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Review: Where are the customers’ yachts by Fred Schwed JR.

Where are the customers’ yachts by Fred Schwed JR.


Fred Schwed Jr, a former professional broker, wrote “Where are the customers’ yachts?” in 1940. It was republished in 1955, and again in 1995.


While the reworking of a classic often produces poorer results each time, this is an exception to the rule simply because the issues addressed are timeless; investment bankers and the like get richer, while most customers never seem to get the yachts. The title of the book is derived from an old story where a client was being taken around the docks of the New York Yacht club and shown the investment bankers and brokers’ yachts, to which the client asked the question: Where are customers’ yachts?


Naturally, there were none.


The backdrop of the book is Wall Street, New York, after the great bear market of 1929 - 1940. The customer tends to be portrayed as a babe in woods who ultimately falls into the trap of trusting those who appear to be in the know — and yet those in the know often don’t know anything. The reason why they have yachts and the customers don’t is simplythat they are brilliant salesmen. The author comes across as an eccentric. You could quite easily see him trotting up and down Wall Street, viewing players with bemusement, and laughing out loud at their opinions.


His style of writing is simple and enjoyable. There is no financial markets jargon. Ultimately, we appreciate how easily accessible information is to us. Humour and quirky logic effectively convey the writer’s message. In one of the chapters he attempts to explain the follies associated with margin trading. His theory is that while he could provide with you with a million reasons to guard against margin trading, you would never believe him until you tried it for yourself. To quote a brilliant line from the book: “Art cannot convey to an inexperienced girl what it is to truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin by words or pictures. Nor can any description that I might offer here even approximate what it feels like to lose a real chunk of money you used to own”.


We are constantly reminded that while hindsight is brilliant, nothing and no one can predict the way the market will turn, and that even though we have access to so much information now, we still tend to make the same mistakes people made way back then when information was privy to a precious few. The fact that it was written in an age so different from ours simply highlights the fact that an industry so driven by human nature has essentially remained unchanged.


The book emphasises that which people who want to invest or trade should already know; there is no substitute for doing your own research, making your own decisions, and getting advice when you think you need it. He does not claim to be fabulously wealthy nor does he claim to know the secrets to wealth. He certainly does not tell you how to get your own yacht.


Those who are seeking advice on how and where to make your fortunes will find this a disappointing read. However, if you are looking for a refreshing and funny outlook on a serious subject, this is the book for you.  

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