Over the last few weeks the book I have been reading during my daily commute was American Sucker by David Denby. Basically, this is an autobiographical look at the experience of an individual stock investor/trader during the period of roughlyÂ 1999 to 2002. That, of course, was very challenging time for participants in the equity markets and it is clearly documented in the text.
Before I get into talking about the story, though, it’s worth taking some time to consider the author. Denby is a writer used to addressing a fairly sophisticated audience. His primary vocation was as film critic for the New Yorker and he had previously authored a book discussing the classics thinking of Western civilization. As such, his language is not that of one writing for the masses. I consider myself pretty well read and with a decent vocabulary, but there were several words Denby used in American Sucker I’d never heard before.
That said, I didn’t find the book to be pretentious or anything like that. From a writing style perspective it was a pretty smooth read.
Getting to the subject matter, I found it a really interesting perspective on the thought process of the individual investor during a time span which ran from euphoria over the prospects of profits from a market rising rapidly to the depths of despair in the face of not just falling prices, but also destroyed confidence in the whole system. As such, Denby caught the tone of that whole period of time during which the stock market peaked and then fell in the most dramatic of fashions. In fact, I couldn’t help but draw comparisons to what’s going on in the markets and the economy right now.
I think the firstÂ real benefit of reading this book for someone involved in the markets is the psychology of investing which plays out in the author’s thinking and actions. He starts off not wanting to miss out, wanting to get his fair share out of the booming stock market of the late 1990s. The euphoria of the time combined with personal developments in his life to lead to toss all his usual caution to the wind and jump into things with both feet. Later, as the markets start to unravel and his portfolio value is dramatically reduced, Denby talks through the waves of hope and fear that are so often found in times of strain.
Basically, anything you have ever read about in trading psychology texts regarding the way most people’s mental process works while watching their account values rise and fall are clearly seen through Denby. It’s all there. As a reader, you can actually see the thoughts and actions which create the price patterns so prevalent in bear markets.
Along the way, Denby documents his evolvingÂ beliefs as events in the markets and the performance of his portfolio combine with events in his life. There’s an important lesson to be had there. Your trading and investing cannot be entirely separated from the rest of your life. They are inter-related and that’s something you need to realize can impact on what you do and how you perceive things.
What makes the book even more interesting is the author’s relationship with some of the major controversial figures of the time period.Â One of them wasÂ Henry Blodget, the disgraced Merrill LynchÂ technology analyst. Another was Sam Waksal of ImClone. Denby’sÂ interaction with both men feature prominently.
Overall, I found American Sucker a very good read. Denby does spend quite a bit of time ruminating on the subject of greed and related topics, as well as some other philosophical ideas – his ownÂ and that of others. Some readers might find this stuff uninteresting and I will admit that at certain points I skimmed along when the narrative stopped and the deep thinking started. It’s an autobiography by a well read, sophisticated, and mature individual, though. You can’t expect it to be without introspection.
In short, IÂ definitely recommend this book for traders and investors and for anyone else with an interest in the markets.