Tag: the revolution that wasn't

LA Times and The Economist Reviews!
Book reviews · The book

LA Times and The Economist Reviews!

SJLeave a comment

My first impression of a person who reviews others’ work for a living came at age 12 from watching the Mel Brooks film History of the World Part One where we’re introduced to Ugg, the world’s first artist, and then the world’s first art critic. He delivers a scathing verdict on Ugg’s cave painting without saying or writing a word.

I am very happy to report that neither of the two fine publications, The Los Angeles Times nor The Economist, that have so far reviewed my book peed on it. This is what the LA Times had to say:

Jakab is a former investment banker who currently writes the Wall Street Journal’s “Heard on the Street” column; he knows what he’s talking about. He’s skilled at translating concepts like puts and calls and short sales and gamma squeezes into language most anyone can understand — a true gift.

LA Times

And later in the review:

Like so much reporting in recent years, Jakab’s book is both depressing and necessary … Anybody who buys and sells stocks, and anyone who “invests” in anything old or new, should read this book.

LA Times

Now that’s nice. And The Economist, which I have been reading for 30 years now, came through with a really flattering take too.

Spencer Jakab, a columnist at the Wall Street Journal, unknots the threads of this complex financial tale. His is a pacey and comprehensive account that takes in the structural changes in finance and the media that made the turmoil possible. 

The Economist

And lower down

…Mr Jakab’s knowledge of Wall Street shines in the historical context he provides and the industry aphorisms he relays (the retail investors who can lose out when hedge funds prosper are typecast as “a lot of dentists”). Despite the density of the subject matter, which includes “rehypothecation” and “gamma squeezes”, the story is deftly told. If the first draft of history was not quite on the money, as Mr Jakab contends, his second go has set the record straight.

The Economist

Please check out the book.

Be Like Ron Weasley
Book reviews · The book

Be Like Ron Weasley

SJLeave a comment

And recognize a troll when you see one.

If you know me at all then you’ve been bombarded with messages about the book. I hate to be annoying, but I also hate to see a year of hard work go unacknowledged. If too few people buy a book then it turns into a vicious cycle – next stop pulp mill, and no more publishing contracts for yours truly either.

What does that have to do with trolls? Quite a bit this time, unfortunately. My book points out how ordinary investors were taken advantage of by companies that got rich off of hyperactive stock trading, among other things. The victims in my story really do believe they are victims, but because they weren’t allowed to KEEP buying meme stocks for a few days a year ago. It’s evidence that the system is rigged. Well it is, but not by an illegal conspiracy.

Pointing this out makes them angry. I’m a hack and I work for the Wall Street Journal, which is owned by Ken Griffin (no, it isn’t). I am a paid shill for hedge funds (I wish) and I didn’t even read the WallStreetBets message board (oh boy did I read it). I don’t want to insult anyone, and I’m sympathetic to the newest generation of investors, but there are some unpleasant aspects to the online army that made GameStop the most traded security in the world.

They haven’t read my book, but they would prefer you didn’t either. So if you go onto the UK Amazon page, where it went on sale a few days ago, this is what you’ll see:

I personally avoid things on Amazon with poor reviews and many potential readers have doubtless done the same. When the book goes on sale tomorrow in the U.S. and elsewhere then you’ll probably see the same phenomenon from “MoxPlatinum” and others.

My ego isn’t so fragile, but this is injurious in other ways. It’s a prime example of how some people behave toward strangers these days online – ironically a phenomenon I discuss in the book in the part dealing with the horrifying online harassment campaigns against some of the main characters. If I saw, say, a local baker wearing a shirt touting a political candidate who offended me, it just might make me upset enough to shop elsewhere. Or it might not if she’s really good. But I would never threaten her livelihood by saying her stuff tastes bad without actually sampling it.

So whether you know me or not, can I ask a favor? I spent a year of hard work baking this cake. If you don’t like it then please feel free to say so, but only after you’ve had a bite. And if you did then please consider writing something nice and maybe clicking on some legitimate negative feedback as helpful, not that it’s “utter Dribble” (the word is “drivel,” by the way). And please extend the same courtesy to other writers you know whose online reviews are suspiciously negative. I do and I will even more now.

Thank you!

