Tuesday, May 29, 2007

Confessions of a Wall Street Analyst (Dan Reingold)

Year Published: 2006
Genre: Memoir

Remember the '90s? Can you recall the soaring heights of the market? Do you have some inkling of what happened when the telecom bubble burst, or were you too young or poor to care?

I can say without shame that prior to reading this book, I had only the murkiest picture of the telecom bubble and its subsequent pop. The key players -- MCI WorldCom, Global Crossing, Qwest, AT&T, and all the others -- were either complete unknowns or near-blank slates. I lost money in the market in 2000/2001 like everyone else who had a toehold, but I was much too young to care about the particulars.

While Confessions certainly won't win any awards for its prose, it did blow the doors off my ignorance surrounding the telecom debacle. I became intimately familiar with people like Bernie Ebbers, Jack Grubman, and Sandy Weill. The entire idea of investment banking, which can seem like a vague, gold-plated industry, is laid out explicitly. And the conflict between research analysts and i-bankers, which lies at the heart of this story, is hashed out again and again. The author was a research analyst at a number of big banking firms, and he both witnessed and was subject to pressures from i-bankers to influence supposedly independent research.

Like so many nonfiction books, though, let the reader beware: the author has an ax to grind. If we're to believe him, he was one of the lone holdouts against an increasingly corrupt business model, and suffered for his nonconformity. It's not necessarily easy to believe that he could always keep his head above the waters of poor ethics, but as he's our narrator, we have to accept his point of view.

Recommended? If you're at all interested in that period of history as it pertains to the market, then yes. It's not a tough read.

Sunday, May 27, 2007

A Random Walk Down Wall Street (Burton Malkiel)

Year Published: 2003 (8th ed.)
Genre: Nonfiction

The stock market is not really my thing. P/E ratios, IPOs, the EAFE index -- while those jumbles of letters may be some people's livelihoods, I've never understood them, nor made an effort to.

But at some point, I think most Americans with halfway decent incomes begin to realize that saving for retirement is a big deal, and that without some idea of how investing works, they stand to suffer a good deal of losses -- either flat-out monetary losses, or losses of opportunities to do better by themselves in the long run.

My faithful readers will note that I began to investigate the vagaries of the market with an earlier read, A Mathematician Plays the Stock Market. While I loved Paulos' book, it wasn't quite the primer on investing that I needed. Paulos had cited Random Walk in his volume, so I picked it up the last time I made a bookstore run.

Random Walk has become something of a classic in the investment field, though Malkiel's arguments are often rebutted by professional investors. Malkiel's premise is relatively simple: the stock market (encompassing both domestic equity and international equity) always gives excellent returns in the long run, but no one can determine if any one stock will give good returns. Therefore, in order to maximize your return while minimizing your risk, invest in a broad-based index fund (i.e. a fund that simply buys a large amount of stocks without buying and selling them all the time) and hold it until you need the money (i.e. for retirement or a home purchase). This is in contrast to advisers who advocate investigating specific stocks or heavily managed mutual funds -- in essence, attempting to "beat the market." Malkiel, citing several economic studies, shows that managed mutual funds mostly underperform unmanaged ones, and that there's no way of telling in advance who will be the few outperformers, so why gamble with your savings?

Now, if this were the entirety of the book, there'd be no reason for it to be upwards of 450 pages. However, Malkiel also runs through the major market "corrections" of the past four centuries (complete with snarky commentary), the tenets of the Efficient Market Hypothesis, the basic precepts of the two prevailing types of stock analysis, and, most helpfully, the types of investments that people should make, based on their age and risk tolerance. On all these counts, Malkiel does a superb job, combining hard-nosed economic analysis with funny, incisive (and often derisive) comments about everyone else in the business. See, for example:
Curiously, however, the broke technician is never apologetic. If you commit the social error of asking him why he is broke, he will tell you quite ingenuously that he made the all-too-human error of not believing his own charts. To my great embarrassment, I once choked conspicuously at the dinner table of a chartist friend of mine when he made such a comment. I have since made it a rule never to eat with a chartist. It's bad for digestion.

My only hesitation in recommending this book is the somewhat worrying fact that Malkiel is a member of the Vanguard Group, the group of leaders of the eponymous corporation that is best known for being the world's leader in the sale of -- you guessed it -- index funds, the very investment Malkiel recommends all people make. This is no way negates his advice (some may even see it as putting his money where his mouth is), but I wish he had been more forthcoming about it; he only reveals this affiliation about four-fifths of the way into the book.

Recommended? Yes: the lifecycle guide to investing alone is worth the cost of the book.

Thursday, May 3, 2007

Selected Poems (Mark Strand)

Genre: Poetry
Year Published: 1979

Have I really been gone so long?? It didn't feel long to me at all. I apologize, dear readers. I won't say it won't happen again, but I'm in the middle of at least three books right now, so I'm bound to finish at least one soon.

In a wonderful YA book called Baby, the main character's grandmother explains to her granddaughter why she bothers to read poetry (in this case, William Carlos Williams) to a small child: "She doesn't need to understand, dear. She likes the way the words sound."

That is, in a nutshell, how I feel about Strand's poetry. Very little of what he says makes any sense to me. His poetry is almost never narrative, and though it's often in the first or second person, he relies mainly on images of inanimate objects to carry his poetry.

And in that particular arena, he succeeds. His poetry is among the most atmospheric (often creepily so) that I've ever read. Consider:

The Sleep

There is the sleep of my tongue
speaking a language I can never remember --
words that enter the sleep of words
once they are spoken.

There is the sleep of one moment
inside the next, lengthening the night,
and the sleep of the window
turning the tall sleep of trees into glass.

The sleep of novels as they are read is soundless
like the sleep of dresses on the warm bodies of women.
And the sleep of thunder gathering dust on sunny days
and the sleep of ashes long after.

The sleep of wind has been known to fill the sky.
The long sleep of air locked in the lungs of the dead.
The sleep of a room with someone inside it.
Ever the wooden sleep of the moon is possible.

And there is the sleep that demands I lie down
and be fitted to the dark that comes upon me
like another skin in which I shall never be found,
out of which I shall never appear.

How I feel about "The Sleep" is actually an excellent example of exactly how I feel about all of Strand's poetry: I appreciate it for its technical brilliance; I am mildly haunted by it for a moment; but in the long run, I'm not moved. In a very, very long book (long for poetry, i.e. over 150 pages), there were very few lines that jumped out at me for tucking away in my subconscious.

Strand's style, to be perfectly honest, can also get a bit tiresome. Lots of short declarative sentences with simplistic constructions, long stanzas, the same images used over and over (the moon, bones, night, shadows, and whiteness, to randomly name five).

If you want to read any of Strand, I'd suggest an earlier standalone work, not an anthology. (I liked the poems at the beginning of this book better than those toward the middle and end.) It may be more of a book to study than to enjoy.

Recommended? Totally a matter of taste.