Fooling Some of the People All of the Time, a Long Short Story

If you manage your own investments, and especially if you buy individual stocks, this book is a "must read" for you. It will open your eyes about the risks of owning individual company stocks. Few people have the ability to research a company the way the author's hedge fund can. Even with those resources Greenlight hasn't been able to force Allied Capital to come clean about their dishonest accounting practices. The only hope individual investors have is to stay clear of companies like this.

It would suffice that this book is well-written, engaging and informative, but it is more than that. It is an important book, for two reasons. First, it shows how much of an investment edge it can be to employ deep research and critical thought. The fact that many other investors continued to be fooled by the company even after Einhorn published his analysis may seem frustrating to the reader, but as an investor I view that reaction as confirmatory that there will always be lots of ways for independent, meticulous thinkers to make money. Second, the book demonstrates how difficult and lonely it can be to engage in activist investing, especially from the short side. Consistent with the story in this book, I have almost invariably found that the more correct the activist's views are, the more likely s/he will be subjected to ad hominem attacks; and that, when presented with cogent evidence of a serious problem, government officials either do nothing or protect the malefactor. Indeed, the business news of the last nine months is replete with examples of this. I am unaware of another book on investing that captures this second element. It is all the more commendable that Einhorn can tell this incredibly frustrating tale calmly, resisting the temptation to engage in histrionics or self-righteousness.

I received this book around lunchtime and read it cover to cover by the end of the afternoon. It was a riveting read - I found myself shocked at the lengths a company management would go to discredit detailed research that pointed to both corporate deception and a tolerance of a culture of fraud, but more than anything disgusted by the laziness of the investigators who could have put a stop to this behavior. I am hopeful this important book makes a difference in both corporate governance and government oversight.

Ever wonder how the Internet bubble REALLY formed? How Enron got away with fraud for so long? Do you think that the truth always comes out eventually? And that the good guys win in the end? Read this book and see how even the free American economy can't handle bad news about its companies. How companies are able to hide the truth from investors and how some on Wall Street and even the government end up helping them out. This true story is Kafkaesque. The writing is easy to understand. And the ending is a wakeup call.