Wall Street Bonanza: A Tale of Three Books

I have reviewed dozens upon dozens of books over the last six years dealing with the causes and aftermath of the financial crisis, and I one day intend to write my own book on the subject. There was a bonanza of books that were written on that subject, some from highly capable economists offering their ideological perspective to the events, some high profile journalists whose point of view was sought after, and others were perhaps stretching to warrant an invitation to the fray but nonetheless chimed in … It was a topic that justified a bonanza of books, and I think we covered it well here at The Bahnsen Viewpoint.

Lately, some may notice there has been another bonanza of books, also dealing to some degree with finance and investment, but not necessarily about something so material and historical and ideological as the financial crisis. Rather, this round has been more “experiential”, or “biographical”. Essentially, they all in one way or another were “I worked or still work on Wall Street and here is what my story was”. Some of you may be thinking, “who cares?”, and some may be thinking, “I didn’t know such a genre even existed – not my dish”, but I have actually eaten it all up, and the results have been rather telling. I ate it up and will continue to eat it up because I have devoted my life to the capital markets. I am in the business of managing money for real people and institutions that have real life things going on, and this means on a day to day basis I am engaged in the lives of those people, but also that I am engaged in the capital markets from which investment opportunities and facilities exist. It is a career, but it is a calling. One I wouldn’t give up for all the tea in China. I love what I do, and when someone else decides to sit down and write a book or make a movie about their own journey, if I end up being the only soul in the land who cares, so be it – I love this stuff. And so I read. And now, I write.

This review will be a sort of combination review, tackling three books I read this summer all at once. The first was Josh Brown’s Josh Brown Backstage on Wall Street. It is admittedly a bit dated at this point, but Josh is a talented writer, an entertaining voice on CNBC, and one of the handful of pundits I enjoy listening to and following whether I agree with him or not (which I often do). He is not an analyst, but he and his partner, Barry Ritholtz, are gifted and opinionated writers, provocateurs, and users of new media to distribute a point of view (they have been extraordinary in their ability to leverage the blogosphere and Twitter to disseminate their perspective). The book sought to “shine a light” on how Wall Street works, and since Josh and I entered the business at the same time, I suspected there would be an interesting parallel path (from big brokerage firms to the land of independence, where he now sits and where I launched in April of this year). A few comments are in order, though. First of all, the book is entertaining, and from my vantage point as a member of the industry, interesting. He is critical of the industry’s embedded conflicts, as I am, and he shines a light on the need for fiduciary care, as I certainly would. I do think some of the rhetoric and illustrations are a bit dated, and I suspect Mr. Brown knows this (one could easily point out that even the big, bad wirehouses have primarily moved to “fee based” models vs. old school commission systems without invalidating any of the larger points he was making). There are various categories he wanted to address in the business, various motivating factors that drive so much of how financial products become into being and a part of an individual investor’s portfolio, and he pulled it off. His chapter on wholesalers – the “sales” folks from mutual fund companies who “cover” financial advisors at big firms – was painfully funny. I feared that the book would delve into too much self-righteous moralizing and such, and frankly, one could choose to read part of it that way. But I put the book down when I was done believing Josh Brown had done readers a service, was not guilty of a sort of ethical narcissism, and had effectively written what I am sure he set out to write.

I would have guessed that John LeFevre’s Straight to Hell was going to be the book I enjoyed the most. GSElevator His famous @GSElevator handle which I follow on twitter has been a heavy source of entertainment for several years, and by entertainment, I mean there have been moments of side-splitting laughter. You will have to dig further if you are interested, and most of the enjoyment of his stuff is past tense (he now seems to just tweet about his own fantasy football efforts ad nauseum, but when he was really just being GSElevator, it was golden). With the backdrop that this was an ex-investment banker who pretended to work for Goldman Sachs in an interview (before he was outed) and had effectively built a massive audience with side-splitting humor pretending to be a sort of cliché Wall Street alpha male, naturally I couldn’t wait for the book! I read it cover to cover, and then I texted as many of my friends as possible to make sure they didn’t buy the book on my recommendation (because I had hyped it for them before I read it). What LeFevre did wrong was be LeFevre instead of @GSElevator. I cannot imagine there are people out there who find it interesting how many times a mid-level investment banking employee got drunk in his 20’s, but if you read the book, you will be hard-pressed to find 15 pages that talk about anything remotely resembling investment banking, and you will find pages anywhere you look that you are certain you already read earlier in the book describing various drunk escapades – one that aren’t particularly funny, interesting, or unique. Young man with frat boy mentality goes on business trip. Young man drinks and drinks and drinks. Young man no longer in the business. Young man writes book about it. Reading the book, I felt like a group of frat boys got together and reminisced about old drinking stories (“remember when we got wasted at Scotty’s party that time – that was awesome”), and someone transcribed their conversation and then put it out as a book. But here’s the thing – if LeFevre and his publisher thought his stories of booze and hookers were worth writing a book about (not as a story of redemption, by the way, but a sort of amoral mindless exercise in hedonistic boasting), fine. I would have never dared to review the book because it wouldn’t have been worth the five minutes of my life necessary to write it (any more than the few hours it took to read the mindless drivel were worthwhile). However, the narrative coming from SOME parts of the press (most have hammered the book along the same lines I have) and from the author and publisher themselves has been something I couldn’t let pass … It goes something like this – “Finally, LeFevre shines a light on what is REALLY happening in investment banking”. “Before this book, you never knew that investment bankers drank a lot in Hong Kong hotels, but now you do!” “This is a business with a deep dark side, and LeFevre shows that Wall Street is a really bad place”. Blah blah blah. I dare anyone to read the favorable press coverage of this mindless rag and then read the actual book. There is not a single iota of interesting business coverage, and not a remote chance you will learn something about the business you didn’t know. Unless you didn’t know that young men with a job often drink and party before they either (a) Flame out (as is the case here), or (b) Pull their act together and grow up. I will leave it there. Skip this one!

