Where Are the Customers' Yachts?

"Once I picked it up I did not put it down until I finished. . . . What Schwed has done is capture fully-in deceptively clean language-the lunacy at the heart of the investment business." -- From the Foreword by Michael Lewis, Bestselling author of Liar's Poker ". . . one of the funniest books ever written about Wall Street." -- Jane Bryant Quinn, The Washington Post "How great to have a reissue of a hilarious classic that proves the more things change the more they stay the same. Only the names have been changed to protect the innocent." -- Michael Bloomberg "It's amazing how well Schwed's book is holding up after fifty-five years. About the only thing that's changed on Wall Street is that computers have replaced pencils and graph paper. Otherwise, the basics are the same. The investor's need to believe somebody is matched by the financial advisor's need to make a nice living. If one of them has to be disappointed, it's bound to be the former." -- John Rothchild, Author, A Fool and His Money, Financial Columnist, Time magazine Humorous and entertaining, this book exposes the folly and hypocrisy of Wall Street. The title refers to a story about a visitor to New York who admired the yachts of the bankers and brokers. Naively, he asked where all the customers' yachts were? Of course, none of the customers could afford yachts, even though they dutifully followed the advice of their bankers and brokers. Full of wise contrarian advice and offering a true look at the world of investing, in which brokers get rich while their customers go broke, this book continues to open the eyes of investors to the reality of Wall Street.

Introduction xiii Jason Zweig Foreword to the 1995 Edition xxi Michael Lewis Introduction to the 1955 Bull Market Edition xxv I. Introduction—“The Modest Cough of a Minor Poet” 3 The validity of financial predictions The passion for prophecy When the bull jumped over the moon II. Financiers and Seers 23 Big banking—nice work if you can get it Some assistant tycoons The fruit on the blossom of thought Wall street semantics Chartists The pay The difficulties of “earning” money An art without a muse A little aptitude test III. Customers—That Hardy Breed 49 Varieties of customers How to get customers Margin What to do when the dam bursts Some case histories and a diagnosis Churning money as a career IV. Investment Trusts—Promises and Performance 67 Stop making your own mistakes Where is the catch? The hell-paving construction company The trouble with the “best” securities The $750,000 bird By way of apology The magical investment corporation V. The Short Seller—He of the Black Heart 87 For the defense A different defense With and without bears Bear raiding VI. Puts, Calls, Straddles, and Gabble 105 What options are (more or less) In defense of the pure gamble The catch VII. The “Good” Old Days and the “Great” Captains 117 The i.q. of a big shot Speculation on speculation A brief excursion into probabilities Down will come baby “They” Manipulators A bowl of nickels VIII. Investment—Many Questions and a Few Answers 135 Headaches of the wealthy A little wonderful advice Price and value—our special market letter Cash as a long-term investment Your way of life and the basis book IX. Reform—Some Yeas and Nays 153 Was it stolen or did you lose it? Nobody loves a specialist Horizons and limits of regulation Inconclusions About the Author 171