On Money and Markets: A Wall Street Memoir

Over the last decade we have seen many self-serving autobiographies and memoirs, but Henry Kaufman's On Money and Markets certainly is not one of them. Kaufman is an investment banker, but he is also a scholar and a gentleman. These memoirs capture the mettle of the man from his start in the banking business, through his years at Salomon Brothers and eventually to his own consulting business. The period covered, from pre-world War II to the end of the 20th century, is the most dynamic time in the history of the financial markets. It is Kaufman's insights into these revolutionary years on Wall Street that make this a gripping tale. We [...] recommend this book to all executives and investors, many of whom would benefit greatly from a refresher course in Wall Street history.

Henry Kaufman is one of the most important figures in the development of world credit markets in the last 40 years. This book is part biography, part history of the post World War II period in the financial markets, and part prescription for the financial markets in the next two decades. The book is written in a lucid, qualitative, approachable way that makes it accessible and interesting to almost any reader. In a foreword by Paul Volcker, the highly regarded former chairman of the Federal Reserve, you will learn that the on-going, difficult financial problems of the current age mean that "On Money and Markets should be prescribed reading for all those whose future and fortunes are tied to the performance of our financial systems."Dr. Kaufman's influence has evolved through his studies of the credit markets, role in developing them as head of research at Solomon Brothers, commentator on the credit markets and Federal Reserve policy, and forecaster of financial market trends. He is well respected, even by those who do not agree with him. Perhaps his most influential moment came on August 17, 1982 when he called the turn in the interest rate environment that kicked in the bond and stock market boom in the United States that has lasted ever since. Let me briefly describe each part of the book. The first nine chapters are primarily a biography of Dr. Kaufman. Despite the fact that I have been following his thinking closely for over 20 years, much of this was new to me. He is modest in speaking about his accomplishments, which makes the story more appealing. The story of how Dr. Kaufman became "the" Henry Kaufman is well worth your time. Born in a small rural town in Germany, violence against Jews in his own town caused his family to emigrate to the United States in the 1930s. During the time in Germany, he suffered from polio, and had two operations as a result. Speaking almost no English when he arrived in New York, he was back to grade level performance within a year . . . after the humiliation of being put back into the first grade. You will get many interesting glimpses of how important mentors and families are to the accomplishments of any one. Chapters three through fifteen also serve as a partial history of the world (and especially the U.S.) financial markets. The length of the period covered and the breadth of view make his perspective very valuable for the casual observer of the subject. Most will be surprised by how great the changes have been in the last two decades, for example. But, to me, the most valuable parts of this book were the prescriptive elements of what needs to be done now that build from material in chapters eleven through eighteen. I agree with him that regulation is falling behind the shifts in the financial markets. For example, new types of financial institutions are being created that have essentially no regulation, yet contain great risks for the whole s

The business section of any bookstore has shelves stretching to the horizon with business books, or more specifically books about Wall Street, and how to get rich in various absurdly short periods of time. My personal favorite is "The 20 Stocks To Own Right Now", how is now defined? When the book was written, or the day the book is purchased. The title by definition makes the volume worthless. The latest section to expand exponentially is the area of "Day Trading" which is for a select few with some key talents and a massive tolerance for risk. The odds are better you will make money writing about day trading than playing the 300-500 trade a day frenzy. These are the types of books that have their moment of fame when movies like "Wall Street" and "Boiler Room" are in theaters, when those who have a career that spans the length of the current unprecedented growth populate Wall Street. The worst of these are the badly written kiss and tell books written by 20 something's who detail the evils of Wall Street that they made money from, and then they write a book when their brief fling with the street is over.Then there are the legends, the players who measure their careers not in 15 minutes, but in blocks of 15 years. They built "The Street", they have seen the hotshots come and go, at times to a minimum-security prison. They may have not bought Cisco the day it was offered to the public, but over time their success is the envy of the investing world.In this case the man is Mr. Harry Kaufman, a man who has had the ear of Presidents, and Federal Reserve Chairmen, and countless CEOS', one of who wrote the introduction to this book, Paul A. Volcker. Mr. Kaufman, Mr. Buffet, Mr. Benjamin Graham, and an additional select few, have or can lay claim to truly having the knowledge, the depth and breadth of understanding finance both domestically, and as discussed in this book, internationally as well. They burst the bubble not of the Internet, but the abandon with which an enormous percentage of today's households invest in the markets without the most basic understanding of what they are investing in.Some of the book does delve into Derivatives, Interest Rate Swaps, and some of the enormous losses incurred recently that took down the bank where the Queen Of England kept her spare change. A youngster toppled that bank if you recall. If this level of detail puts you off, the book is still an important book to own.Mr. Kaufman tells much of his story as it coincided with the rise of Solomon Brothers from its infancy to the colossus it has become, and the memory it almost became. He also explains why he left that institution with exceptional candor. He is literally one of the originators of research as it has developed to this day. Some gave him the sobriquet of "Dr. Doom" not because he was wrong, rather because he dispassionately studied markets and then explained reality, not what people wanted to hear. He invented many of

Henry Kaufman's book is much more than a compelling saga of a life, a career, and a financial history. It is a reminder of the risks that abound in today's markets, and of the compelling importance of the great values that have led to the strength of the nation's financial system. In the book's most important chapter (16), Dr. Kaufman presents 17 neglected lessons for policymakers, financial institutions, and investors. If we ignore them, the well-catalogued sins of our financial past will return to haunt us. Consider Lesson 4: "..basic fiduciary duty too often has been forgotten in the high-voltage, high velocity financial environment of recent decades . . . the notion of financial trusteeship has been lost in the shuffle." He's right, and readers will profit immensely by taking heed, not only of those words, but the entire book.

I am tempted to recommend "On Money and Markets" to students who are aspiring a career in corporate finance and banking industry.I like this book especially in its spectacular overview of the history of modern financial markets. Mr. Kaufman's accounts of his own life were also impressive in that his life exemplifies a passionate man's incessant pursuit of understanding and adapting to turbulent changes in the modern economy. Mr. Kaufman's erudite illustrations which are equipped with detailed graphs and data make this book easier to understand and provide solid grounds to his insights into the financial architecture in the new century.I would say that this book is a good start for non-finance major college students to take a brief look at the financial market and its history. I strongly recommend this book.