A Capitalist’s Lament: How Wall Street Is Fleecing You and Ruining America
Paperback: 240 pages
Publisher: Skyhorse Publishing (2016)
Leland Faust is an honors graduate from both the University of California, Berkeley (Economics) and Harvard Law School. He is the founder of CSI Capital Management where he served as Chief Investment Officer for 33 years, supervising over $1.5 billion in assets.
In A Capitalist’s Lament he lays out what investors need to know to protect themselves from ‘business as usual’ and avoid being taken. In great detail he goes about unmasking Wall Street’s unsavory tactics by giving readers a high-level view of how the financial services industry misleads them, overcharges them, and exposes them to needless risk. He documents the financial industry’s alluring come-ons, airbrushed risks, high-stakes gambling, half-truths, misleading statements, outlandish predictions, tricks to overcharge customers, bad deals, and outright fraud by the most prominent and renowned of Wall Street’s players.
In the brief – seven pages – first chapter, Faust cuts right to the chase, informing readers that in its fleecing of investors, Wall Street is ruining America. This fleecing takes place because the media allows itself to be used by Wall Street and convince Americans that to oppose Wall Street is to oppose capitalism and free enterprise.
Faust takes great pains to assure the reader that not only is he a capitalist, he is a hard-core capitalist and the book is not about bashing the American economic system. Instead, the desire is to shed light on how Wall Street abuses the system and investors to advance its own interests; and he walks readers through how it’s done.
Pursuing Selfish Interest
Of course the interest of many on Wall Street is to make money and they have a distinct advantage. For capitalism to work, people who assume risk should reap the rewards of success; however, they should also suffer when loses occur. We’re all familiar with that concept. Unfortunately, too often that isn’t the case for those on Wall Street. They reap the rewards when things go well and are protected from loses in a system that shields them. A distinct advantage indeed!
Perhaps one of the most illuminating points in the book is made in chapter three, Nonstop Conflicts of Interest, where Faust lists 18 everyday practices in which Wall Street place its own interests ahead of its clients, or places the interest of one group of clients ahead of those of others.
In short, Faust makes the point that Wall Street looks out for itself and not its clients.
The Wall Street Con Job
In the second half of the book Faust suggests in many respects what happens is nothing more than gambling. While true investment vehicles – such as stocks, bonds, and most mutual funds – do exist, others such as short sales, options, futures contracts and most hedge funds are simply forms of gambling disguised as investing. The difference according to Faust? With true investments, both parties to a transaction can ultimately earn a profit. Conversely, gambling is a zero-sum game. And I’ll give you one guess who often loses in the zero-sum game.
Two practices that Faust views with a certain amount of derision are short-term trading and short selling, both which receive their own chapters in the latter part of the book. In short – pun intended – both are representative of the primary points made by Faust throughout the book. The focus on immediate gains is generally the antithesis of true investing and more closely resembles gambling; and overwhelmingly the winners are those on Wall Street and not the small, retail investors.
At its core, A Capitalist’s Lament is about what happens when financial firms and their employees forget whose interest they are supposed to protect. It shows how making foolish or wrong predictions is of no consequence to those who make them and how Wall Street luminaries with poor track records still garner celebrity status. Most of all, it spotlights how Wall Street manipulates the system and furthers its own interests at its client’s expense and puts us all, and capitalism, at risk.
A Capitalist’s Lament: How Wall Street Is Fleecing You and Ruining America is available at Amazon in Kindle and Hardcover versions for $16.99 and $18.49 respectively.