Customer Reviews

American Sucker

5 star:		(10)
4 star:		(12)
3 star:		(4)
2 star:		(6)
1 star:		(10)

 

 

Having read a good but cautionary review when the book came out and having an interest in the topic, I waited for a copy at the local library. Good idea. Buying this book to learn something about investing would be like buying the stocks Denby chose to make money. At least the reader's intentions or motives would be a bit more rational. Denby apparently has watched too many movies and read too many great books. What he really needed was some good common sense.

The title is misleading. Denby's entire downfall is not based on his being "American" or a "sucker". Yes, he was greedy and willing to be gullible. He waxes eloquent on greed and envy. But these are besides the point. Yes, he listened to precisely the wrong people. But his initial, critical, deadly mistake was to assume that he could make a million dollars in one year by not doing anything other than "invest". He was greedy, envious, naive, uninformed and lazy. He wanted so much to make that million that he ignored red flags, warning bells, and first-year business student advice on investing.

He has a cynical view of investing, based on Keynes' observations as to the risks involved. That pretty much explains how he thinks he can make a million in one year just by buying technology stocks in 2000. Denby also decides that taking risks means being irrational, that progress requires irrational behavior. What he fails to do is to listen even to the people who he indirectly accuses of having duped him; even Henry Blodgett told Denby to be more careful. Denby seems convinced that Alan Greenspan's effort to raise interest rates was the market's true undoing, This is a bad case of denial from the recent dot.com bust debacle.

Denby's self-absorption with his attempts to maintain his liberal, upscale, upper West Side lifestyle and apartment in the face of a pending divorce speaks volumes for his willingness to do incredibly foolish, shortsighted and greedy things makes this more of a lesson in how not to dissolve a marriage than any sort of morality play, note of sympathy, or tale of snake oil salesmen swindling a poor, innocent, well-read but naive movie critic. It is hard to feel sympathy, even for such a large, personal loss.

This is not just a book about finance, though at first glance it would be easy enough to mistake it for one. The clever cover design resembles a stock ticker, and if you dip into the opening pages, you will learn that this story begins with author and critic David Denby's goal of making a million dollars. Denby wasn't seeking wealth merely for the sake of wealth; at the beginning of 2000, his wife had told him their marriage was at an end. Denby became obsessed with the idea of holding onto the seven-bedroom Manhattan apartment he had shared with her and their two sons. If only he could ride the seemingly steadily rising tide of the stock market and make that million, he could buy out her share and preserve their home.

Denby is a long-time film critic (New York magazine, The New Yorker) and author of "Great Books," a passionate account of his return to college in middle age to rediscover the seminal works of western civilization. Although ostensibly about his financial quest, the reader slowly discovers this book is really about his quest to rebuild and maintain a meaningful life. He comes under the spell of New Economy stars who would fall mightily within a couple of years, including ImClone founder Sam Waksal and Merrill Lynch Internet analyst Henry Blodget. Denby adopted a course he knew was risky (though how risky, he didn't realize) by focusing on new technologies such as ImClone's cancer drugs and the firms producing the tools that would usher in the true Information Superhighway, with the entire contents of the Library of Congress transmitted to the other side of the globe at light speed. Denby works to learn as much as he can about those to whom he has entrusted his money and dreams, and the more he learns, the more aware he becomes of the betrayal that eventually wiped out the savings and shattered the faith of tens, if not hundreds of thousands.

Throughout, Denby is engagingly, openly frank about the impacts of the financial roller coaster ride he experienced. At one time or another, his sleep habits, his bowel habits and his sex life suffered. But what seemed to have been at stake most of all was his sense of self and the realization of the things that really matter in life, including making the most of the limited days we are given. His narrative closes with a hopeful reaffirmation of these core values.

This is passionate, vivid book with lessons for us all.--William C. Hall

It is depressing to read Denby's account of the bursting of the bubble. It is even more so when it is framed against the disintegration of his family after his wife leaves him and he tries to take care of their two boys and maintain a home for them. The experience tears him up.

The American Sucker is also about the people (Henry Blodgett, Sam Waiskal, etc) that he met during the boom and how they let him down, as well as his obsession with the rising market in spite of all that he knew and all that he had studied. There are passages of insight but there is nothing funny about any of them.

It became a "necessity " of sorts for him to profit from the boom, as he wanted to collect a goodly sum to buy his wife's share of their West Side apartment. Greed and desire got the better of him and so he hung on when the world around him was collapsing.

He was aware of all that too. He knew what was happening. He knew how to extricate himself. Still he kept making mistakes, kept up the hope for the turnaround that never came.

Denby is well read, of course. He reflects on Aristotle, Veblen, the Greenspan logic, and economic theory, He asks good questions, fundamental ones. He learned from the experience. We all did.

He is cognizant of the danger of dismissing bad news, how easy it is to become blind to evidence contrary to your own views, or ignore the tell-tale signs of corporate malfeasance.

And so the bubble burst. It was amusing to recall those days, those heady days that come, if you are lucky, once in your lifetime.

