I’ve just finished a very funny book on how Wall Street works, published in 1940 and written by someone who worked in the markets through the crash of 1929. Where Are The Customers’ Yachts was reissued as a paperback a few years ago, and almost every page is relevant to today — perhaps even more relevant satire than it would have been in the calm pre-credit crunch world.
Compare this recent Onion headline: Recession-Plagued Nation Demands New Bubble to Invest In to this passage from Yachts:
In our moments of sober thought we all realize that booms are bad things, not good. But nearly all of us have a hankering for another one. “Another little orgy wouldn’t do us any harm,” is the feeling that persists both downtown and up. This is quite human, because in the last boom we acted so silly. If we are old enough, we probably acted silly in the last three. We either got in too late, or out too late, or both. But now that we are experienced, just give us one more shot at a good reliable runaway boom!
Or there’s the chapter “The Short Seller — He of the Black Heart.” As the author notes, indignation about the short seller “only exists during and after panics — during prosperous times he receives as much attention as do people who practice barratry.” From a posting about new Merrill Lynch writedowns on financial blog The Big Picture today, a sarcastic comment referring to the currently pervasive “it’s all the shorts’ fault” meme:
There is no doubt as to who foisted these losses on Merrill: Rumor-mongers, Short-sellers, and al-Qaeda. Management obviously had nothing to do with this. Hence, the SEC should be spending most of its budget, manpower, and time investigating those issues.
Or this headline from today’s CBS Marketwatch: The blame game: It’s fashionable, but probably wrong, to blame the short sellers
Yachts author Fred Schwed Jr. (could that possibly be his real name?) himself foreshadowed the future in his pages on the folly of chartists, aka technical analysts:
When the student peers, however closely, at a graph of Dow-Jones averages, for example, all he sees for certain is a history of past performances clearly and conveniently depicted. That one can, by examining the line already drawn, make a useful guess at the line not yet drawn, must be predicated on the hypothesis that “history repeats itself.” History does in a vague way repeat itself, but it does it slowly and ponderously, and with an infinite number of surprising variations.