Where Are the Customers’ Yachts?

Schwed traded professionally, lost money in 1929, left the business, and in 1940 wrote the funniest book about Wall Street — a sustained demonstration that the industry’s confidence in its own forecasting is unearned, and that most of what it sells is the appearance of knowledge. The title is the old Newport story: a visitor is shown the yachts belonging to the brokers, and asks where the customers’ yachts are. There aren’t any. The book’s durability comes from the fact that nothing it describes has stopped happening.

Why it’s on the list: Li Lu’s section on Value Investing, Finance, and Capitalism is mostly the constructive literature — how to value a business, how Buffett thinks, what financial history teaches. This is the entry about professional self-delusion, which is the other half of the education: a discipline built on other people’s mispricings has to be honest about where the mispricings come from.

Where I saw it: On Li Lu’s Recommended Book List, entry 30 in the value-investing section, cited as the Wiley 1995 edition. Kyle saved the list as two X posts, from @F_Compounders and @themattharbaugh, that between them photographed only this section; the full list was recovered from the source PDF.

Connections

• Li Lu’s Recommended Book List — the bibliography this came from.
• Wall Street — the target.
• Investing · Behavioral Economics — the self-delusion it catalogues, sixty years before the field named it.