Attended a book launch party last night for Stephen T. McClellan‘s Full of Bull. The subtitle of the book is: “Do what Wall Street does, not what it says, to make money in the market.” The crowd was an interesting and lively mix of financial industry folks, artists and people connected to the world of opera. (Stephen’s wife is a painter and worked at SF Opera for many years)
I haven’t read the book yet, but what I gather from Stephen’s remarks, and skimming through, is that he hopes to help people decode the language of Wall Street. As in Lewis Carroll’s Alice in Wonderland, it’s important not to take things at face value. A “buy rating” doesn’t mean buy, and a “hold rating” doesn’t mean hold. A lot of the communication on the Street is through signaling, in the margins, or outside of the official channels. Information asymmetry is the primary method by which money is made. Clarity in communications levels the playing field and destroys perceived advantages. Muddy waters are the natural habitat of the players in financial markets.
As the market enters a period of uncertainty after an extended bull run, it’s good to have books like this to turn to. An investor looking for advice would do well to learn how to converse in the language of the Street before acting on the latest hot analyst recommendation spewing out of a cable news station.
I’ll be reading Full of Bull in the next few weeks, and you should too. Let me know what you think of it.