This book would have been terrific if it had been written by someone less educated than Denby. Give me an investing fool with a good editor any day. Who cares if you can quote Nabokov and Trollope? Am I supposed to be impressed because you used the word tintinnabulation not once, but twice (!) in this book? The show-off intellectual tone of this book detracted from the story, which would have been much better had it focused solely on the insanity of the tech craze and the underhanded and/or insanely optimistic dealings which went on.

As a narrator, Denby never revealed the magnitude of the money he put into the market, and I think that would have added a lot to the book. Shouldn't the American Sucker tell all when he's revealing all his mistakes and missteps? Also, his quarterly reports did little to add to the understanding of his financial portfolio.

Denby did do a good job illustrating how the market worked, without resorting to a textbook style. He explained how much capital is required to push a drug like Erbitux through FDA trial, and how production has to be ramped up even before approval in order to meet demand. There are some good lessons about the stock market wheelings and dealings of the year 2000, if you can get past Denby's never-ending pretension.

Let's try not to build great expectations here. Denby is not a financial professional, he's not even a financial journalist. He's a self-described "liberal arts guy". Don't read this expecting to get a lot of insight into the market or as a "how to" guide (or even a "how not to" guide).
Read this because it's an enjoyable read. I read it on the train on my commute and was thoroughly entertained. He offers great insight and philosphical introspection into what was going on in his life and how his obsession with the market intertwined with it and coincided with some major events in his life. He also offers first-hand glimpses into some very high profile stories from the bursting of "the bubble".
Good stuff.

In this memoir of his misadventures in the stock market, movie critic David Denby quotes John Maynard Keynes: Investment "is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct." Denby's rigorous self-examination has made his investment history interesting to those who don't share his gambling instinct. However, I wonder if he has succeeded in truly apprehending the nature of his obsession.
Denby talks about greed a lot, but I question whether greed was so strong a motive in his case. Supposedly, his investment goal was to make a million dollars to enable him to hold onto his apartment after separating from his wife. Despite being frank about his investment income and loss, Denby never tells us how much he earns from his actual work and makes it impossible for the reader to determine how necessary this million dollars was. Also, the object of his greatest desire, the $42,000 Audi A6, was seemingly within the purchasing power of a successful journalist yet Denby refuses to buy it. I would submit that what motivates Denby most is the fear of being left behind a trend. He seems near to recognizing this, with all his talk of time, speed, and the "zipper," the electronic ticker tape visible from his office, and with the urgency he senses in finding popular yet artistic movies to tout. He even condemns Tyco crook Dennis Kozlowski for having conservative tastes in art rather than favoring trendy Rothkos.
Indeed, it is difficult to see how Denby could have been such a "sucker" if mere greed drove him. He has the advantage over most day traders and the like in having formed friendships with a couple of the big players in the 90s bubble, Henry Blodget and Sam Waksal. Instead of gaining wisdom from the two now disgraced operators, Denby is even more enthused by their elusive pronouncements. Incidentally, his portraits of Blodget and Waksal, despite being intermittent and comparatively brief, are unlikely to be improved on.
Unfortunately, Denby often slows down his narrative with efforts to find a deeper meaning to his obsession. Supplemented with references to "Great Books," these discussions can be tedious and unsatisfying. In similar fashion, some of his stories seem to be exaggerated for dramatic effect or to fit a metaphor. Despite these flaws, the book is well worth reading and helps illuminate the mentality of the Bubble 90s.

David Denby flirts with internet porn but commits to the NASDAQ. His motive for the marriage is not so much to make a million, but to stave off the inconvenience of having to sell off his 1.5 million dollar digs on the upper west side after an amicable divorce from his non-chalant wife. His I.T. investment capital is really, at bottom, just play dough. Denby doesn't actually dread the spectre of the Poorhouse, and this vibe we feel up front-- that Denby inhabits a world where nothing really awful is going to happen, where nothing Drastic actually happens, where something, but not everything is at stake -- distracts from any real amusement this confessional could have provided.

Denby romps through an arena of the genteel, where no one is beaten to a bloody pulp for skulking about with married women, where no one balks at $350 a night for a lover's weekend at the Red Lion Inn, where no one actually jumps the 50 stories when the portfolio goes bust, and where no one spits in your eye for lying to their face. Denby is both attracted to and repulsed by those fiduciary hooligans who behave badly as they bleed money. He even covets Nyquist's capacity for homicidal passion, but we know from the get-go that Denby himself won't throttle anyone over his tech losses, even those cultured vultures who deserve at least a moderate neck-wringing.

Sometimes it seems Denby leers at those for whom everything is at stake like some kind of pecuniary voyeur. But that isn't really fair, because he really is more than that -- he does get to hang out with Waksal and Blodget. He becomes at least an honorary insider, but it's the Martha Stewarts and her ilk who are privy to the late night phone calls before the bottom drops out. Denby feels jilted by Waksal and Blodget, and in fact he appears more wounded and sunken by the end of his "romance" with those two than he ever seemed over his wife's leaving. When Denby muses over Blodget's "coded" lingo, and the betrayal it ultimately suggests, he understates, "It hurt like hell," but he could well have blurted, He Never Really Loved Me! As he attends a court hearing for Waksal, and they briefly meet up, we are reminded of Alvy Singer at the end of Annie Hall, wistful and a bit embittered, yet still too decent a fellow to muster unbridled hatred.

