I just finished John Talbot’s “The 86 Biggest Lies on Wall Street.” It’s concise and very good. It’s a quick read and a good book to read piecemeal since each “lie” is it’s own chapter and usually only a page or two. Mr. Talbot is a former investment banker at Goldman Sachs and a visiting scholar at UCLA’s Anderson School of Management. And just for good measure, I’ll point out that his 2006 book was entitled: “Sell Now! The End of the Housing Bubble.”
I like the title. First, it’s the 86 “Biggest” lies on Wall Street, suggesting that there are more. Second, it’s interesting that the lies are the 86 Biggest “on” Wall Street, suggesting that these aren’t necessarily lies perpetrated soley by Wall Street itself — and I think that’s true. That is, these are also the lies that we tell ourselves and lies that have been around since there have been markets. Like opposing cliches (does “haste make waste” or should you “look before you leap”?), supposed axioms and investment lies creep in our parlance and ethos and, mostly without our realizing it, they stop being questioned until someone points out –usually the market itself in its own inimitable and blunt way — that the Emperor has no clothes.
In short, I recommend the book. It’ll get you thinking about some of your underlying (no pun intended) assumptions. Question everything. Socrates would be proud.
For a taste…..
Lie #29: In the long run, stocks outperform bonds if you do not object to slightly higher volatility along the way
Lie #35: The [US] stock market’s two-decade appreciation was primarily due to growth, innovation, the opening of new markets, and good corporate management.
Lie #37: Fixed-coupon [US] Treasury bonds are risk free
Lie #39: Interest rates are set by the Federal Reserve