The New Reality of Wall Street : An Investor’s Survival Guide to Triple Waterfalls and Other Stock Market Perils

The book deals with enough history and timeless investment advice to make it an enduring reference for those with pretensions of managing their own money. It is a lively romp through market and economic history aimed at small investors.

Great book

“New Reality of Wall Street” is an oddly assembled book with some flashes of insight. Although Mr. Coxe has a lively writing style, the substance and weight of his assertions often leans towards what is colloquially referred to as “bull”. The novice will find much to be confused about. The keen skeptic will have much to be skeptical about. And the expert will find nothing new.

The book starts out in the style of a wilderness survival guide. This would suggest the book is meant for novice investors. And this is supported by his diversions to explain concepts such as risk premium and bond duration. But he also delves into detailed discussion regarding foreign currencies without explanation of currency mechanisms. For example, he explains that Japan, as an enormous creditor to the USA, must print large amounts of Yen to “absorb” the inflow of Dollars. A novice who does not understand central banking mechanisms is left without so much as a trail of popcorn to figure out why or how this is. So while Mr. Coxe spends too many pages on basic principles for this to be an expert investor’s book, he entirely skips vital concepts for this to be a novice’s book.

Even if one does understand everything that is said in these pages, there are other thematic problems. He makes numerous creative assertions regarding the causality of certain economic events, but does not offer any supporting logical arguments or empirical evidence. (Contrast this with writers such as Robert Shiller or Marc Faber who do not require you to take their statements at faith, but instead support their assertions with data.) Most often, his arguments are based on political opinions and platitudes. If you do not accept his political opinions, you may find it difficult to accept many of his explanations or conclusions. It’s not that his political opinions are unusual as much as his opinions display a disconcerting tendency to confuse fact with opinion or logic with data. For example, in one instance he simply states without further elaboration that democracy is superior to communism as a matter of logical fact. While most readers would agree that historical evidence supports the superiority of democratic style governments, to state that this is a result of deductive reasoning is be ignorant or confused. Faith is required in reading this book. Ironically, he spends considerable effort explaining why you should never accept Wall Street recommendations on faith.

Finally, although some of his assertions may seem bold for those who do not regularly read beyond mainstream financial magazines, his investing recommendations betray any uniqueness. His recommendation is simply to diversify broadly among stocks, bonds, and cash.

Although I happen to agree with much that he writes about, I am left feeling that this is nothing more than a very long elaboration of a poolside conversation over beer. It may be enjoyable and you may be nodding your head in agreement often, but unlike what the title suggests, there is nothing substantial, concrete, or convincing. Marc Faber’s “Tomorrow’s Gold”, although slightly dated, is a far superior treatment with similar conclusions and more daring recommendations.