Book Library

Where Are The Customers' Yachts? or A Good Hard Look at Wall Street


Author: Fred Schwed, Jr

Publisher: Simon and Schuster, New York

Year Printed: 1940

Edition: First

Condition: Good

eBook: None.
Link to article published by IFA

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Pages: 215

Height: 7.75 inches

Width: 5.5 inches

Notes: Illustrated by Peter Arno. This book is in very good condition. Spine lettering slightly faded. A scarce classic.

Link to article published by IFA

Humorous and entertaining, this book exposes the folly and hypocrisy of Wall Street. The title refers to a story about a visitor to New York who admired the yachts of the bankers and brokers. Naively, he asked where all the customers' yachts were? Of course, none of the customers could afford yachts, even though they dutifully followed the advice of their bankers and brokers. Full of wise contrarian advice and offering a true look at the world of investing, in which brokers get rich while their customers go broke, this book continues to open the eyes of investors to the reality of Wall Street.


"Once I picked it up I did not put it down until I finished. . . . What Schwed has done is capture fully-in deceptively clean language-the lunacy at the heart of the investment business."
- From the Foreword by Michael Lewis, Bestselling author of Liar's Poker

". . . one of the funniest books ever written about Wall Street."
- Jane Bryant Quinn, The Washington Post

"How great to have a reissue of a hilarious classic that proves the more things change the more they stay the same. Only the names have been changed to protect the innocent."
- Michael Bloomberg


     "On that first day of employment I was told to look about and acclimate myself. I observed a gentleman buy two hundred shares of something at eleven o'clock. At half past two he sold it, and willingly calculated for me his profit, which was five hundred and sixty dollars. Naturally I stood and watched this operation, quite pop-eyed, with a vague sense of pleasure. After the market had closed, I timidly approached some of the office pundits and asked where that money had come from, and had anybody lost it when the man won it? I received a number of prompt and windy answers, none of which was correct. One gray-thatched Nestor explained to me in a simple and kindly manner that the customer had made this money and that the 'shorts' had lost it. A younger man said that that was silly (it was), that no one had lost it, that it was a natural increment accompanying the expansion of American Prosperity...A third man confided to me that the customer had made this profit quite easily by merely following an 'indelibly indicated trend.' A fourth said, emphasizing his pronunciamento by tapping me on the chest with a well-manicured finger, 'Young man, a bull makes money, a bear makes money, but a hog never makes anything!'

     This last statement, while startling and intriguing, did not seem relevant to my question, even then. It took me some time to discover it to be particulary untrue. I have heard it often since; it is a sort of customers' man's chantey to encourage customers to step into and out of the market a little livelier." pg. 6
   "The more skilful of these traders can, and do, peer into the future for a period of five or even twenty minutes concerning those securities which they are actively trading. This short-term peering is a legitimate function becasue of plenty of hints are pouring in to them all the time on many wires. However, as soon as they get a moment of leisure they try peering into the future for five or ten months. For this they are precisely as ill equipped as everybody else." pg. 39

   "When 'conditions' are good, the forward-looking investor buys. But when 'conditions' are good, stocks are high. Then, without anyone having the courtesy to ring a warning bell, 'conditions' get bad. Stocks go down, and the margin clerk sends the forward-looking investor a telegram containing the only piece of financial advice he will ever get from Wall Street which has no ifs or buts in it." pg. 43

   "In all discussions of short selling that are meant for public consumption, everyone, whether pro or con, agrees that bear raiding is outside the pale of decent human activity....Bear raiding is the further ruthless slaughtering of prices by selling short at a time when they are already cruelly disorganized by actual economic calamity. That is raiding at what is considered its worst." pg. 128

   "It is indeed the truth; one can do more fascinating things with an option than an inventive boy can do with a set of Meccano." pg. 144

We recently came across a blog that enumerated 10 more great lines from "Where are the Customers' Yachts?" Thought you might enjoy them.

1. On using statistics to your advantage: “One can’t say that figures lie. But figures as used in financial arguments, seem to have the bad habit of expressing a small part of the truth forcibly, and neglecting the other part, as do some people we know.”

2. On the value of “I don’t know”: For one thing, customers have an unfortunate habit of asking about the financial future. Now, if you do someone the single honor of asking him a difficult question, you may be assured that you will get a detailed answer. Rarely will it be the most difficult of all answers – “I don’t know.”

3. On the cyclical nature of the markets: “When “conditions” are good, the forward looking investor buys. But when “conditions” are good, stocks are high. Then without anyone having the courtesy to ring a bell, “conditions” get bad.”

4. On the usefulness of theories: “All of these theories are true part of the time; none of them true all of the time. They are, therefore, dangerous, though sometimes useful.”

5. It’s a little different every time: “History does in a vague way repeat itself, but it does it slowly and ponderously, and with an infinite number of surprising variations.

6. On the emotions of losing money: “Like all of life’s rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. You cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin by words or pictures.”

7. On second-level thinking: “Those classes of investments considered “best” change from period to period. The pathetic fallacy is that what are thought to be the best are in truth only the most popular – the most active, the most talked of, the most boosted, and consequently, the highest in price at that time.”

8. On leverage: “A man who borrows money to buy a common stock has no right to think of himself as a constructive social benefactor. His is just another fellow trying to be smart, or lucky, or both.”

9. On short sellers before the Great Depression: “Before October 1929, nobody objected to short sellers except their families. The families objected to going bankrupt.”

10. On who’s to blame for poor advice: “The burnt customer certainly prefers to believe that he has been robbed rather than that he has been a fool on the advice of fools.”