Articles and Resources
Where are all the Customer's Yachts?
I have to thank the style guru Stephen Bayley for introducing me to this book, what a marvellous read, and despite being written in 1940, the observations of the people involved in stock trading are as pertinent today as they have always been. Human nature doesn't change.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 title refers to an old story/joke 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.
After spending only two years on Wall Street in the 1920s the author decided to get out but in that 2 years he learnt much about people and their motivations, which he shares eloquently with us. Written in 1940 after the horrible bear years of 1929-1940, when the memories of the 1920s were still fresh, he updated the book in 1955 during the 50s bull market. In the updated version there is a new introduction in which he explains that the book does not need updating.
The book contains investment classic stories that you must have heard, or even told, as whilst the book has been read by few, its stories are quoted by many. 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 funds, short sellers, options, speculators and the bull market of the 20s, and the excuses handed out to those who are relieved of their money.
The writing style is urbane and witty. For example, there is the usual disclaimer on not following the advice in the book in the beginning. Except, it is illustrated by two hands with fingers crossed. And, the warnings are a just little different. The information in this book "while not guaranteed by us, has been obtained from sources which have not in the past proved particularly reliable."
Seriously, the humor in this book will help you to better understand the risks associated with stock investing. There is a wonderful quiz you can take that will tell whether or not you should be a stock investor. Most will not pass that quiz.
Huge thanks from Stephen and I for your extremely valuable advice which we will now pursue. We were really inspired after our meeting and just wish we'd met you years ago!
Sophie Stewart - London
Sophie Stewart - London
