Book Review: Laughing At Wall Street

It’s tempting to pay a lot of attention to Wall Street, and the people and media who study the actions of Wall Street. After all, there are plenty of books, magazines, television shows, and even entire television networks, all devoted to watching the latest actions of Wall Street traders and investment organizations. But what if it were possible to achieve good, even great, investment returns by ignoring Wall Street, and attempting to find your own investment path?

Laughing at Wall Street attempts to do just that. By focusing on finding information that is ignored by Wall Street and using it to invest, it attempts to accomplish one of the toughest parts of the investment game, investing in a way that greatly increases your money. Is this approach a success, or a flop? Let’s read on to find out!

Summary

Laughing at Wall Street starts with an introduction to investing for those who are scared or worried about investing, displaying author Chris Camillo’s investment success already, and encouraging the reader to join him. The first chapter covers some of his history, from his younger self picking a profitable stock by pure ‘eeny, meeny,’ method to being obsessed with investment techniques for much of his teenage life. Chapter two looks at the two most commonly cited methods of investing, technical analysis and fundamental analysis, and seeing the flaws with both techniques, alone and together.

The third chapter looks at the flaws with the current financial system, particularly the difficulty most financial professionals seem to have doing better than chance with their suggestions. Chapter four is called ‘Other People’s Money,’ which puts the idea of borrowing or leverage in many people’s minds (myself included), but actually refers to finding ways to cut your spending to put more money towards individual stock investments (also known as the ‘Big Money’ account by the author).

Chapter five looks at how to start viewing the world through investor’s eyes, stressing the importance of spotting trends in the world that would go unseen by Wall Street professionals, a largely male, middle-aged (or older), white, and urban group. The goal of this is gain an information edge over such professionals, so you know something that they do not. The sixth chapter looks at how you research such an information edge, attempting to verify that something you think might be a sign of pending trends (say, your daughter claiming that ‘all her friends’ have Ugg boots) is actually wide-spread and real enough to impact the price of a stock. It covers several examples of how spotting such trends, and ignoring false trends, could result in hefty profits.

Chapter seven considers how you can determine what Wall Street already knows about such a trend, so you can be sure you get in, as it were, before the market as a whole realizes what is happening. It shows how to calculate a consensus score, to figure out what Wall Street is saying in general, so you can avoid simply being part of the crowd. While on the subject of crowds, though, the eighth chapter focuses on how you can harness the power of your crowd, particularly the virtual networks we increasing access, from your friends on Facebook to online discussion boards covering any topic that could interest you.

The ninth chapter covers two different methods of applying your new knowledge of an emerging trend. The first is simply to buy the stock of companies that are trending toward an increase in price; the second is to buy stock options enabling you to profit from the rise (or fall) of stocks whose trends you are able to determine. The tenth chapter looks at how you can view the world with investor’s eyes, giving advice on spotting trends before they are apparent to Wall Street and reviewing the other lessons shared throughout the book.

Chapter eleven shares a few brief stories about how the author’s associates were able to apply what they encountered in their daily lives and through non-Wall Street approved research to make large stock market profits. The appendix to the book is a beginner’s guide to getting involved in online stock communities, a good source of information and suggestions about investments.

Pros

Laughing at Wall Street is an interesting, different approach to investing compared to the average investment guide. The investment method suggested certainly has potential (although, also more than a little risk, if you’re not a good trend-spotter). The simple approach and lack of detailed calculations make it easy enough to read through and understand, even without much personal finance experience.

Cons

The book definitely downplays the potential risk inherent in investing in individual stocks, particularly when you aren’t reading through any of their financial statements to see where they stand. Similarly, there’s not much discussion of how to invest more cautiously, or otherwise shore up your financial life before individual stock investing (by building up an emergency fund, paying down debt, and investing enough to reach up to  your desired retirement earning). There are also some things that are of questionable suggestion, particular with so little emphasis on risk, such as using options for the investment (although, it does say to simply buy the options, rather than selling them and potentially losing more than you are paying).

Overall

Laughing at Wall Street is a pretty interesting book, but is probably not good for a rank beginner organizing their finance. There needs to be a greater focus on issues the book does not mention (and investments the book glances over) before getting to this type of individual stock investments. That said, it does make an interesting approach to those who have built up their finances and want to know what to do to possibly grow their investments; for that group, Laughing at Wall Street provides a decidedly interesting approach to such investing.

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