Last and certainly not least is Jason Trennert’s My Side of the Street Trennert. Trennert is the Managing Partner of Strategas Research Group, a splendid investment boutique whose research I use heavily. His book serves as a sort of antidote to some of the silly caricatures that exist in Wall Street folklore. He is transparent, honest, and real in describing some of his own bouts of struggle and iniquity, and yet doesn’t seek to center the book around his happy hour excesses, let alone glamorize or romanticize them. Rather, he delves into the formation of his own research firm having left one of the largest ones where he earned his stripes as an analyst. The book is personal but informative; it builds a connection but also educates; it is defensive of Wall Street without being naïve and ignorant. I am not sure how much people outside of our industry would care, but the book is endearing and worthwhile for every single person who calls Wall Street home (even if they live in Newport Beach, California). He understands free markets, he writes eloquently about them, and he portrays a story of real human aspiration – the desire to become something in the business of capital markets, and how he did exactly that. The fact that he sets up the narrative as a tale of two restaurants at 54th and Madison is hysterical, for I have dined at San Pietro’s countless times telling myself I was the most blessed man in the world to eat there, and I have sat over at Rothmann’s across the street countless times STILL feeling like I was the most blessed man in the world. For one thing, I love fine dining Italian AND steakhouses all the same. But I also got exactly what Trennert was referring to. You enter this business and take on all the stress, risk, and anxiety it represents because you are an aspirational person. You love the human flourishing that capital markets help to unleash. What Jason Trennert’s book does is personalize his story around such endeavors, and in the process inform his readers about a perspective on Wall Street few have done. A great read.

There will surely be more books coming about life on Wall Street because (a) Some want to demonize it, and (b) Some want to caricaturize it. Some will sell, and some will not. I will likely read them all because I am a junkie for it. In the case of these three books, though, one got a little sample of the whole new cottage industry. I am better off for having read two of these three, and I am better off for now having written about all three.

The Round Two Winner is …

Look, I don’t really have the energy to do a good job reviewing tonight’s 3.5 hour debate, because, well, I just got done watching a 3.5 hour debate. I guess 3.5 hours of debate beats 3.5 weeks of non-stop Fed/interest rate talk, but I think some people have better diversions from their day job than I do. I digress.

It was a long debate – too long – but there were some illuminating moments. There is no point to mentioning how unpresidential and weak and ignorant and narcissistic and shallow Donald Trump is, because anyone reading my blog already knows that, and if they don’t, they aren’t going to agree now. He is incorrigible, but not as incorrigible as his minions are. I assume Sean Hannity went on air tonight to praise his advanced studies on immigration and serious, impressive approach to, say, jurisprudence, but for my readers whose IQ exceeds Sean Hannity’s, which is to say, all of you, Trump was a disaster. The air is coming out and the only question is how fast. I assume his handlers will take that slap mark off his face that Carly left squarely on it. Highlight.

Carly was strong, really strong. She should have left the Christie thing alone when he rightly scored points for pointing out the irrelevance of Donald’s and Carly’s pedigree. Going back to it a second time was not necessary, but all in all she was really outstanding – sort of an anti-Hillary: Impressive story, well-spoken, likable, informed, intelligent, charismatic.

Jeb had a disastrous first half of the debate, and did do better in the second half. His line defending his brother was ironically the strongest point of his campaign so far. Jeb’s problem, though, is unsolvable – totally unsolvable – and that is that he is lacking in mojo, and mojo is not to be bought with PAC fundraising. He is bright, and he is a solid conservative, but he is a yawner, and that is not going to work this time around – I promise you.

