Financial-markets

This book has good insights into the Wall Street of the 1960's. This was the period of time most similar to the present (not identical) regarding the boom in tech stocks and new issues. Brooks has some interesting insights into the players in that period of time and what went wrong.

"The Go-Go Years" is a largely a collection of New Yorker magazine articles (and some pieces written especially for the book) by John Brooks, who in it covers a crucial period in the history of Wall Street, the 1960s, which includes the rise of conglomerates, mutual funds, and hedge funds, i.e. players at the heart of our economic situation today. Reading this book is instructive for that alone.

But the book is far more than a prescient account of today's market forces. It's a vivid rogues gallery of people who rode the tides of fortune, had their days at the crest of their profession, and then fell back. Some, like stockpicker extraordinaire Gerald Tsai, the first Asian to rise to NYSE prominence, were undone by fortune and circumstance. Other less savory characters had only themselves to blame.

There's an early look at Ross Perot, described vividly at the book's outset as losing a half-billion in a single day (April 22, 1970) and more or less shrugging it off. Perot's priorities were solid and he knew what he was about. Not so Eddie Gilbert, "The Last Gatsby" as Brooks calls him, who parlays small victories into outrageous defeats, dragging along a coterie of privileged friends into more and more nefarious investment schemes. Brooks sees Gilbert's get-rich-quick attitude as too emblematic of Wall Street in the 1960s, and his narrative never tires of pointing these out.

Brooks' elegant prose has a way of leaping out at you without disrupting the narrative flow. About the trend for all investment strategy to come unglued: "The dumb money could take bitter comfort in the company it had among the smartest of the smart money - or former money." On Tsai: "...so swift and nimble in getting into and out of specific stocks that his relations with them, far from resembling a marriage or even a companionate marriage, were more often like that of a roué with a chorus line." On the numerous bailouts undertaken by the Street as the '60s went sour: "Save the broker in order to serve the customer: it was Wall Street's version of the trickle-down theory."

Brooks's writing feels timeless. His is a lapidary style of almost accidental eloquence, blending facts in a seamless way as he tells his tale. It's like Roger Angell's baseball writings for the same magazine - I kept thinking about Angell's great essays in "The Summer Game," which focuses on roughly the same period as "The Go-Go Years," albeit on a different sport.

While Brooks's disapproval with Wall Street in the 1960s is obvious, and his genteel liberal disdain for a status quo that allows the market to manage itself shows up now and again, he never loses his focus on the people, and allows them to breathe in his narrative. He doesn't quote from them much, but he obviously spoke to many of the principals at length and weaves their insights into the story. As much as the then-nascent trend toward conglomeratization bothers him, he allows himself to show some sympathy for one of its more outrageous practitioners, Saul Steinberg, who in one of the best chapters finds himself thwarted by the bluebloods while attempting to acquire Chemical Bank. "I always knew there was an Establishment - I just used to think I was a part of it," Steinberg says.

It's not a connect-the-dots style history of Wall Street in the 1960s. It's too episodic for that. But if you are studying the facts and figures of the Go-Go Years and want a deeper look, or simply enjoy the human drama all-too-often overlooked in American business journalism, "The Go-Go Years" is a book that has only appreciated in value over time.

Wiley Investment Classics typically fall into two categories, fascinating troves of banking wisdom that are well-written and insightful, and painful diatribes that while full of good intention are best put on the shelf for display. "The Go-Go Years" is definitely the former - this is an incredibly well written book about what has really become one of the forgotten times in American financial history. While the booom of the 1920's and resulting crash, as well as the excess of the 1980's are frequent subjects of many financial authors, Brooks has picked a relatively infrequently discussed portion of our financial history, the booming 1960's and the resulting crash of the early 1970's.

There are many outstanding sections of the book; the introduction to Ross Perot in the first chapter, the history of Gerald Tsai and Fidelity, the rise and fall of the conglomerates, the description of the back-office and its staff, and finally the description of Wall Street that begins Chapter 5, which is without question the best description of the area ever written. These few pages (104 - 111) are simply an outstanding piece of prose.

There are just too many good things about this book to fit into a 1,000 word review. Too many of the lessons from only 40 years ago are maddeningly similar to the lessons many dot-com and IPO investors are learning now, and the structure and actions of many Wall Street establishments are all too easily explained with this simple peace of previously "missing" history. If you are up to date on the current view of the 1929 collapse, and the bull market of the 1980's, then this is the book that goes a long way towards filling out the major events that shaped the markets in the interim.

Go read this book.

Favorite Excerpts:

"Goaded by stock underwriters eager for commissions or a piece of the action owners of family businesses from coast to coast - laundry chains, soap-dish manfacturers, anything - would sell stock in their enterprises on the strength of little but bad news and big promises." - Brooks (page 28)

"Some accused him of being a habitual liar; they forgave him because he seemed geniunely to believe his lies, especially those about himself and his past." - Brooks (page 63)

"In the nineteen twenties, Wall Street's last great era before the present one, it was a kind of super university as well as a marketplace." - Brooks (page 105)

"'We were all sheep,' one of them would admit, sheepishly, years later." - Brooks (page 120)

"A smooth operator with a streak of the gambler; a company more interested in attracting investors than in making real profits; the resort to tricky accounting; the eager complicity of long-established, supposedly conservative investing institutions; the desperation plunge in a gambling casino at the last minute; the need for massive central-banking action to localize the disaster; and finally, reform measures instituted too late - we will see all of these elements reproduced with uncanny faithfulness in United States financial scandals and mishaps later in the nineteen sixties." (page 125 - 126)

"Economics have never been my strongpoint" - Salinger (page 273)