Where Are the Customers' Yachts? or a Good Hard Look at Wall Street

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."

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

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.

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."