Customer Reviews

Full of Bull (Updated Edition): Unscramble Wall Street Doubletalk to Protect and Build Your Portfolio

5 star:		(13)
4 star:		(15)
3 star:		(11)
2 star:		(4)
1 star:		(0)

 

 

Although this is the revised edition, McClellan seems like he is in the wrong decade on much of his advice and ends up sensationalizing his underlying premise. Now I would agree, he is largely correct in his read of security analyst's and the institution environment... but he draws it out over far too many pages. Really this message would be better served in a 10 page article and not a book.

I believe that a lot of the elements that made it into this updated edition end up up going beyond his comfort zone. I think a lot of readers will get bored. I think would be better served by other authors who take a more straightforward approach. A lot of the key points and takeaways are reiterated in these reviews... You loose out on some uninspiring stories half of which were from the times when he was on the other side of the fence.

Also, as another reviewer pointed out some of his suggestions and comments are completely ridiculous: like avoiding NASDAQ stocks. This is like saying you should avoid TV's from non-American companies - outdated and biased.

I'm a portfolio manager for a hedge fund, so I have some experience with analysts and a lot of aspects of Wall Street that McClellan outlines in the book.

First, the positives. The part about analysts is absolutely right. Analysts and investment banks are not there to cater to individuals -- they are there to provide support to commission-generating clients, who are large institutions and hedge funds. These funds pay quite a bit for the research, either through commissions or direct payments. Individuals don't pay anything... so individual investors get what they pay for. If you stop and think about it, this shouldn't be a surprise. My experience with analysts is always this: they know everything about the companies they cover, but they have little to no ability to draw good conclusions from that information. I don't know of a single major financial institution that allows an analyst to trade based on his or her analysis. There's a reason for it.

And now the negatives.

The inability to draw sound conclusions shows up in the rest of the book. McClellan shouldn't be giving investment advice -- it is atrocious. Most of the time it is contradictory and uninformed, sometimes he is just reckless. He claims you should invest in themes that will be big -- for example, 2 years ago, commodities were great. Or 25 years ago, computers were just becoming a big deal. But who knew at the time?? These themes are obvious in hindsight, but I challenge anyone to identify that theme today. Social networking (which you can't even buy)? Solar power? Nanotechnology? Genome sciences? Broadband infrastructure? Something completely different?

He claims buy small companies with large revenue growth. However, they should also be listed on the NYSE, not the NASDAQ, which many might find at odds with the "small company" part. Other tips of his: don't invest in mutual funds or internationally. Avoid tech. Don't diversify.

So out of all this, buy small NYSE-listed companies with double digit revenue growth, highly profitable, and trade at low multiples in industries that are going to be hot, but just haven't been identified by the general public. There are so many problems with this, I don't even know where to start. It's equivalent to him saying, "Put most of your money in the 7 companies you think will be the next MSFT. By the way, you should have invested in MSFT 25 years ago when it had its IPO... except you'd be breaking my investing rules by buying NASDAQ stocks, tech stocks and IPOs."

But especially dangerous is his advice for investors in down markets -- if stocks are about to go down a lot, just sell and wait until things go up again. And don't buy if the markets are going even lower. And how exactly are you supposed to know if markets are headed higher or lower? McClellan conveniently keeps that "Wall Street secret" to himself. Oh, and another tip from McClellan: Be calm about your trading and ride out all of the ups and downs in the market -- don't sell if your stocks go down.

Huh?


He claims to be a value investor a la Buffett, but this is certainly not the case. Even Buffett points out that nearly everyone should just invest their money in an index fund and not think about it; be happy with average, at least you're not getting killed by Wall Street and hedge funds. McClellan wants you to believe that everyone can have above average returns. Don't believe a word of it -- it's the same garbage every other Wall Street house and snake oil salesman wants you to believe to get commissions, subscriptions, and royalties out of you.

Key takeaways: Analysts are not helpful for the individual investor. Ignore their "price targets" and their stock rating -- they won't help you. But after the last 10 years of insanity in the markets, what investor doesn't at least suspect this?

