Enterprising Investor Forum

One of the best books on markets and investment psychology! Despite really being about Jesse Livermore, one of the greatest stock speculators EVER, it is actually written as a fictional biography of “Larry Livingston.”

The book follows Jesse (Larry Livingston) from his early start helping out in “bucket shops”, to him starting to trade, to market speculator, to market manipulator, to market maker.. all the way to market legend. Throughout this whole incredible journey, the readers get a detailed account of what happened, how he made and lost millions of dollars and all of his words of wisdom.

This book takes place in the early twentieth century but it ‘practically’ reads as if it where written today. Naturally, there are differences but the psychology remains the same. Actually, readers will find out where a lot of the commonly used investment phrases/concepts originated. For example:

• following the ‘path of least resistance” = the trend is your friend
• do not buy a stock that is going down, if nothing is supporting it = don’t try and catch a falling knife
• the crowds do not profit from tips, think for yourself = tips are for waiters
• No stock is too high to buy or too low to sell
• and so on….

This is a really great read and has probably been the foundation for most of the other investment books out there. Remember that despite being published in 1923, this is the most read and recommended investment book ever! Do yourself a favor and pick up a copy…

Enjoy!

This is a great book and like all the true financial classics, still relevant today despite having been written in the late sixties. Readers are warned that the book is all about image and reality and identity and anxiety and money. In a nutshell, the book is: contemporary, interesting, educational and very witty.

As Adam Smith states in the first sentence of the book; “The world is not the way the tell you it is”, and he goes on to try and give readers a behind the scenes view of Wall Street and of ‘The Money Game’ … why the markets are so addictive and how it can be a zero-sum game.

He talks about the characters involved, the psychology, the systems and the obsession with being in the markets… “The irony is that this is a money game and money is the way we keep score. But the real object of the Game is not the money, it is the playing of the Game itself”.

Definitely a strong recommendation from our part.

Enjoy!

After our review of One Up on Wall Street (link) we had to do Peter Lynch’s follow-up. This book is similar in terms of strategy and what he preaches but it offers a more in-depth look on how to picks investment products and screen the market place (whilst taking the reader through his full experience at Magellan).

As usual, the book is a very easy read and quite amusing. What is refreshing is that the reader really gets a feel about the psychology of money management and not only the technical/strategic side of the business. As he says, “In dieting and in stocks, it is the gut and not the head that determines the results”. N.B. remember: you are getting this advice from one of the most successful track records of any money manager.

A quick overview:

• You can’t see the future through a rear view mirror
• If you are going to pick a fund or stock, you might as well take the time to pick a good one
• As Buffett also notes, the extravagance of any corporate office is directly proportional to management’s reluctance to reward the shareholders
• Not all common stocks are equally common
• The best stock to buy may be the one you already own

If you want good results, you have to invest only in companies you have researched and do not be afraid to take big positions if you have done your homework.

Enjoy!

Subtitled: ‘The Secret History of Lazard Frères & Co.’, this +700 page ‘tale of unrestrained ambition, billion-dollar fortunes, byzantine power struggles and hidden scandal’ will definitely prove difficult to put down and stop reading.

Despite all the controversy surrounding this book, this is a great read and a true insider view of Wall Street and the house of Lazard. Truth be told, this could be a blockbuster movie (well, actually probably too much to convey in one single movie) and is truly a very comprehensive piece of research that has been undertaken by Mr. Cohan. Maybe one small criticism could be that there is a bit too much detail in some parts but all in, reads fine.

From the establishment of the firm to the near demise during World War II, Cohan portrays all the ‘Great Men’ of Lazard up to the final IPO and the end of a dynasty:

• André MEYER: architect of the post-war resurrection.
• Felix ROHATYN: possibly the greatest investment banker that ever lived.
• Michel DAVID-WEILL: the last scion of the family-owned banking empire.
• Steve RATTNER: the PR/Media king that tried to save the firm.
• Bill LOOMIS: the ultimate Lazard survivor who also repeatedly tried to save the firm.
• Bruce WASSERSTEIN: a living legend - one of the key figures of investment banking history who ultimately took the firm private and made a fortune.
• …and many more key bankers such as Gerardo Braggiotti.

From Paris to London to New York, ambition, wealth, power, betrayal, side-deals, tradition, drama, etc…….. this is a truly fascinating book and a must read.

Enjoy!

This is the third book we are reviewing from the ‘little book’ series and once again, these are really great.

John Bogle summaries and explains a lot of our thinking here at Enterprising Investor Forum. He starts with Buffett’s famous story about the Gotrocks (read: here), explaining how Wall Street is effectively stealing investor funds and preventing them from adequately compounding good returns.