Wall Street Journal book excerpt
Columns · investing · The book

Wall Street Journal book excerpt

SJLeave a comment
(L-R) Bill Gross, Ken Griffin, Jason Mudrick, Vlad Tenev and Baiju Bhatt SIUNG TJIA/WSJ

Today’s Wall Street Journal has a 1,500 word excerpt of one of the chapters in my book. The article’s title is “Who Really Got Rich from the GameStop Revolution?” One helpful reader has already written to complain that they had to read too far into the article to find out. When I answer a WSJ subscriber (and I always do, unless they’re menacing or insulting), I try to be courteous. Still, the huge photo of five billionaires behind the article’s title was a pretty good hint, I think.

Anyway, the excerpt is an interesting part of the story but one of the less-surprising things you’ll learn if you read the book. Far more interesting to me was how trading and social media apps are so effective at getting people to act recklessly. The human psyche changes very slowly, but companies’ understanding of how to push our psychological buttons has evolved as quickly as the technology they can bring to bear. I’ve been working in or writing about financial markets for 29 years and I learned a lot while doing my research. You don’t have to be especially interested in finance for this to change the way you see things.

The book’s U.S. release is Tuesday, February 1st, available for pre-order now!

investing · journalism

On CNBC for GameStop Mania Anniversary

SJLeave a comment

I spoke about the book (out in a week!!!!) with CNBC this morning. I’m no natural on TV and always a bit nervous about condensing the insights of a whole column, much less a 320 page book, into a series of soundbites. But I think Andrew Ross Sorkin’s questions were sharp and my answers were acceptably concise. Check it out:

Columns · The book

Robinhood Traders Robbed Themselves

SJLeave a comment

You might have noticed that the stock market is a tad wobbly these days. Your own portfolio might be significantly wobblier than the headline numbers suggest if you piled into some of the most popular stocks on social media, so I hope you didn’t.

A lot of those same stocks happen to be in the top 20 or top 100 on Robinhood which, for anybody who reads my book (out on February 1st), won’t come as a surprise. This herd-following behavior was in fact pretty profitable for a while. I wrote about the downside of that today.

A clever young man, Noah Weidner, kept track of an index of the most popular stocks owned by investors at the broker. More recently, even after the data feed was curtailed by the broker, he kept up a list of which stocks entered and exited the top 100. For the most part those rejected like energy ETFs, Berkshire Hathaway and Wells Fargo went on to do well. Meanwhile, most of those added have been among the biggest losers recently, including shares of Robinhood itself. I link to an academic study that does a nifty job of explaining why that happened.

Stay safe out there.

Columns · investing · The book

Does Your Index Fund Have “Diamond Hands?”

SJLeave a comment
Yes, these are Roaring Kitty’s hands

Anybody who has read my first book knows that I take a mostly dim view of active management. Still, this week I wrote about an episode central to my upcoming book that proves an exception: how active managers handled meme stocks.

When the market values of GameStop, and AMC went up several hundred or thousand percent based on no change in their fundamental value, active fund managers did the obvious thing – they dumped them and moved on. But index funds, which tend to beat those active managers in the long run, held tight with “diamond hands” because they have to. In some cases they bought more at inflated valuations as their assets grew or as those companies issued shares to their now almost entirely retail base of owners. The only passive investor I’m aware of that was able to take the money and run was Dimensional Fund Advisors (I interviewed their deputy head of portfolio management, Mary Phillips, for the column). Even today, with their share prices (in my opinion) still grossly elevated, the main owners of the meme stocks are the self-described “apes,” many of whom believe there is still a short squeeze looming because of phantom shares.

Active fund managers shouldn’t look a gift primate in the mouth. The last year that funds benchmarked to the Morningstar Large Blend category outperformed that benchmark was in 2013 and before that it was 2009, according to a study by Hartford Funds. Index funds have strung together several consecutive winning years over their active counterparts during extended bull markets in the past, too—for example between 1994 and 1999.

This is one of those cases when owning an index fund can be frustrating. As of today, the top two holdings in the Russell 2000 Value Index – let me repeat, “value” – are AMC and Avis Budget Group, another company that recently got the meme treatment for discussing the addition of electric vehicles to its fleet. Whatever.