I don't recommend this book. There are so many better books out there about investing that lead to these same conclusions about analysts. Burton Malkiel's A Random Walk Down Wall Street does this with a more rational approach to investing, so stick with the classics.

The book's value is directly proportional to your investing experience. Beginners will get a basic overview of the players, tools and events that influence stock prices. The glossary and index alone are worth a quick study. So long as the beginners don't take the investment advice to heart, no harm is done.

Experienced investors will no doubt reel from the contradictory investment advice and wish-upon-a-star keys to avoiding down markets (there's so many tips you can't possibly follow them all without undoing one or more tips).

My three-star rating reflects my ambivalence with the book; I can't recommend this book when there are better investment books available. However, there isn't much harm in reading Stephen McClellan's reflections from a 32-year career. It would have been better to stick with a memoir than to mix it up with incongruous investment advice.

Rating: Three stars

I think one has to look at this book from two different perspectives when offering an objective review. First, how effectively it goes about explaining what analysts do as a profession and why small retail investors need to be very cautious making any investment decisions based on analysts' recommendations. Second, does it offer any profound insight on what investors should focus on when making investing decisions if they are not to follow analysts' recommendations like sheep?

On the first note, I think it does a stellar job. It describes what a securities analyst does in his / her daily grind. It outlines what is happening on both the buy side and the sell side from the analysts' perspective. It also describes how the number of analysts and their roles have shifted over the past decade. McClellan is open and honest, and on occasion humorous, in covering some of the more negative aspects of the profession as he is critical of many analysts. He outlines how the investment banking / analyst conflict of interest that Wall Street tries to convince the public no longer exists is still very much present. There is no Chinese firewall between different divisions and thus analysts are handcuffed in their work. He clearly illustrates why this is the case and thus why most analysts' recommendations are overly kind to the firms they are evaluating. He even offers interesting suggestions on how to reform the industry. I think anyone in college thinking about a career in this field would be well served reading this book and several others McClellan references such as Liar's Poker and A Random Walk Down Wall Street for more perspective.

On the second note of does the book offer any profound investing advice, I think the work simply falls short. I think many astute investors will read this book walking away saying it just doesn't offer anything new. The grand daddy of all investing books is by Buffett's mentor (Security Analysis by Benjamin Graham). McClellan even references this book as well. The more I read the more I conclude that most investing books just rehash concepts that have been well articulated in Graham's classic and much of the financial literature that followed and has been around for decades. There just isn't anything new or profound here for experienced investors. Although I did enjoy chapter 6 on "executive traits are a revealing investment gauge." McClellan spent a career dealing with executives trying to paint their companies in the most favorable light and I think his experiences on nuances to look for in leadership is something many others have not tackled in their writings. I also think the format of the book will lend itself to facilitating the learning process for new investors. Bold face italicized subheadings with key concepts investors should be aware of is a nice touch.

I think some of the other reviewers are being a little too critical. If this book is intended for a new investor, I think it does its job well. If this book is intended for an experienced investor, it falls short. Some have pointed out inconsistencies in this book and yes they do exist. In defense of this claim, as investors, we all have a checklist of things we look for and as most of us are aware, we rarely find one stock that fulfills everything on our main checklist for a variety of reasons. I don't agree with his advice to tread lightly with international companies. Yes, they are risky and have more moving parts; however, if you put in the work you will expand the universe of appropriate investments from which to choose and add potentially lower correlation investments to your existing portfolio and reduce your risk. I subscribe to the theory that 20 to 30 percent of one's equity positions should be in international securities. It simply expands the universe of what you have to select from, offers tremendous opportunities and actually reduces one's risk when done correctly. Plus, I think the recommendation of only buying NYSE listed securities that is also mentioned on that page is ridiculous. Most of McClellan's advice is solid, it just does not add anything new to the equation. I do wish page 72 (talking about NYSE listed securities and international investing) was omitted from the book.