He details why the low-cost index fund solution is the best way for most investors to allocate their savings and shows this in a very simple and concise manner.

Like Warren Buffett, he maintains that investing is all about common sense and that investors should not fall victim to fads and fashion and understand that despite being simple, investing is far from easy. We should forget notions of consistently trying to ‘beat the market’ or ‘beat the street’… it is simply not possible and effectively a zero-sum game.

Investors will do very well for themselves if they can match market returns over the long-run and should not fall victims to excessive expectations.

For our other reviews:

• The Little Book of Value Investing Review: here.
• The Little Book that Beats the Market Review: here.

Enjoy!

A classic, another tale of the 80s excesses. This is not an investment or finance book, it is a great contemporary novel.

In what is essentially a homage to New York, Wolfe tells the story of a Wall Street bond trader - not a simple trader but a ‘Master of the Universe’ - and how failing to take the wrong turn whilst driving his beautiful Mercedes started an incredible downward spiral, a one-way ticket to disaster.

Readers get it all:

• improbable characters ranging from eccentric English expatriates, medial moguls, a ghetto warlord Reverend, beautiful and dangerous women, etc
• tales of New York riches from private schools, Park Avenue properties and retreats in the Hamptons
• Wall Street characters, war stories and bonuses
• Greed, murder, lust, luxury and more…..

Enjoy!

This is one of the best books we have read in a while! Barton Biggs offers readers a truly fascinating account of Wall Street and the hedge fund world.

The book is well written, interesting, instructive, funny and captivating. It is not a tale of ‘hot shot’ hedge fund managers but a very eloquent and detailed account of the fascinating world of hedge funds, the people (both a mangers and investors) and the inner workings. Apart from the tales of Wall Street, the book also wonders back in history and offers unique insights and lessons from Bismark and John Maynard Keynes.

The book is a mix of The Intelligent Investor, One Up on Wall Street and Liar’s Poker…. we think this ranks in the must read list! We came across this by chance and can’t stress what a good read this was.

As David F. Swensen from the Yale Endowment said:

“Barton Biggs writes about markets with greater style, clarity, and insight than any other observer of the Wall Street scene…”

Enjoy

Like ‘The Little Book that Beats the Market’ (read review), this book keeps on teaching readers how to make money in the market. Greenblatt manages to explain how to take advantage of opportunities that arise in a very simple and straight forward fashion.

He focuses on Spin-offs, Mergers, Restructuring, Recapitalizations and Bankruptcies to highlight how the Enterprising Investor, who is willing to take the time to do some research, can greatly profit from these situations and actually beat professionals without even having to compete with them.

The book tackles each situation not only by explaining why, how and when you can profit but takes readers through a number of case-studies to prove all the points that Greenblatt is making.

Recommended reading for both novice and experienced investors.

Enjoy!

Despite not being about investing or the markets, we felt that readers could find this book quite interesting as it strives to ask the right questions and understand why and how events happen - something that is key for the Enterprising Investor.

As the authors state: “If morality represents an ideal world, then economics represent the actual world.” The book sets out to convince readers to become skeptical of conventional wisdom and addresses a number of questions with common sense and quantitative analysis to show us the hidden side of everything. For example:

• What Do Schoolteachers and Sumo Wrestlers Have in Common?
• How Is the Ku Klux Klan Like a Group of Real-Estate Agents?
• Why Do Drug Dealers Still Live with Their Moms?
• and many more….

In doing so, the authors manage to challenge this conventional wisdom and actually prove it wrong. OK, some of the findings are controversial but they are backed up by numbers and they will no doubt give you plenty of discussion topics and food for thought.

Enjoy!

Michael Lewis shares his experiences as a bond trader at Salomon Brothers in the 80s. The reader gets to follow him through his unorthodox way of getting hired, to trainee, to geek, to Michael and finally, to being a Big Swinging Dick on the trading floor!

Lewis is a really good writer, he manages to make you feel as though you were there with him. Not only does he paint a picture of all of the characters but he actually find a way to let you have a peek into what was going in their minds and driving them. If you enjoyed watching the movie ‘Wall Street’, this should be on your MUST READ list.

Another interesting aspect of the book is that, not only does her offer an insight into Salomon, the Street, the high profile figures, the traders and so on but he manages to do this in an extremely funny way - the book is hilarious.

As the back of the book states: Funny, frightening, breathless and heartless, Liar’s Poker is a tale of hysterical greed and ambition set in an obsessed, enclosed world.

Enjoy!