The Greatest Trades of All Time
By Vincent Veneziani
Today I am reviewing The Greatest Trades of All Time. Read my other book reviews here.
I was excited to read this book, as I have been quite interested in the past to read books like The Greatest Trade Ever and Fooling Some of the People All of the Time, which detail the contrarian views, intense research and courageous bets of various investment managers that ultimately paid off in spades. Although I had already read the books written by or about various trades profiled in the book (Chanos, Templeton, Paulson & Lippman, and Einhorn), there were several that I had either never heard of (Schwartz, Arnold) or knew very little about (Hall, Tudor Jones). This book is short, at just 166 pages, and given the number of “greatest trades” covered (fourteen in total), I knew there wouldn’t be a lot of space to devote to each individually. So from this starting point, I expected a fairly concise profile of particular trades that have met some pre-defined criteria to be called “The Greatest Trades of All Time.”
Unfortunately, I was disappointed. And not just a little bit. So I’ll start with my conclusion: The Greatest Trades of All Time is easily the worst investment book that I read in 2011. In his clearest moments, Veneziani’s writing can be described as superficial at best, and downright ridiculous otherwise. The problems start early, when it is clear that Veneziani had not set out to write about the greatest trades, but rather the greatest traders. Each profile focuses an obscene amount of what little space is available on providing a thumbnail biography of the man behind the trade, while awkwardly attempting to cull some pat conclusions about what led to the greatest trade. In this regard, the book reads like a ninth grade english assignment, largely failing to add any value to the reader. For anyone interested in learning about the trader’s background, I would advise a trip to Wikipedia, which provides a less biased and more complete background of almost all of the traders featured. The conclusion that you draw will almost certainly be as strong as those of Veneziani.
Unfortunately, the title carries further problems than merely the trade/trader confusion. The term “greatest” implies that the author has applied some standard against which the traders are measured. For particular trades, this would be a relatively simple quantitative standard, but by focusing on the traders themselves this presents a more challenging problem, and Veneziani was clearly not up to the task. While Veneziani includes traders who executed some of the most famous trades in recent memory (Chanos/Enron, Paulson&Lippman/Subprime Mortgages, and Soros/GBP), there are a number that are included without any explanation. For example, I mentioned I had never heard of Martin Schwartz. He was evidently a talented trader, winning the US Investing Championship in 1984, and writing a book about his trades. He may indeed have executed some superb trades that would rank him on par with Soros et. al., but Veneziani provides no details about this. Instead, he is included evidently as a motivational tale about how anyone can start with little and make it big. Hardly enough in my opinion to qualify someone as one of the greatest traders, or having made one of the greatest trades (“of all time”), whichever topic Veneziani believed he was writing about at the time.
This leads in to the next major fault line running throughout the book: motivation. At some point, Veneziani evidently thought he would morph this book into a motivational self-help book for traders, with tips on how to “recreate” the trading strategies of these great traders, and the traits that he feels contributed to the trader’s success. Let’s examine a few. In the Jim Chanos profile, Veneziani writes the following:
Focusing primarily on the Enron trade, we can use Chanos’s ideals and tactics to find similar opportunities on our own. To start, here are a few things to make a priority:
- Find companies where something about them just doesn’t seem quite right. Maybe it clashes with your trading ideals.
- Watch out for companies with insanely overpriced stocks, a key giveaway. While other companies may not be as corrupt as Enron was, you can look for the discrepancies and ask yourself why X company’s stock is trading at Y price.
- Once you think you have found a company that is worth shorting, make sure you follow every tidbit of news about it, especially SEC filings.
So his big advice in evidently “recreating Chanos’s trading strategies” is to look for things that “just don’t seem quite right” and then “follow every tidbit of news” about them. Gee, thanks Vince. I wish I could say that this was the most superficial part of the book, or even of the chapter on Chanos, but alas I cannot. I will also note this motivational statement:
At the end of the day, it doesn’t matter how much capital you start with or what strategy you employ. What really matters is sticking to your trading beliefs and only adjusting them in order to create profits or minimize losses.
Given that only one of these sentences contains a cliché (“At the end of the day”), this might not be the most representative passage, but his statement about “only adjusting… in order to create profits or minimizes losses” is a good example of a sentence that evoked a common feeling throughout. I was constantly left wondering whether Veneziani has ever in his life been challenged to justify what he had just said. No one, in the history of the financial markets, has ever adjusted their trading beliefs for any reason other than to create profits or minimize losses. This is a completely meaningless statement, yet there it is, offensively contained in the body of the book and on the back flap.
So far I’ve covered the big, foundational issues of the book. To summarize, I think Veneziani likely jumped into writing without a definite objective, flip flopping between competing ideas and consequently achieving nothing of value. Beyond this, there are some small issues that I think are worth pointing out. Repeatedly, Veneziani finishes a chapter mentioning the contents of the trader’s most recent 13-F, which is the form institutional money managers must file that show their long positions. To include this in a book is a laughable attempt to fill space, as if he was having trouble getting through the scant 166 pages. He had to have known that, by the time the book was edited, printed and distributed, the material would be several quarters of out date. Moreover, this information is presented almost as an aside, with zero analysis of how long these positions had been held and whether they were growing or shrinking. Even some conjecture about why those positions might be held would have been somewhat redeeming, but instead they appear like vestigial tails, running off the end with little purpose and no explanation.
Throughout the book, there is a distinct impression that this was a vanity project used to bolster the image of a third rate market commentator (see a representative example here). Try as I might, I cannot find a single redeeming feature of this book, or any reason why you should buy it. I hereby crown it the worst investment book of 2011.
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