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Fooling Some Of The People All Of The Time, A Long Short (and Now Complete) Story, Updated With New Epilogue (2000)

by David Einhorn(Favorite Author)

3.96 of 5 Votes: 1

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English

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review 1: David Einhorn is a very well-regarded hedge fund manager. After finding irregularities in a company called Allied Capital's financial statements, Einhorn went short the stock. Einhorn discussed his position that Allied Capital was in trouble at public forums. Then the nightmare began. Allied Capital waged a personal war against Einhorn that involves issues of Einhorn's free speech and the perception of short selling as wrong and injurious to capitalism (it's nothing of the kind IMO).The Securities and Exchange Commission (SEC) eventually caught up to Allied Capital (which has still not admitted to wrongdoing). This book is about the right to be unpopular and the integrity of the financial system.Einhorn gives many colorful examples of his thought process in identifying acc... moreounting sleights of hand. The examples range over several different companies and decades. It's an eye opener for most of us.
review 2: I get a lot of books handed or recommended to me, most of which seem to miss what I actually enjoy in books. This one seemed one of the most egregious examples; a book about details behind short selling positions and market failure. Queue the confetti. While I had enjoyed Einhorn's takedown of GMC, this didn't seem like it would do anything for me.I was wrong.Halfway through, I had to stop and thank my friend for the recommendation. This is an interesting inside view of corporate (dys)function and the business environment. While at times it gets a bit esoteric or bogged down in details, the author always did an excellent job making sure that the reader could grasp the enormity of what he and his confederates had found.Like many people, I found the initial discussion of his past, the fund, and their first positions to be surprisingly engaging. He's pretty upfront about the successes, as well as the failures, and that honesty humanizes what might otherwise seem to be a dry, financial story. When the story shifts to his investment and engagement with Allied Capital, at first it seems a bit overdramatic. And then he starts to unfold the mystery. More and more. Until what you get a chance to see is a surprising and disturbing look at how a perverse set of incentives can distort the free function of a market. How the economic incentives of a bank change how their analysts evaluate investments. How the career prospects of reporters affect what they choose to write. How the politicians, in the service of a noble goal, can help feed a system that defrauds the public. Towards the end, I found myself reading passages out loud to my girl-friend because I was just dumbfounded by the things he found.The book's not for everyone. It takes patience and willingness to think through some complicated stories. You have to put up with, what seems at times, to be petulant anger of the author. But it's fascinating and I recommend it. less

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