Basically, American Sucker is an autobiographical look at the experience of an individual stock investor/trader during the period of roughly 1999 to 2002. That, of course, was very challenging time for participants in the equity markets and it is clearly documented in the text.

Before I get into talking about the story, though, it's worth taking some time to consider the author. Denby is a writer used to addressing a fairly sophisticated audience. His primary vocation was as film critic for the New Yorker and he had previously authored a book discussing the classics thinking of Western civilization. As such, his language is not that of one writing for the masses. I consider myself pretty well read and with a decent vocabulary, but there were several words Denby used in American Sucker I'd never heard before.

That said, I didn't find the book to be pretentious or anything like that. From a writing style perspective it was a pretty smooth read.

Getting to the subject matter, I found it a really interesting perspective on the thought process of the individual investor during a time span which ran from euphoria over the prospects of profits from a market rising rapidly to the depths of despair in the face of not just falling prices, but also destroyed confidence in the whole system. As such, Denby caught the tone of that whole period of time during which the stock market peaked and then fell in the most dramatic of fashions. In fact, I couldn't help but draw comparisons to what's going on in the markets and the economy right now.

I think the first real benefit of reading this book for someone involved in the markets is the psychology of investing which plays out in the author's thinking and actions. He starts off not wanting to miss out, wanting to get his fair share out of the booming stock market of the late 1990s. The euphoria of the time combined with personal developments in his life to lead to toss all his usual caution to the wind and jump into things with both feet. Later, as the markets start to unravel and his portfolio value is dramatically reduced, Denby talks through the waves of hope and fear that are so often found in times of strain.

Basically, anything you have ever read about in trading psychology texts regarding the way most people's mental process works while watching their account values rise and fall are clearly seen through Denby. It's all there. As a reader, you can actually see the thoughts and actions which create the price patterns so prevalent in bear markets.

Along the way, Denby documents his evolving beliefs as events in the markets and the performance of his portfolio combine with events in his life. There's an important lesson to be had there. Your trading and investing cannot be entirely separated from the rest of your life. They are inter-related and that's something you need to realize can impact on what you do and how you perceive things.

What makes the book even more interesting is the author's relationship with some of the major controversial figures of the time period. One of them was Henry Blodget, the disgraced Merrill Lynch technology analyst. Another was Sam Waksal of ImClone. Denby's interaction with both men feature prominently.

Overall, I found American Sucker a very good read. Denby does spend quite a bit of time ruminating on the subject of greed and related topics, as well as some other philosophical ideas - his own and that of others. Some readers might find this stuff uninteresting and I will admit that at certain points I skimmed along when the narrative stopped and the deep thinking started. It's an autobiography by a well read, sophisticated, and mature individual, though. You can't expect it to be without introspection.

In short, I definitely recommend this book for traders and investors and for anyone else with an interest in the markets.

people do crazy things when they're under stress. we have flights of fancy in our dreams of escaping our sorry fates. this is what happened to Denby. his marriage was ending after 18 years and he escaped into the exuberance of the tech boom. he got greedy and he lost a lot of money. as you can see from a lot of other reviews, you can't feel too sorry for a guy who sold his manhattan apartment for 1.5 million (split with his ex-wife) and lives as a movie critic for the new yorker. sometimes he comes off as a spoiled, pretentious bourgeois which indeed he is, but he is also capable of a certain amount of useful self-analysis, even insight. his idea of the great ends of life consisting of survival, love, achievement, knowledge, and belief are a nice way of describing a substitute for greed as a motivational force. this book is a nice companion for further study of human motivations, especially in times of crisis. although greed can be part of other motivations, as an end in itself it is empty and destructive. i think some of the reviewers who give the worst ratings for this book stopped reading before he redeems himself somewhat toward the end of the book in gaining control of this impulse and becoming more of a human being again.

Although Denby admits his privilege and the folly surrounding his desire to raise $1 million in order to save his apartment from the fall out of his divorce, the reader is still confronted with the question "why?" (why did he risk so much for a piece of real estate, why did it take him so long to realize that "home" is moveable, why could he not see the truth of the people and organizations he became obsessed with). The answers to these and more questions are hard to come by in the text. Denby is generous with clever text, but stingy with real explanations for his behavior.

Perhaps his story would have worked better, as another reviewer noted, as an article rather than a book length narrative. The text is padded with numerous quotes from Denby's movie reviews (he points out frequently that reviewing movies is how he makes his living) - a "feature" intended to provide insight to his state of mind at the time certain actions or decisions were made, but serves more often as advertising for his bread and butter work. Additionally, Denby sets up the story as a sort of mystery - we know the ultimate outcome of his quest for money, but he wants us to be compelled to turn the pages quicker and quicker to find out the details. Sadly, the device doesn't quite work out - too many of us suffered the same type of economic fall out and it's just not that interesting.

Still, it's not a bad book. Readers who are willing to set aside these, and other, flaws will find it an enjoyable way to spend an afternoon (with liberal page skipping).