I don’t have anything to say about Rand Paul or Mike Huckabee.

Scott Walker tried. He was well-prepared with cute lines. But he comes across desperate now. He barely had the mic. He just doesn’t seem relevant. For him to get back into this thing it would be a far bigger comeback than what John McCain experienced in 2008, and that thing was for the record books. I like the Governor, but I do not believe he is Presidential.

Dr. Carson had a bad night. It was supposed to be his night to pick up those Trump folks who maybe perhaps have a brain or a conscience, and he did not do so. He started slow, and he didn’t pick up much throughout the night. His Afghanistan material was abysmal – like shockingly bad. You can tell he doesn’t have a campaign filled with consultants because I assume if he did they would have told him to do a better job tonight.

Christie had a good night. He is going nowhere, but he had a good night.

I want to give Ted Cruz a chance, I really do. But I have no tolerance for his hypocrisy on the Justice Roberts issue (he CLEARLY and EMPHATICALLY supported a Roberts nomination at the time), and his disingenuous use of the “amnesty” term is unbecoming someone of his intellect. He is bright, and he is formidable, but he grated on me tonight.

Kasich had a bad night, and perhaps one he won’t recover from. That may be too dramatic. But his waffling on the Iran deal is ridiclous – there is no “if” when it comes to Iran funding Hamas and Hezbollah – we KNOW that they ARE doing so. We don’t have to see IF they will do so. His people have him tunnel-visioned on this 1990’s nostalgia thing, as if American fondness for the balanced budget will give HIM more points than Hillary CLINTON in the end. Totally bizarre. Kasich is a strong candidate because he governs a state that probably delivers the Presidency, and he is a grown-up. But he had a bad night. He can recover though.

I am perfectly fine with readers believing my own biases for Marco Rubio prohibit me from giving an objective assessment of his performance, but I would suggest that anyone who watched the debate who does not believe Rubio simply SHINED is the one lacking objectivity. Solid on Russia. Solid on Syria. Solid on ISIS. Best foreign policy credentials on that stage. Best economic message – solid vision of hope and aspiration. Articulate. Out of the fray with Trump the Clown. Really a great night overall.

So here we are. Two down. I don’t remember how many to go. Tonight should have counted as two. We have three or four people I’d like to see up there. It will take awhile. The report card tonight:

Rubio and Fiorina – the winners
Kasich and Carson – the losers
Huckabee – kinda sad
Rand Paul – I found a guy who dislikes him more than me (but I dislike that guy)
Christie – good night
Walker – mediocre
Bush – some warm; some cold; so lukewarm
Cruz – irritated me tonight
Trump – I’m excited to hear Trump will have a team to tell him the names of world terrorist leaders. I’ll pay him to stop giving people five on stage and making me wince at the awkwardness

Good night.

We Will Never Forget

The second week of September is always going to be a tricky one for me.  Every year it involves the celebration of my September 8 wedding anniversary to Joleen, and every year it involves the tragic rememberance of the September 11 nightmare that fell upon our country.  I love the beginning of the week’s memory; I loathe the latter one.  As our country reflects on the events of 9/11, the loss of human lives, the assault on our freedoms, our land, our way of life, I remember the actual day like it was yesterday.  I remember that moment of being utterly frozen, unable to process what had really happened.  I can’t comprehend how many features I have watched and read over the years on various individuals who we lost that day – various heroes who gave their lives to try and save others – and even various stories of surviving that defy any level of natural belief.  This is a giant story of human loss wrapped inside a giant national story of our country’s own freedom, dignity, and purpose.

There is a sense in which we lose some of the story by assuming the attacks went to the twin towers merely because of their height and ease of reach …  The monsters who perpetrated the attacks were not merely thugs with boxcutters, they were not merely hooligans, they were not merely angry disenfranchised terrorists.  They were actually part of a very large, very wealthy, very organized, and very ideological organization.  They were ideologues.  The ideology of Al Qaida loathes the western life, it loathes Judeo-Christian values, and it loathes a culture of American freedom that serves as the domicile for western civilization and Judeo-Christian values to live together.  At the heart of the successful American experiment has been free markets, and at the heart of free markets has been capital markets to drive these free markets.  The twin towers to a large degree but to an even larger degree that entire hub of lower Manhattan that is the site of the ground zero, the trade center complex, the corner of Wall and Broad, and that great entry into the world – our world – is a symbol, and in fact THE symbol, of American capital markets – American free markets – which is to say, American freedom and flourishing.  They did not go after the twin towers because they were tall, they went after them because they were rich.  Because they were aspirational.  Because they were, American.

