Street Fighter
Written: Nov 17 '04 (Updated Nov 17 '04)
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Pros: Levitt gives his inside scoop on the Street while providing sound financial fundamentals.
Cons: The general reader may get tangled up in or bored with the technical side.
The Bottom Line: Dense at times, but full of solid information for investors.
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| mht's Full Review: Arthur Levitt - Take on the Street: What Wall Stre... |
No, not the video game variety...but a public advocate against Wall Street abuses. Arthur Levitt, the former SEC Chairman, has helped to reform the American securities world in important ways. He gives a true expert's view along with a frontline perspective on issues that affect the lives of all financial investors--whether full-time, part-time or avocationally.
Personal Story
Levitt's dad, as New York State comptroller, had fought hard for pensioners in New York. Arthur Levitt Sr. had a showdown with NY City mayor Ed Koch, who wanted to raid pension funds to avert a financial crisis for the city. Due to Levitt Sr.'s staunch refusal to take from people's retirement, Koch pointed at Sr. and said, "If New York City fails, it will be your fault!" Levitt Sr. then suffered a mild stroke but the example he set for his son helped his son later to become a champion of the common investor as SEC Chairman. In the meantime, NYC has obviously not failed financially.
Bully Pulpit
The SEC Chairman has significant authority and power to try to enforce SEC regulations. Levitt fought fiercely to try to level the playing field, improve information for the average investor, and reduce distortion & dishonesty in accounting.
For example, Levitt did much to increase the disclosure of self-interested relationships that could motivate positive press releases and ratings. Levitt noted the phenomenon of banks and brokerage firms acting as "cheerleaders" for companies they served. He figured it'd help the public to know such relationships so that rosy projections might be tempered by considerations of positive bias.
Blocking the Flow of Inside Information
The recent Martha Stewart case, regardless of what you think about her guilt or innocence, gave a lot of publicity to the illegality of abusing inside information. Levitt, as a former broker himself, describes how company insiders would drop juicy morsels of information for those they'd like to curry favor with. The problem is that this information would get to these privileged few before it was available to the general public. Levitt worked to try to decrease this practice so that the general public would get the information at the same time as brokers.
Along these lines, tele-conferences for quarterly reports or otherwise were often limited to brokers. Now any investor, small or large, can listen in (and in some cases ask questions) at such teleconferences.
Technical Analysis
Levitt gives a primer on how to read balance sheets, income statements, cash flow statements, and different types of "news" that can be misleading. These portions of the books are quite useful, but are more demanding mentally. They've helped me to analyze these tools of the trade more skillfully while avoiding pitfalls along the way. This portion doesn't have as much narrative flow to it, but can sharpen one's investing acumen. I have re-read portions of it to strengthen my ability to apply what's contained therein.
Accounting Shenanigans
Levitt tried to prevent the Enrons of the world from foisting accounting frauds upon their own workers and the public. Levitt exposes the cozy consulting/accounting relationships that have made accounting companies less motivated to be vigilant about accounting lies. You see, since these accounting firms don't want to jeopardize the consulting business they get from the companies, they are less eager to challenge accounting misdeeds, which they are responsible for ferreting out. Levitt promoted the idea of making independent accounting auditors more independent and less self-interested in overlooking accounting, ideally increasing the odds that they will nab dishonesty.
Up the Hill
Levitt also gives advice on how the average investor can influence those in Congress. He describes the menagerie of lobbyists, special interests, and the interaction of different federal agencies. The book opened my eyes to who the players are, what issues are at stake, and how to get involved.
Champion for the People
While Levitt's enemies would like to have painted him as a meddling nuisance, it seems from this book that he did the American people a great service by making investing fairer. He was willing to go to the mat for what he thought was right, notwithstanding powerful opposition to his efforts. This book both documents the drama of these struggles, while giving solid advice on how to become a savvier investor. Even though it isn't exactly a light read at times, I recommend it for those willing to think through what it says. Here is a Street Fighter whose message and work is much more important than the video game personas that have eaten many coins in arcades around the world: if properly applied, it could put dough in your pockets rather than emptying them.
Recommended:
Yes
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Epinions.com ID:
mht
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Member: Morse Tan, Esq.
Location: Jacksonville, Florida, USA
Reviews written: 115
Trusted by: 31 members
About Me:
HappyHubby, DevotedDad, BookAddict, investor, TennisBrain, cellist, TravelNut, DogLover, law professor: learning to play!
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