Financial Television personality "Downtown" Josh Brown is a frequent panelist on CNBC's Halftime Report, as well as a highly regarded money manager as CEO of Ritholtz Wealth Management. He recently published You Weren't Supposed To See That: Secrets Every Investor Should Know. From 2008-2023 Josh wrote the pioneering financial blog The Reformed Broker which catapulted him into the limelight. In his new book, he reprints select blog posts at the beginning of each chapter, then follows up with current day assessments with updated analysis. His on-air persona likes to poke the bear, stirring up the powers that be on Wall Street with his shoot from the hip controversial commentary. The book does much the same.
For an investing book, You Weren't Supposed To See That is unorthodox in its writing style. Most notably is Josh Brown's sense of humor which is uncommon in this publishing niche. He's like John Bogle with a joy-buzzer. At the beginning of the first chapter he posts excerpts from Kurt Vonnegut's speculative fiction novel Player Piano. Player Piano is a dystopian story depicting a time when machines take over, and, only the engineering and managerial class has any semblance of a life. Sound familiar? The chapter is about not fighting the robots or algos, but investing in them. He believes you should invest in the Magnificent Seven stocks, the large cap technology companies that dominate our world. Apple, Amazon, Alphabet, Meta, Nvidia, Tesla, and Microsoft are all mentioned. The Orwellian oligopoly that dominates modern times.
Brown cautions readers about the Wall Street sales machine and the hucksters on YouTube, X, and TikTok touting short term trading strategies. He emphasizes investing instead of trading and pays no mind to Wall Street's embrace of earnings whispers and quarter to quarter earnings statements. As Brown says, "Trading in stocks is mostly an exercise in bull**itting ourselves into the idea that we can reliably and repeatedly outsmart all of the other bull**itters each day.". He emphasizes that during the last decade, brokers have primarily morphed into asset managers which are fee based as opposed to commission based. They make their money by increasing their clients' assets instead of commission fees, and as a result, index ETFs and mutual funds are a preferred way to invest because it's difficult to beat the S&P 500. Diversification is a theme that resonates throughout the book.
Each chapter reads like an essay. Although the writing is smooth, it's also very dense, chock full of economic and financial history, pop culture criticism and lessons on life. Although there's good advice for individual investors, a lot of the commentary is meant for industry insiders. The jokes can go right over your head if you're not well versed in the monetary-industrial complex. Brown name drops some of the more prominent hedge fund managers of this generation such as Carl Ichan, Chamath Palihapitiya, Lee Cooperman, David Tepper, Cathie Wood and Bill Ackman, and warns about the hot hand because they don't stay hot for very long. At least not in the computerized trading era. The one that was left unscathed is Tepper because he got out while he was on top.
Manias, crashes and scams have permeated stock markets from time immemorial to the present. Brown touts diversification and staying long the market to build wealth with a 60/40 portfolio which is 60% stocks and 40% bonds. Investors that can't stomach the market volatility tend to keep their money in a bank account or annuity which pay much less annually on average than a traditional equity portfolio. No risk, no reward. He advises that investors protect themselves from selling in panic during corrections. There's a herd mentality where some financial professionals copycat each other during times of crisis. They can lose clients money by impulse selling during market downturns with flavor of the month investing strategies. He quotes the most renown trader in history, Jesse Livermore: "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.".
Brown built his reputation for saying the things industry insiders are thinking but won't say out loud. He covers a lot of subjects in the book. The zero interest rate environment of the pre-pandemic decade is talked about in length. A chapter is dedicated to the aforementioned Jesse Livermore, too. Plus, Technical Analysis vs. Fundamental Analysis is mentioned a few times. But what the book really comes down to is you and your money and how to navigate through the murk of the financial industry. Beware of investment professionals trying to sell you the sizzle, not the steak. There's a great quote in the book by J.P. Morgan and this about sums up Josh's investing philosophy: "The man who is a bear on the future of the United States will always go broke.". Stay long and good reading.
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