is irreverant, yet substantive and the book is peppered and illustrated with anecdotes that at times made me laugh and, at other times, cringe. The chapter, "Staying out of Murder Holes" is alone worth the price of admission. If you learn nothing else except the difference between a "fiduciary" standard and a "suitability" standard, you will learn something that could make a huge difference. The fact that I had invested for years and never understood the difference until reading Josh's book was a rude awakening.
Finally, Josh Brown has the distinct advantage of being in the same office with Barry Ritholtz, the author of "Bailout Nation" and one of the best minds in the business. I would think just being on the same block with Barry would improve one's perspective on what to do and what not to do when it comes to investing.
I was a proprietary NASDAQ trader during the time that it was good to be a proprietary NASDAQ trader, 1995-2001. I worked for a small broker dealer with about 25 other "traders". We had to get gobs of licenses to trade, Series 7, 22, 6, 64, probably a few more and what we did every day was we'd come to work at an ATM. We'd sit in front of computer screens and essentially "front run" and we made hundreds of thousands of dollars every year. There was so much money being made it was economically unsupportable. I always knew it would end because people shouldn't be able to make that much money for doing nothing of value. We would look on Instinet to see if big orders were coming in and then we'd short or take as much stock as we could on NASDAQ, and then offer it a level or two above or below where we got in, just in time for the SOES traders to buy at the top or sell at the bottom. It was stupid how easy it was. I estimate that over the 6 years I was there, the room made about $40M. And where did this money come from? The little guys that didn't have an Instinet terminal. The Public. It's always the Public that gets poked! It ended when Arthur Levitt moved to decimals. We lived on the spread. We're lucky that there are guys like Josh out there that don't get caught up in the BS of the system and keep perpetuating the myth. It's tough to get rich quick. If you read and believe Josh, and have a healthy dose of Wall Street skepticism, you will have a lot more money at the end of the line.
Backstage Wall Street, is a well thought out mix of hard-earned personal experience from both the buy and sell side of the business, in-depth research and witty commentary on the side effects of greed and fear on Wall Street. Without any hesitation, I would label it as a highly useful read for anyone that manages or intends to manage money.
Here are some of the insights I picked up from reading it:
1. Selling one's expertise is much easier than actually developing an expertise, especially as it pertains to investing.
2. A good broker can close on anyone and he means anyone. Well almost. I was secretly hoping to adopt some of the successful selling techniques in my portfolio of bar pick up lines, but then Brown slapped me with the following: "It is nearly impossible to impulse-sell securities to women, as they tend to invest more for financial security than for bragging rights, big fish tales, or naked greed like wealthy men do." If only stocks were shoes.
3. By driving the costs out of trading, the online brokerages had inadvertently driven the investment banks back to the profit drawing board--as history has shown time and again, Wall Street getting creative is almost never a good thing.
4. Social media is just one more disruptive force that allows talented individuals to build their own brands and to gnaw away at the once-mighty oaks that have ruled the industry for so long.
5. Wall Street Sell-side research is a giant joke. In bull markets, you don't need them because everything goes up. In bear markets, their warning is usually way after the fact.
6. The game used to be played like this: "Do your initial public offering through our banking department, and our brokerage analysts will guarantee you a `strong buy' rating for your first six months of trading."
7. There is still an understanding that you don't downgrade the big clients of the firm. When analysts do downgrade stocks, in my experience, it tends to come only after a slew of weak earnings reports and in the context of a stock price that has already been falling for months. In fact, ask most experienced traders about which type of sell-side call gets them most excited and they'll almost unanimously answer that they love when a broker goes negative. The value investors will wholeheartedly agree.
8. The most effective method of selling anything in this world is through storytelling. And it is not just product that needs to be sold. Strategies have received their own stories as well. "Buy and hold" is one of the greatest stories ever told, this despite the fact that in the past century we've seen 25 cyclical bear markets and two bone-crushing secular bear markets.
9. There are a lot of "murderholes" on Wall Street: SPACs, Chinese ADRS, one-drug biotechs, private placements among others. I love the quote from Mike Tyson in the book: ""Everyone has a plan, 'til they get punched in the mouth."
I want to tell you a bit about this dude, Josh Brown. I'm in the financial services business for 24 years and there aren't many like him. He's honest, straightforward. His words are cutting and real. No bull. As I read through this tome and featured Josh in my book, I kept shaking my head. He's right on. Know the difference between a broker and a true registered investment adviser? No you don't. Want to really understand what goes on behind the scenes? Here it is. Follow Josh on Twitter @reformedbroker. No, I'm not a paid spokesperson. I just know what I'm reading is true. And poignant. And Josh wraps this stuff in entertaining prose, too. A must read.
There's way too much fluff and not enough of the actual peek behind the curtains. This book should have been 150 pages shorter. That, or else the author should have spilled even more of his experiences and insights instead of pages and pages building up to the meat of the book which doesn't really start until after 100 pages in. When Josh finally gets to the good stuff (finally divulging the straight-line pitch after 150 pages of buildup, commissions and fees in the products you're being offered, investments to avoid, etc.), it's both interesting and informative. I wish there would have been more of this. I'm a big fan of Josh and his blog, but don't think he goes as far or as deep as he could/should have.
Haven't finished it yet but so far it is interesting in that it describes the back-stage antics going on in brokers offices and the exchanges, in general. As a long time investor, I don't find it any more revealing than other books I've read on the same material, but having watched the author on CNBC it is a bit more personal. Let's face it, these folks are all salepeople and the idea is to get you to listen or make transactions through them in order for them to make their living. I have learned long ago to listen to their stories ,then double check the facts before risking my money!
This book will give the reader an inside look at the reality of how financial " wealth management" actually works. I learned a lot from reading this book and would advise anyone who invests in the stock market to read it as well. Just because someone wears a nice suit and is able to throw around complex sounding financial phrases, it doesn't mean he will be any better than you at investing your money.
I manage all my own investments and reading this book valladated my decision and gave me more confidence in doing so. I have also become a fan of Josh Brown and I follow him on CNBC, and on his Blog. In the wierd and wild world of financial punditry, Josh is one of the very few good guys" who you can depend upon for telling it like it is. DO NOT PASS UP READING THIS BOOK. There are things in it that you REALLY SHOULD KNOW!
I bought the book because Josh Brown's blog and twitter stream are pretty entertaining. And of course the media hype and discussion about the book. However, as other reviews have stated this book really re-hashes the same stories we have all read before. Although not as entertaining as Boiler Room, it is an inevitable comparison.
If you have not read previous financial industry tell-all books it an interesting read, if you have then do not expect too much new material. It is a pretty quick read if you are on a plane or need to kill a few hours.