Updated: May 3, 2013 12:14PM
Originally published: June 12, 2006
Looking for something interesting to read this summer? I have two suggestions. But first, a warning: Don’t read these books unless you’re willing to be shocked and startled -- and to question some long-standing beliefs about the financial markets and the economy. These books are guaranteed to result in dinner-table debates and cocktail party disruptions. Plus, they just might save you from some personal financial disasters.
In Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments (Hyperion, $24.95), author Gary Weiss, an award-winning investigative reporter, paints a frightening and funny, insightful and enthralling picture of Wall Street. It would be a lot more enjoyable if it were fiction instead of hard-hitting truth.
You’ll be amazed, but not by the obvious scamsters, such as the cold-calling brokers who promise big returns from penny stocks and from the Internet “pump and dump” promotions.
A real revelationWhat’s really stunning are Weiss’ researched accusations against the SEC and other securities regulators, against big-name Wall Street brokerage firms, against the specialists at the New York Stock Exchange, and against the hedge funds that are managing significant amounts of money for our nation’s most prominent educational and charitable organizations.
For example, Weiss examines the activities of former SEC Chairman Arthur Levitt, who was acclaimed as “The Investor’s Champion.” In Weiss’ view, Levitt helped the accounting and consulting industry while ignoring travesties of justice such as the securities arbitration process that puts individual investors at a huge disadvantage.
Weiss points out that Levitt’s successor, William Donaldson, was on the board of the NYSE when Levitt’s SEC was censuring the exchange for its floor trading activities. Then he notes that Donaldson had also been on the board of a small company whose stock was touted by paying analysts for creating research reports. Another example: The first head of the new SEC accounting standards board, William Webster, had been an independent director of U.S. Technologies, “whose CEO eventually was bundled off to prison.”
Indeed, Weiss takes no prisoners and pulls no punches in his criticism of Wall Street insiders, and the obfuscations and double-dealing that put individual investors at risk. Weiss is in favor of short-selling as a self-correcting market activity that lets the air out of irrational stock promotions. And he warns against the lure of hedge fund, noting that these “private” investment partnerships for the wealthy are now being marketed to individuals, who pay huge fees to alleged “superinvestors” -- hedge fund managers who keep their strategies and track records secret and who can legally lock up investors’ money for years.
With all his accusations and scary stories, Weiss’ prescription is not more regulation by government or exchanges. Instead, Weiss suggests that these abuses will only be cured when investors make themselves heard, by complaining to Congress, by taking a stand when the SEC proposes new regulations, and using the Internet to write about their experiences with the bad apples on Wall Street. The free enterprise system needs honest financial markets -- and Weiss’ accusations simply can’t be ignored.
Stossel on myths and lies
ABC News journalist John Stossel scores a hit with Myths, Lies, and Downright Stupidity: Get out the Shovel. Everything You Know Is Wrong ($14.97).
Are you willing to accept the possibility that gasoline prices are still a bargain? Well, if you knew that -- adjusted for inflation -- the price of a gallon of regular gas was $3.12 in March, 1981, then maybe today’s prices wouldn’t be so shocking. That’s the “truth vs myth” approach Stossel takes.
Are you willing to accept that the world is not “running out of oil?” Are you aware that “there’s enough petroleum energy in the Canadian tar sands to meet our needs for a hundred years” and that it becomes profitable to extract that oil when prices reach $50 a barrel.
Stossel takes on the media, the public school system, Congressional spending, child-rearing theories, women drivers, marriage, sex and religion!
These two books are a worthwhile investment of your money and your time. And that’s The Savage Truth.
Terry Savage is a registered investment adviser. Distributed by Creators Syndicate.