Full of bull: do what Wall Street does, not what it says, to make money in the market

234 Pages·2008·1.45 MB·English

by  Stephen T. McClellan

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From the Library of Melissa Wong
FULL
OF
BULL
ptg
From the Library of Melissa Wong
ptg
From the Library of Melissa Wong
FULL
OF
BULL
Do What Wall Street Does, Not What it Says,
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To Make Money in the Market
S t e p h e n T. M c C l e l l a n
From the Library of Melissa Wong
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©2008 by Stephen T. McClellan
Publishing as FT Press
Upper Saddle River, New Jersey 07458
This book is sold with the understanding that neither the author nor the publisher is engaged
in rendering legal, accounting or other professional services or advice by publishing this book.
Each individual situation is unique. Thus, if legal or financial advice or other expert assistance
is required in a specific situation, the services of a competent professional should be sought to
ensure that the situation has been evaluated carefully and appropriately. The author and the
publisher disclaim any liability, loss or risk resulting, directly or indirectly, from the use or
application of any of the contents of this book.
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Company and product names mentioned herein are the trademarks or registered trademarks ptg
of their respective owners.
All rights reserved. No part of this book may be reproduced, in any form or by any means,
without permission in writing from the publisher.
Printed in the United States of America
First Printing October 2007
ISBN-10: 0-13-236011-X
ISBN-13: 978-0-13-2360111
Pearson Education LTD.
Pearson Education Australia PTY, Limited.
Pearson Education Singapore, Pte. Ltd.
Pearson Education North Asia, Ltd.
Pearson Education Canada, Ltd.
Pearson Educatión de Mexico, S.A. de C.V.
Pearson Education—Japan
Pearson Education Malaysia, Pte. Ltd.
Library of Congress Cataloging-in-Publication Data
McClellan, Stephen T.
Full of bull : do what Wall Street does, not what it says, to make money in the market /
Stephen T. McClellan.
p. cm.
ISBN 0-13-236011-X (hardback : alk. paper) 1. Stocks—United States. 2. Investments—
United States. 3. Investment analysis—United States. 4. Wall Street (New York, N.Y.) I.
Title.
HG4910.M3696 2008
332.63’220973—dc22
2007022483
From the Library of Melissa Wong
To Elizabeth, ptg
my love, my bride, my friend
From the Library of Melissa Wong
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From the Library of Melissa Wong
Contents
Preface …………………………………………1
Chapter 1: Decoding Wall Street’s
Well-Kept Secrets ………………………………7
Chapter 2: Understand Wall Street’s
Misleading Practices …………………………35
Chapter 3: Strategies in Quest of the ptg
Ideal Investment ………………………………63
Chapter 4: Evaluating Companies as
Investment Candidates ………………………91
Chapter 5: Executive Traits Are a Revealing
Investment Gauge……………………………113
Chapter 6: How Street Analysts Really Operate ………137
Chapter 7: Reform Research to Level the
Playing Field …………………………………167
Afterword ……………………………………183
Glossary ………………………………………189
Index …………………………………………209
From the Library of Melissa Wong
Acknowledgments
This book was materially enhanced by input from a few trusted Wall
Street veterans whom I have known for most of my career. They
reviewed the manuscript and made several worthy suggestions. My
old friend Peter Anastos spent his career in the mutual fund industry,
the last several years before retirement as head portfolio manager of
the Alliance Capital technology fund. Jim Lee was an institutional
salesman at the small firm where I started in 1971, has been an
investment manager over the years, and is an astute observer of the
Street as well as investment trends. Over the decades, he has seen it
all, from the buyside perspective. George McDougall, a friend since
first grade, was instrumental in determining the title and aided in
the editing. John Korvin, a golf partner who skins me regularly, and
Mike Walsh, a comrade involved in technology market research, gave
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me valuable suggestions. Jim Boyd at Prentice Hall guided the
publication process. The Barbara Hendra Agency assisted in market-
ing promotion. I appreciate their constructive counsel.
The foremost person assisting in the preparation of this book was
Joyce Padua. She works with me as my personal assistant. We slogged
each morning for a few hours, me buried under copious notes on one
side of my desk, she sitting across in front of the computer. She did her
share of editing, too. Now she thinks she’s an expert investor. Another
valuable contributor was my freelance editor Michael Denneny in
New York, who brought order and clarity to my jumbled prose.
Then there is my progeny. Laurel Almerinda remembers the
labors of my first book. As an artsy, creative, and driven USC graduate
film school alum, she’s pursuing a career as a writer and director in
Los Angeles. Justin McClellan toiled for his engineering degree at
Boston University and is now employed in the aerospace field while
eagerly mastering the investment ropes of managing his own portfolio
of stocks. They constantly offer unsolicited parental advice to keep
me in line.
From the Library of Melissa Wong
ACKNOWLEDGMENTS ix
Finally, my bride Elizabeth Barlow, a painter who spent her
career in the arts, the opera, and ballet, became the love of my life as
this book was in midstream. Her feline, Figaro, came along with her
and promptly took over as master of the house. Several times Eliza-
beth overheard me casually giving practical and what I thought was
obvious investment advice to someone. It was intuitive to me as a pro-
fessional insider, but an enlightening observation to outsiders. She
usually reacted by inquiring if I had addressed that in my book.
Amazingly, in many cases, I hadn’t. So I immediately jotted the
suggestion into the book. Elizabeth was instrumental in helping me
visualize investing from the eyes of a non-professional outsider.
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From the Library of Melissa Wong