Perhaps having been in the securities business myself, there was not so much to glean from this admirable effort that was not already "old hat" for me. Nevertheless, for novices this material would be a valuable preparation and education. One does have to admire the author's honest and direct treatment of certain practices "behind the scenes."

The author gives a detailed view from the inside of the game why such advice as comes off the street isn't to be trusted. Much of what gets into print or onto the internet is dated or tainted. There's nothing for the investor but to learn how to read the tea leaves himself. Understanding the financials is pretty essential.
For my part I've found there to be no relationship whatsoever between how well a stock does or doesn't do and the rating given by whom or whoever.
Using a screening program I've found that a screen for very basic essential financial criteria produces a very short list of stocks. What the stock pundits are smoking I can't say but I have my suspicions. Those buying and selling in milliseconds were selling snake oil in a prior life.
The author points out that stock repurchases and reorganizations should send up red flags. They are signs of mental poverty on the part of management and never worth buying into.
A good book if you need the scales removed from your eyes.

There's some decent stock tips to invest more wisely on bullish stocks. Thanks amazon. Good read with good info.

If nothing else, the one thing I think this book should give anybody is a healthy dose of cynicism before they start investing in stocks. As much as anything, it makes it clear that you are the only person with your best interest in mind and that anybody offering you services or advice is looking for some way to make money off of that advice and you should never assume that their plan really includes you making money.

All of that said, I don't think this book is necessarily too useful for anybody that strictly invests in mutual funds, particularly index funds. Such a person probably figured out a long time ago that they didn't have the time, skill, or risk threshold to actively trade and invest in individual companies.

Full of Bull written by a former stock analyst is an attempt to help the individual private investor. It does contain some insights and what may be considered some "inside" information but some of this information is so drawn out as to muddle the point. For example, early in the book there is a long section about analysts and how they are geared toward helping large companies and corporations and not the "little guy" and how their advice cannot be taken at face value. The issue was there were pages and pages of examples and equating this to that and discussion rather than one succinct point and example that I almost had to go back and re-read to be sure I got the correct point. For the "layman" or newbie investor (or if you've never invested before in your life) this can be overwhelming. This isn't an investing for dummies book in other words - which is fine - but don't expect to come into it with zero information and fully understand everything. The author spends some time criticizing Wall Street and analyzing recent and past "crashes" which is interesting. And he gives some direct advice on doing research and investing in certain types of companies and of warning signs that companies may not be doing so well. I think this will need multiple reads to glean the full amount of information from it but is worthwhile enough to look through. I'd give it a 3 ½ but will round up to 4.

It sounds good to have inside information from a seasoned, former Wall Street CFA. However, most of the info presented here simply can't keep up with the current rapid and volatile movements of stock markets. Intended to give the individual (small) investor clear pictures of Wall Street's misinformation, many of the author's investing strategies are becoming obsolete and at times self-contradictory. Examples: McClellan emphasized long term investing yet advised dumping stocks after approx. a year to lock in profits and to prevent further loss. IF an investor had dumped stocks during the end of 2008 or early 2009 by following this strategy, he/she would have missed the subsequent strong rebound; He stated mutual funds are too dull yet suggested index funds and ETFs to "participate in the market"; He recommended investing in focused/specialized companies yet distrusts "techie geeks" who are experts in a specialized technological niche. The main theme of this book is that the investment industry is only there to benefit the institutional investors and screw with the individual investors. Financial analysts and ratings are not be be trusted (common sense). The author stressed skepticism of all financial research, reports, company buy-backs, and slimy, extravagant executives. Most investors have already learned to distrust Wall Street and large corporations after the recent financial debacles. Some of the "secrets" presented here are common knowledge to most investors who conduct investment research on the internet. McClellan's investing strategies are overly conservative and pessimistic and just can't adapt to the current market conditions. The section on favorable/unfavorable traits for corporate execs was rather funny. There is also a useful glossary of basic financial terms at the end of the book.