Bypass Wall Street: A Biologist's Guide to the Rat Race Kindle Edition

I see this book as really 3 discrete parts. Some of them more useful than others.

I think the first third of the book or so is actually pretty useful for a complete newb to investing. It walks through what the readily available options are for investing. Nothing ground-breaking, but if you're asking yourself "where do I start; what do I do" I think it would be worthwhile. There's a real foundation of pessimism here, some warranted in my view (securities largely over-priced currently based on fundamentals); some of it not. The author's argument is heavily reliant on the notion that we're at an end of innovation, or at least significant innovation. I totally disagree, but I guess every generation needs to have its neo-malthusians disproved in turn.

The next chunk of the book is an almost entirely worthless chunk of chapters describing preferred public policy options. It's almost not even worth critiquing, because they're just down-the-line liberal political expenditures gussied up as "investments" that would make attractive investment options for individuals and improve society. There's nothing practical about this section because there's no way for an individual to actually invest in these options. The author acknowledges this, but spends an awful lot of time talking about them anyway. Here the author could have really used a co-author or editor with differing political views to at least address some of the common critiques to these positions she puts forth.

The last chunk is primarily proscriptive, but here I'm also not convinced that there's all that much worthwhile. The author's solution after first describing why current options are unappealing, and then describing what a "perfect" (unavailable) option would look like, is for investors to source and fund their own loans to individuals outside of the financial sector. To find trustworthy acquaintances and lend them money. No need to worry about borrowers going belly-up, because you can diversify your lending across maybe 7 or 8 borrowers and provide loans to borrowers for rates lower than a bank would (but higher than the rates you would get for a savings account or a CD).

It's a terrible idea. The amount of work you'd need to put in to source and service these loans seems likely to turn into a part time job. The risk you'd face in choosing one wrong loan (or possibly several - most people in a given social circle are likely vulnerable to the same types of economic shocks) could be catastrophic to your nest egg. I can't even imagine the expenses involved if you need to sue or foreclose on a deadbeat lender.

The financial industry exists for a reason. I understand that it seems like they make up an outsized portion of the economy, but the idea that you could do better than the banks by picking and choosing from individual borrowers seems even more implausible to me than the idea of picking and choosing individual stocks. Maybe if you're a college professor like the author and have (1) a ton of free time and (2) access to extremely intelligent students in need of financing this makes sense. From my perspective, it seems like a good way to make uninformed decisions and take it in the pants.

The author sets up an "ordinary person" Jen, who is single, has an average salary $80,000 per year, at age 49, and inherited a large sum of money from her parents (Because otherwise the author calculates that Jen would run out of money before she is dead). Now the question is where should Jen put her money? Here is the thought process:
1) If Jen invests her money in bonds etc. the return is worse than inflation. Stock market may offer you better returns, but (1) stock picking is hard, (2) mutual funds are not trustworthy, you may as well buy index funds. (3) Even index funds are too volatile. Looking at the history, if you invest in the height of financial bubbles, you may not be able to get your money back even after 15 years, not to mention beating inflation.By now the author concludes that Jen should avoid stock market entirely. Here the author completely ignores the idea of "time averaging", i.e. invest the money at a regular time interval, to avoid the disastrous scenario she imagined where Jen invests all the money at the peak of stock market.
2) The author then has a long discussion of making the pie bigger i.e. make the society more prosperous. The idea is that we as a society should invest money in public infrastructure, health care, education etc. so that make the society as a whole better, so that each person can get a bigger slice of pie without hurting other people's interests. She then advocates higher tax rate etc. I wouldn't go into the debate here, since at the end of this long digression (more than 1/3 of the book), the author herself realized that "Oh this doesn't really solve any of the problems that Jen is facing right now".
3) Now Jen has another idea: How about I make private loans to people I know, help them to pay mortgages and student loans, and ask for a higher rate lower than the bank's lending rate (but higher than the bond returns)? That'll probably slightly beat the inflation. Here she spends a lot of time bashing the financial sector, how it has become 8% of the economy and is completely ripping people off. etc. Her ideal is to completely get rid of the "middle man" in these financial transactions. However she fails to realize two flaws of her plan: (1) trying to find people on the two ends of the financial transaction is not easy, which is part of the reason why these financial intermediates exist in the first place. (2) this plan is also highly risky. Just as the author realizes herself in the book, the borrower of your money may suddenly have an accident and cannot pay you back on time, the housing price may fall so that the borrower may choose to default etc. The offered solution? Lending your money to someone you trust, like trustworthiness is something that you can judge perfectly well. The author does realize the risks and advise the readers to diversify the loans, but how would even one default change the expected return rate? The author forgot to calculate.
4) Now the author goes one step further, and thinks the best investment would be in human capital. By now she has completely forgotten that she is writing a book assuming an average Jen, now she assumes that Jen is a college professor, and has a lot of former students. She thinks her former students that she trusts will be the best source of people to make private loans, and even more, she imagines a world where she can entirely quit her job and start a home academy, and become a private tutor for ~ 8 students, and will take a share of their future salary as her investment returns, and she claims this will make the students better fit the future job market because she can give them more targeted training and this will be worth more than an average college degree. This section of the book is just so ridiculous that I don't know where to start to criticize. First, outside being a professor, how easy is it to find enough promising young people for you to invest in? Second, isn't there conflict of interests if professors are allowed to do this? For example, a professor may simply choose to enroll the students that are most likely to take her loans. Third, how in the world is it possible that an average Jen's experience is worth more than a college degree? An average person probably doesn't have an expertise compared to a college professor, and even for a college professor unless the student only wants to learn her specialty field, her guidance will be very limited. And learning is only a small fraction of college experience... There so many more things that are wrong in this part, but hopefully you have got a good idea about how naive the author's "solution" is.

So this is Jen's story. I don't want to comment on the author's political positions, but from this book it's pretty clear, just as the other comment has pointed out too, an average Jen may find the book interesting, but she will still not know what to do with her money after reading this book. To make matters worse, if she actually tries to implement some of the ideas in this book, she may be bearing extremely high risks. Wall Street and financial sector as a whole is certainly not charity, and indeed suffers from the problems criticized in this book, but implementing the plan in this book may make you even worse off financially.

Financial advice from an unqualified and ignorant biologist. Not based in researched and proven economic nor financial theories and practices. Read and implement at your own risk.