FOOL ON THE HILL
An Investment Opinion
License to Steal: A Must-Read for Every Investor Yi-Hsin Chang (TMF Puck)
December 13, 1999
Only 11 more shopping days 'til Christmas. Have I got a stocking stuffer for you. Check out License to Steal: The Secret World of Wall Street Brokers and the Systematic Plundering of the American Investor. It might be a little big for some stockings, but it's a fast-paced narrative about the real deal behind the brokerage industry.
The book is by "Anonymous" and journalist Timothy Harper. It traces the Street "education" of the anonymous co-author's rise from lowly cold caller to successful stock broker. As the first few sentences of the book tell us:
"This is a cautionary tale of Wall Street. In a sense, it's the book your stockbroker doesn't want you to read. It's a walk down the dark side of Wall Street, the true story of brokers who broke the law and violated their professional ethics. Beyond the outright crooks, however, it is also a lesson in how brokers routinely mislead their clients and abuse their trust."
Essentially, License to Steal is extremely Foolish and carries some of the same ideas The Motley Fool has been trying to spread to the populace for quite some time now -- hidden commissions, bogus stock recommendations, and the inherent conflict of interest within the brokerage industry (brokers make money not by making you money but by getting you to buy and sell as much as possible).
I've never recommended a book without reading it from cover to cover, but I feel completely comfortable suggesting this one after reading about a third of it (I'm in the middle of finals!) because every page I have read is entertaining, well-written, and enlightening.
The book recounts the outrageous lifestyle of some rogue brokers but also gives many everyday instances of how brokers shamelessly peddle stocks they know nothing about, "park" shares in clients' accounts without their knowledge, and manipulate a stock price to create a bigger spread (difference between the bid and the ask and hence bigger profits).
License to Steal can be an eye-opening experience for investors still unaware of the pitfalls of using a traditional, full-priced broker. At the same time, it is an interesting story even for more jaded investors wanting to know the nitty-gritty details of the unscrupulous practices of all too many stockbrokers.
If you're concerned that the book is by 'Anonymous" (the most prolific author in human history, by the way), fret not. Tim Harper, the journalist who helped the real-life stockbroker write this book, explains in a note on Amazon.com that he shares those misgivings. This was no ploy to boost sales. Actually, the fact that the co-author is anonymous has hurt sales. In fact, "Anonymous" was originally supposed to use his real name but changed his mind just before the book came out. If you read the book, you'll see that the book couldn't have been written had the names been left in.
Of the seven customer reviews currently featured on Amazon, six are overwhelmingly positive, while one is distinctly negative, but it's written by a broker! To me, that's all the more reason to read the book.
So if you buy one book this holiday season, buy License to Steal -- it'll forever change the way you view stockbrokers and the brokerage industry.