My Book Reviews

Co-written by Joey Anuff, cofounder of the Suck.com humor Web site, and Wired magazine's Gary Wolf, "Dumb Money" is Anuff's colorful first-person account of his brief involvement in the volatile world of day-trading during the late 1990s. After making a big profit by trading EBay stock, Anuff tries to parlay his earnings into more success. He talks about various aspects of his day trading routine, including: reading the news before the market opens, monitoring his stocks, watching CNBC, dealing with his broker (E*Trade), and reading internet stock message boards.

The book does a decent job of telling the history of day trading, including: the SOES bandits, a profile of Harvey Houtkin, the day-trading hysteria of the late 1990s and some of the fetish stocks involved (like Iomega), and studies in the Journal of Finance about market-maker manipulation.

Despite the fact that this book is about a trader's real-life trading experiences, there is almost no valuable content for traders. The only quote that I noted as being valuable was his observation that "sometimes you can sense the potential energy in a stock for weeks." Conversely, there are tons of ridiculously hyperbolic and inaccurate statements, such as:

• when he says that "to be a day trader is to make regret into a lifestyle."
• when he mentions his "$800 Herman Miller chair."
• when he says that day traders "live every second on the edge of panic."
• how day trading is his one shot at "independent wealth."
• the supposed "midday dead zone, the Bermuda triangle into which a momentum players entire life savings can vanish."
• when, in true idiot style, he refers to the stock that he has a position in as a "POS".

In addition to these comments, the book shamelessly wades into sensationalistic topics like message board pump-and-dump schemes and day-trader-turned-killer, Mark Barton. But aside from these individual quotes, there are also other problems with the book.

First, this book does a dis-service to real traders by perpetuating the myth of the "crazy day trader lifestyle". Even though the tone of the book was meant to be "fun", and some of the trading stories were genuinely exciting, the problem is that many outsiders who read this book do indeed believe that "this book shows trading as it really is", as one overly-impressionistic Amazon reviewer wrote. Sorry, but this is not what trading is really like.

Second, is the hypocrisy of this book. This book pretends to be a reality check to those who romanticize the "laid back" day trading lifestyle of quick and easy profits. But this book simply romanticizes the "crazy" side of day trading by making all of his adventures sound exciting. Books like this are created under the guise of de-constructing a romanticized world, but just end up romanticizing the world in a different way. Both sides are just hypocritical whores selling an inaccurate and incomplete image of their subject matter.

The third problem is the artificial feel that the book has. The author (who is a writer) gets involved in the world of day trading, all-the-while knowing that his trading adventures will probably be published. This self-awareness leads to a faux reality where his behavior is driven by the need to create an exciting story, like when kids on MTV's "The Real World" have contrived conversations just because they know that the cameras are rolling.

Fourth, is the author's unwarranted condescending attitude towards the world of trading. After his "assignment" is complete and the author is summing up his day trading experience, he asks, "And what do I get in return for all of this devotion? only money." This condescending comment was simply a transparent attempt to portray the trading world as shallow in order to hide the fact that he, in reality, had no devotion at all to trading. When reading the book, it's apparent that the author had no intentions of ever becoming a trader. His attempt to portray the trading world as shallow is ironic since the author himself was nothing more than a stock market tourist whose contrived adventures were just as shallow as the trading world he criticized supposedly was.

I would have given the book only 1 star, but it does serve as an accurate historic account of the idiotic behavior of 1999.