Backstage Wall Street: An Insider's Guide to Knowing Who to Trust, Who to Run From, and How to Maximize Your Investments

by Joshua M. Brown

Chances are you haven’t been making the best investing decisions.Why?BECAUSE THAT’S HOW WALL STREET WANTS IT Wall Street is very good at one convincing you to act against your own interests. And there’s no one out there better equipped with the knowledge and moxie to explain how it all works than Josh Brown. A man The New York Times referred to as “the Merchant of Snark” and Barron’s called “pot-stirring and provocative,” Brown worked for 10 years in the industry, a time during which he learned some hard truths about how clients are routinely treated—and how their money is sent on a one-way trip to Wall Street’s coffers. Backstage Wall Street reveals the inner workings of the world’s biggest money machine and explains how a relatively small confederation of brilliant, sometimes ill-intentioned people fuel it, operate it, and repair it when necessary—none of which is for the good of the average investor. Offering a look that only a long-term insider could provide (and that only a “reformed” insider would want to provide), Brown THE PEOPLE —Why retail brokers always profit—even if you don’tTHE PRODUCTS —How funds, ETFs, and other products are invented as failsafe profit generators—for the inventors aloneTHE PITCH —The marketing schemes designed for one thing and one thing to separate you from your money It’s that bad . . . but there’s a light at the end of the tunnel. Brown gives you the knowledge you need to make the right decisions at the right time. Backstage Wall Street is about seeing reality for what it is and adjusting your actions accordingly. It’s about learning who and what to steer clear of at all times. And it’s about setting the stage for a bright financial future—your own way.

Genres: Finance, Nonfiction, Business, Economics

Hardcover

Reviews

[Martin · Rating 3 out of 5]

I certainly appreciated the irreverence in Brown's narratives. Although the book was written to be self-aggrandizing, he seems like an honest, aware guy, and it benefits that the writing was purportedly born out of catharsis. I learned some things that I should have known better - the difference between a broker and an advisor, how etf's compare to mutual funds, and a general summary of events and vocabulary in the finance world in the last 30 years. Nevertheless, most of the general lessons should already seem clear to anyone that simply has more experience to not fall prey to things like cold calling, shady commission charges, and to be skeptical towards financial advice. These characteristics should already be available to anyone who would previously take the time to read a book like this but it guides to see lessons fleshed into witnessed accounts. Perhaps the best audience would be young finance students who gain by learning the abuses of the financial system and not to become greedily caught into the system.

I'll continue to monitor some of Brown's predicitions: the broker model being unsustainable, the shrinking of mutual funds and financial experts, and the favoring of an advisory model. Even if the claims sound good from common sense, I'm guessing that real signs will either be incredibly slow or perhaps never change at all. One true trend that I am at least aware of is the measured growth of passive investing.

[Steven · Rating 2 out of 5]

Ten-word summary: Joshua Brown is great and honest, regular brokers are not.

If you are an idiot who has a broker who actually makes investing decisions for you, then you should read this book. If you are an educated investor, there is nothing valuable for you to learn here.

[Richard · Rating 3 out of 5]

It would be a good idea for everyone who is or expects to be an investor (and that includes everyone who has a retirement account) to read this book. It won't take long; the book is rather short and it reads quickly. After you've gotten halfway through the book, if you find yourself thinking, I'm not learning much new here, then Congratulations! You are a reasonably cautious and knowledgeable investor. You passed the test. While reading, you might have found yourself reflecting on investing mistakes you made earlier in life. I did. (Remember: Good judgment comes from experience, and experience comes from bad judgment. We've all been there one time or another.)

If, on the other hand, much of this information is new to you, then keep reading. You are vulnerable to being taken on a very expensive ride sometime (or some many times) in the future. Or someone might be fleecing you right now without you even knowing it.

I gave the book 3 stars ("I liked it") because the book was written well enough to be entertaining even though I knew probably about 80% of the essence of what the author covered. Having a refresher doesn't hurt. For some people, this might be among most valuable books you ever read. It just depends on where you are in life.

