Sunday, June 8, 2014

another catch up Confessions of a Wall Street Analyst by Dab Reingold

I read this in March and passed my copy along to our local investment broker.  It was outstanding, enlightening, and somewhat technical in parts.  Part history and part emoir.  .  Published in 2006, Hardback by Harper Collins, 315 pages followed by notes and references.   I  spend time watching our various investments and always have my eye out for a good stock tip.  I have been suckered but once by purchasing United American Petroleum, a wild cat oil drilling operation and fortunately did not loose that much; I  keep that stock today which I call my casino stock, for it was my gamble at which I lost, as a reminder that I am not so smart, regardless of research and   after reading Dan's enlightening memoir about his time as an idealist analyst on Wall Street, I was affirmed.  The small time  investor simply is not able to compete or be as aware as the biggees, so since  one cannot run with the big dogs best to stay on the porch.  We have 2 investment brokers both of whom have done well for us and now I will be content to follow their advice and watch our  various funds grow.   

Most of this occurs during the big days when the dot coms were rising and  greed was  in for the long haul on Wall Street.  Dan enters as a new  analyst recruited for his technical skills with statistics and  ability to model  metrics; while he attempts to remain a purist, not mixing with the marketing sectors of the firms where he is employed as the going gets going it becomes rougher.   He describes what "going over the wall means" in the investment Street lingo, that's when the analysts are engaged to hear marketing and insider information which if they are ethical they must ignore or recuse themselves from commenting  or analyzing the potential of that particular stock.  Dan does this ethical dilemma  straight line to his detriment.  

My tough career in state government which gave me many promotions to higher management and left me many sleepless nights pales in comparison to life on "The Street".  When I read about his real 24/7  always on the clock and flying  from time zone to time zone non stop I knew what weary really meant.  Somehow I could absolutely relate to his perhaps naivete and idealism, been there.    The strategy of stock prices on earnings day was something I had suspected.  Dan  pulls no punches especially when describing his chief rival, Jack Grubman who was the hot shot amongst the analysts but as tainted as they come.  How the firms lure the analysts or try to en mass and how those who move along are able to bring their teams with them was an eye opener.  1997 was the watershed year for the  telecom industry and analysts with the baby bells  doubling annually and growing the internet industries by 1000%,  (Pg 152) and  (Page 103)   How the internet affected  protocols and the entire telecommunications industry is  interesting history now. (pg 100.)  2001 is described as  a year of insatiable desire for bullish commentary by investors.  

Dan's altruism gets severe knocks as he learns, "it's not what you knpw but who you know."  (Pg 205) The IPO's in these early days were rift with insider games, something he finds hard to accept, but when he questions his arch rival Jack Grubman he is blown off with  the responses that " public  IPO investors are playing in a rigged game, suckers."    


(Pages 18-189) The greed and arrogance is certainly  rough to digest as well as hearing that institutional investors are preferred  over retail brokers representing individuals.  Fidelity is one big institutional that is always  ahead of the game which is  great for bigger Fidelity  clientele.  I really was intrigued as well as alarmed.  I remember the MCI World.com fiasco and the Bernie Ebbers trial well.  He was a real small guy, who became one of the greediest men; he might have lived quite well had not he  been so consumed with greed which fed his arrogance as lived the good life.  This is covered through out the book as well as pages 2-3 of the prologue.  In one year April 2003, World.cpm had amassed $11 billion in fraud.  Those numbers are unfathomable.   (Page 271 & on)    Dan ultimately retires  teaches for a time and closes by saying "I came in as an idealist and left a cynic."  I can say the same for my governmental career so I related to much of his eye opening heart breaking experiences.  

This is a 5 *****.  It  may be too technical for some and although it sat on my shelf for a year  or more I am pleased that I finally read it.   Not for the faint hearted nor for the light reader who only wants entertainment.