An attack on the aspirational society that is America continues today, and often that attack is from within our own borders, and praise God does not allow the murder of 3,000 people.  It involves instead an assault on freedoms and pursuits that are at the essence of our way of life.  The existential threat continues from outside our borders today as well, embodied in the fanatic Islamic fascist threats we face from Iran to ISIS to Al Qaida.  They no doubt plan to strike again.  We seem, at times, to no doubt be unable or unwilling to stop them.

I believe in the aspirational society that is America and I mourn the attack on that society that took place on 9/11.  I say that “we will never forget” because I know that there is a remnant, however diminishing it may be, that indeed will never forget.  My heart goes out today to those who lost loved ones on 9/11.  Howard Lutnick, CEO of Canter Fitzgerald where nearly 700 employees died on 9/11, said today that he now has 51 grown kids of lost Cantor employees working at Cantor – it occured to me that the Kindergarten boy he walked to school the morning of 9/11 must now be starting college.  A lifetime has gone by, or at least an entire childhood.  But today I refuse to forget why the attack happen, the nature and character of the animals that perpetrated the attack, and what it will take to protect the American value system that was itself the reason for the attack.  May we all never forget, and may we vigilantly honor those who were lost – honor them by defending the aspirational society, and advocating a militant protection against the soulless demons who would gladly do this again.

The GOP and China

So a not surprising thing has happened in response to the reality TV star dominating the news in the GOP primary, but also in response to recent economic volatility around China and their growth slowdown. In fact, it happens every election cycle on the other side of the aisle. The China-bashing has begun.

Now, my kind of China-bashing involves thoughtful and sensible critiques of their deplorable human rights record. Instead, we have gotten a barrage of comments forcing observers to take notes on various candidates economic IQ’s.

Gov. Scott Walker, a respectable foe of union thugs, said that he has hardened on China in recent weeks because they have recently devalued their currency. He also called on them to implement free market reforms. Apparently, not a single aide of Gov. Walker’s mentioned that the currency devaluation came about as a result of them increasing market mechanisms towards such, meaning, laying off the interference that had been propping it up! The United States has threatened to call China a currency manipulator for two decades; now, they do as asked, and some candidates don’t like it?

The reality is that Sen. Rubio is right to hammer China for their piracy violations and massive flow of iniquities in the observance of human rights. But beyond standard politico-pandering, any suggestion that the United States is going to start a trade war with China any time soon is pure poppycock. If the United States wants to give China less leverage, she can shrink her deficit and balance her budget so as to regain the upper hand. In the meantime, the various threats Republican candidates are making against China remind me of what President Bush said to us at the SALT conference a few years ago about Obama’s campaign promise to shut down Guatanamo Bay:

“Oh. That never bothered me for a minute. I knew there was absolutely no chance he’d really do it once he got his very first national security briefing. No chance.”

Pandering to a low information voter on matters of economics is par for the presidential course. But the global state of affairs matters, and China is not a subject merely to score campaign points with at this time. Sober and sensible reflection of matters of global economic urgency are the need of the hour. Obama may run the full two terms of his presidency without China dominating the headlines. I assure you, the candidate we elect at the end of 2016 will not be so lucky.

Top Ten Signs that You Might Want to Consider Living Life at a Slower Speed

Each and every one of these “examples” below were pulled straight out of the actual real life of, well, yours truly. I, of course, am not promising to do anything about it. Just sayin’ …

(1) Those brief periods you find yourself in where wifi seems to be non-present or non-functioning cause you to grit your teeth, tighten up, and possibly even hyper-ventilate

(2) You find yourself upset at how long your Keurig coffee machine is taking 

(3) You get upset when a light is green instead of red because you wanted to reply to a text or email

(4) You travel with three portable iPhone chargers, two wall iPad chargers, two wall iPhone chargers, one surface pro charger, four wall USB chargers (for the portable iPhone chargers), and three chargers that you have never known what they were but are petrified to throw away

(5) You can proudly claim that you took in the gorgeous tundra of Alaskan glaciers with How Religion Shaped Commerce in Puritan America

(6) You refuse to even consider entering a restroom without an analyst report in hand – home or otherwise 

(7) In fifth grade you were middle of the class in math and science but did an “extra credit report” for no extra credit whatsoever on the Falklands/Argentina/Britain mess and another on the problems with UNICEF

(8) You stop going to restaurants not on Open Table (this one may be legitimate)

(9) The blessing you cite most often after years of vision impairment being surgically healed is that you can take your glasses off to read in bed

(10) Your morning jacuzzi respite at your desert home requires three or more research reports, a book, an iPad, an iPhone, and two cups of coffee