[Brian G. Murphy · Rating 2 out of 5]

Much of what this book discusses is now common knowledge, but seeing the numerous industry conflicts of interest in a neat — if a bit rough around the edges — narrative projects the enormity of the problem. Brown does a commendable job of highlighting these issues; after all, there's a big difference between being aware of corruption and actually having it laid out before you.

[Cathi Davis · Rating 3 out of 5]

Easy to read. Follows the redemption plot. Would be more interesting if he perhaps cudgeled the New Wall Street hypocrites. Old WS is kind of an easy target at this point. Too bad his definitions didn't include these terms! It seems like everyone is bashing OWS. And claiming to be NWS these days. But if you read this AND his blog you will see he continues to skewer the pompous and self serving.

[Kevin Way · Rating 3 out of 5]

The title of this book isn't terribly accurate. It's a rough guide on "who to run from", but it doesn't get particularly far on "who to trust", and it never gets near "How to maximize your investments".

[Ang Jie · Rating 3 out of 5]

The book is about an ex-broker's take on the bad practices of Wall Street over the past two decades. Specifically he talks about bad actors (mainly the brokers and some investment bankers), bad products and bad push tactics to close a trade.

I believe in learning from the lessons of the past in order to hopefully avoid making the same mistakes future. This book is useful for this purpose, for it clearly illustrates how the dot.com crisis is the product of ignorant investors who were lured to buy a dodgy product by greed and brokers whose sole aim is to close a trade. It also briefly about how investment bankers conspire with equity researchers to push IPO prices sky-high, hence earning a big fat commission themselves.

Perhaps from these lessons one can learn to be mindful of sales people whom you don't know but claimed to 'want to build a relationship with you and don't want you to miss the opportunity to invest in a' fundamentally undervalued stock''.

Another lesson learnt is that illiquid products that are not publicly traded (e.g. private REITs, private placements) are likely to be bad products - especially if they promise too high returns. Those products are most probably private because they are such bad investments that even the investment bankers and corporate bankers have refused to finance them, leaving selling to retail investors as the only option.

The author appears to be skeptical about the rapid growth in the types and number of ETFs. However, this book doesn't predict whether it would up being a bad product as well; it just anticipates that it would eventually overtake mutual funds in terms of market cap.

Overall its an interesting book that is good to read once, but I personally would just borrow the book. I would give 3.5 stars if half star is available.

[Mark · Rating 3 out of 5]

An honest appraisal of the brokerage industry from one participant's point of view. It is a good buyer beware type book that points out the many conflicts of interest that exist when it comes to managing one's money.

[Charlie Gustafson · Rating 5 out of 5]

Insightful

Amazing book! Very insightful, brutally honest and yet appreciate the humor. Josh Brown comes across as a bluntly Straightforward human being who has his moral compass pointing in the right direction.

[Min · Rating 3 out of 5]

very fast read. although the straight line method had been advertised to me as the selling point for the book, i got the most use out of the rias and bds discussion and the (very) brief 12b-1 discussion. honestly nobody does a good job distinguishing registered reps from investment advisors to the more colloquial financial advisors and producers nametag and it's a pretty good primer at distinguishing the two (although it gives short shrift to the dually registered types).

admittedly the whole bloody industry is heavy on the acronyms, light on clarity.

[Jay Cunningham · Rating 5 out of 5]

Really enjoyed this book. I am a rook at a warehouse firm and found it really entertaining and educational. Reads like a memoir so it doesn't have a ton of dry, analytical content. Great book for investors and reps to get a behind the scenes look at what makes Wall Street tick.

[Justin Kittle · Rating 5 out of 5]

Great book

It was a nice "peek behind the curtain" of how Wall Street actually is. Great intro to Wall Street without getting too technical. Josh 's sense of humor makes it a fast read.

[Zachary Shrier · Rating 4 out of 5]

Overall book is a fun look at the retail sales culture of Wall Street. Highlight of the book: Josh's revealing of the "sales script" that brokers use on prospective clients.

[Marcin · Rating 4 out of 5]

I was expecting more of personal experiences rather than what the industry looked like in general.

[Jonathan · Rating 4 out of 5]

Very entertaining. I think the oceanic metaphor is dead on. I would suggest that a big producer..who has a single sizable account..be known as a narwhal!