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220 of 228 people found the following review helpful
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 planned to have my book appear under a good title, The Adventures of Huckleberry Finn."
The author's favorite review of the book contained this phrase, "If I were J.P. Morgan, and I have no reason to suspect that I am not . . . .", 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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41 of 41 people found the following review helpful
on November 2, 2002
In the current gloomy environment -- with scandals and investigations ("shocked, shocked, I say, to hear...") at every turn -- this book is a LOL reminder of the constancy of human behavior in the face of temptation.
As the other reviewers note, Schwed worked as a broker in the early 1920's. He then wrote this book -- the "Liar's Poker" of its time -- in the 1940's, with the wry perspective that only a crash and ten years of stagnation can bring. Ancient history? Au contraire. What makes this book such a must-read is two things.
First, the things that firms and brokers do to separate customers from their money haven't really changed. Touting low quality underwritings, cramming unwanted inventory down customers' throats at inflated prices, using fancy phrases to flog dogs were as prevalent then as now.
But this is not a one-sided bashing of the Street and its techniques. Schwed gives equal time to customers' susceptability, even eagerness, to play their part in the game. Schwed's fundamental point is that people -- clients and brokers alike -- are forever led astray by their wanting to earn outsized returns without having to take any risk.
But the thing that really sets the book apart is Schwed's lucid yet highly entertaining style. You'll walk away with fresh insights into industry practices and market structures that you can apply to today's events. And even when you realize the target is you -- the ever-hopeful investor -- you'll be laughing so hard you won't mind.
If you even mildly liked Liar's Poker, you'll love "Yachts."
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25 of 26 people found the following review helpful
on September 1, 1999
The book takes a cynical look at the internals of the stock market in general and stock market mania of the late 20s in particular. The author's hilarious style should make your eyes shed tears as you read this book. Despite its focus on the markets of the late 20s, this book is a timeless classic. With slight changes certain events described in the book can be related to today's market. Towards the end of the book, Fred Schwed offers this priceless advice:
"For no fee at all I am prepared to offer to any wealthy person an investment program which will last a lifetime and will not only preserve the estate but greatly increase it. Like other great ideas, this one is simple:
When there is a stock-market boom, and everyone is scrambling for common stocks, take all your common stocks and sell them. Take the proceeds and buy conservative bonds. No doubt that the stocks you sold will go higher. Pay no attention to this - just wait for the depression, which will come sooner or later. When the depression - or panic - becomes a national catastrophe, sell out the bonds (perhaps at a loss) and buy back the stocks. No doubt the stocks will go still lower. Again pay no attention. Wait for the next boom. Continue to repeat this process as long as you live, and you have the pleasure of dying rich."
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25 of 27 people found the following review helpful
on January 16, 2005
I read this book years ago before was even a glint in Jeffs eye, and happenstance put it back in my hands recently. It is every bit as hilarious today as it was back then. I came here as I was curious to see if it was still in print and if so, what people today were saying about it.

As not enough of the reviews reflected my experience I felt compelled to post my two cents so as to keep any prospective readers from being scared away.

Even if you've never had any personal experience with Wall Street, the Chicago Board of Trade or anything else in between, if you'd like a very, very funny read I recommend this book. If you *do* have investment experience you'll find it even funnier.

