Bill Cara (aka William Ciccarelli) has produced an important book on modern financial markets. He has achieved this in spite of:
1. the difficulty of going from blog to book
2. the difficulty of writing a first book and attempting to pack a lifetime of knowledge into 404 pages
3. the difficulty in deciding on the knowledge and experience of the targeted reader
4. the difficulty of going against conventional wisdom
But if you give him a chance, Bill succeeds on all counts. Let me be more specific.
I read Bill's blog ([...]) daily. I like reading him in a conversational mode. I read his reactions to market and political events as well as his responses to questions from readers. One useful feature of both his blog and his book is the frequent use of URL's directing the reader to relevant content of other internet sites.
After a lifetime of participation in financial markets, Bill has definite opinions about how markets work. He personally knows many of the good and bad guys. Even 404 pages is little space to review these lifetime experiences.
Most readers come to his book without these relevant life experiences. The reader could be a novice or very experienced investor or anywhere in between, but not someone like Bill who slugged it out daily with the market makers. Bill does not have the benefit of being a graduate professor of finance who knows that his students have completed the prerequisite courses. Therefore, he devotes about half of the book to finance 101 for the beginners.
I think the book's strongest points are made in attitude rather than technique. Bill risks being labeled an eccentric because his advice (observations) goes against conventional investor wisdom. He argues that buying and holding quality stocks for the long run will not make much money. Instead, buy quality stocks when the market dislikes them and sell them when they are back in favor. The only thing that counts is the price. Good stocks go through price cycles of being over and under priced. Do not trust the financial press, particularly the talking heads on the financial networks. Assume that the investment houses, particularly the sell siders have their own agenda to make themselves rich and you poor.
Most appreciation of capital occurs slowly over long periods of time through increases in productivity. Other changes in price are a zero sum game. The markets produce an inherent conflict of interest between those who can control the value of assets by either large sums of capital or control of information. The individual investor is confronting an enemy which can be the large investment banks, corporate insiders or even the government.
Government uses its own considerable resources to maintain low interest rates, maintain low inflation, promote prosperity, relieve poverty and fight wars. It also attempts to be an honest broker among special interests. But from time to time it stumbles.
When the balance between social justice and self interest fails, the responsible parties have the chance to apologize, obfuscate or tell what they know is untrue. When the expansion of credit produces unintended consequences, who is to blame? The American voters have the opportunity each 4 years to decide who they believe and who they hold accountable for prior failures. Markets make this decision daily. The individual investor makes this decision daily, weekly or less often depending on his/her limitations of time, experience and determination.
A lot of the advice (observation) might seem erroneous if it were not for Bill's daily account on his blog of the financial market gyrations of the past decade and particularly the failure of the mortgage and banking regulation in September 2008.
I am recommending this book to my son. He is a successful professional and beginning his life as an investor. He is a prodigious saver, using mutual funds as his major store of wealth. He buys stocks from time to time but does not have the time to engage the financial markets like his retired father. He has no formal education in finance and will benefit from the didactic part of the book. He is beginning to doubt the expertise of financial experts and the fairness of the financial markets. He is asking himself how he can maintain the value of his savings and someday be able to retire and write book reviews like his father.
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