If you're going to be taking the Paoli local into town anytime soon, look for the copy Scott left on the bench on his way to Starbuck's. I promise you if read with a sense of humour you'll be howling with laughter before you get to Daylesford!
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23 of 25 people found the following review helpful
on December 9, 2002
Put down that ugly brokerage statement from the busted, dot-gone Bear market. Skip that news report of the latest bankruptcy filing and spend a couple of whimsical hours with author Fred Schwed, Jr. WHERE ARE THE CUSTOMERS' YACHTS? is a rejoinder to Wall Street's inflated self-confidence that begins with that classic question. Schwed's conversational style makes this a quick read. His style is 'wry', 'dead-pan', 'droll' - a bit of Andy Rooney, maybe a bit of 18th Century novelist Lawrence Sterne. Schwed looks back to the 1920's (published 1940, republished 1955) as "one of the great universal delusions of history" a period of "supreme miscalculation". It was a kind of grand "nonsense" we can relate to in our own post-internet bubble period. Schwed is more humorist than moralist. Misdoings on Wall Street are "overrated" often a mix of "bad luck and bad brains". Advisors are "romantics" who genuinely believe that the market's movements can be predicted. Often they become victims of their own "confused sincerity". Technical analysts are "pathetic", persuading themselves of predictive patterns in stock charts and statistical data. In the end market activity may repeat itself, but often "ponderously, with an infinite number of variations." Schwed takes the side of short sellers, an unpopular bunch who weigh against the general herd to profit when the market declines. He notes that such professional cynicism is never tolerated in an un-free society. Years before the Wall Street Journal began 'testing' the efficient market theory (EMT) selecting stocks with darts, Schwed relates the apocryphal story of a bank trust officer's relative success selecting stocks from his pen's random ink spots. In a timeless passage, Schwed summarizes his investment program: "When there is a stock-market boom, and everyone is scrambling for common stocks, take all your common stocks and sell them. Take the proceeds and buy conservative bonds...just wait for the depression...sell out the bonds...and buy back the stocks....Continue to repeat this operation as long as you live, and you'll have the pleasure of dying rich." Who can argue with a contrarian strategy that would have worked wonderfully in recent years.
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9 of 9 people found the following review helpful
on October 19, 2000
Sixty years old, and as accurate as ever. For everyone who thinks that technical analysis is gospel, for everyone who thinks high mutual fund fees are worth it, for everyone who complains that the "market makers" are manipulating the stock market, and most of all, for anyone who thinks that recent stock market events are unprecedented, you need this book! Schwed skewers classic Wall St archetypes that haven't changed a bit since 1940. It's a fun, funny read, and one I recommend highly, particulary to the Foolish.
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7 of 7 people found the following review helpful
on March 22, 2000
Read this book before you invest a dime! The passage of sixty years hasn't changed the relevance of this book. The author's experiences as a stock broker lead him to speak of the things that everyone on Wall Street knows, but doesn't care to speak of. Such as that even the most exalted stock market analyst doesn't know which stocks will go up and which will go down.
He's really funny, too. I read this book all in one day, it zips right along.
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6 of 6 people found the following review helpful
on August 15, 2002
While you are wondering what to do with your money after the 2001/2002 stock market crash, Fred has some ideas...mostly how about cash? Since mutal funds have the best advice money can buy and are still falling, what's wrong with just having a bit of cash?
Anyway its hilarious! Should be a gift for college graduates/first jobers who have an extra buck in their pockets and are eyeing the stock/bond markets.
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8 of 9 people found the following review helpful
on January 8, 2003
"The more things change, the more they stay the same." That's how Fred Schwed, Jr. introduces this gem, if my translation of the French is correct. The book is timely, even though it was first published in 1940. The author shares his observations of Wall Street with wit and humor.
"The chief concern of this book", he states, "will be with an examination of the nonsense ... ." One example is this excerpt from a paragraph he takes out of The Wall Street Journal: "the action of the market was regarded as in the nature of a technical recovery, with little thought of the imminence of dynamic action." Nonsense was apparently well articulated before the bull market of the `90s. Another example is his explanation of why people buy high and sell low when they go to the stock market. They mistakenly believe that once prices are rising (or falling), they'll continue to rise (or fall). "But it is not a fair thing to say of the stock market," he claims,"which, not being a physical thing, is not subject to Newton's laws of propulsion or inertia."
There's more than "an examination of the nonsense" here. Readers may take "A Little Aptitude Test" to see if finance is their calling and consider "A Little Wonderful Advice" on getting rich. If Schwed's advice doesn't make you rich, his hilarious insight will at least make you laugh.
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5 of 5 people found the following review helpful
on October 9, 2001
Where are the customers' yachts is the funniest send up of the stock broking industry that's ever been written - by miles. The thing that strikes you is how nothing has changed since he wrote his memoirs in the late 1930s. (Allegedly, he lost a packet in the 1929 crash and decided to call it a day - from where he went on to write childrens' books).
His writing style is so nimble, so comic, that you can't help reading this book from cover to cover in a single sitting. You've got to read it, just for his description of the (...) world of short selling and analyst reports. It's old fashioned prose of the very best kind. No bizno-speak or MBA twaddle. Just colourful characters and lots of laughs.
Schwed may have been a broker, but everyone is a target. Clients... rarely do their homework and are always impressed by analysts/sales telling them what will happen. One pitiful tale involves a client asked for $500 margin in a falling market. He runs around all day raising funds to try and head off the deadline. But in the end he comes up short by 15 dollars - after paying the broker 485...
Where are the customers' yachts is a fabulous book. Schwed has managed to heap ridicule on everyone and yet spell out, very clearly, why the only winners are the bankers and the brokers.
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