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originally posted elsewhere: June 27, 2004
tl;dr: A carnivorous bite into Wall Street...
Andy Kessler's Wall Street Meat is a breeze of a read: an often funny (sometimes hilarious) series of anecdotes that combine to provide an insightful, critical look at the workings of Wall Street and the technology capital markets of the 1990s.
Kessler recounts his days on Wall Street, starting as fresh-scrubbed engineer who stumbles onto the Street almost by accident, to his departure and subsequent career investing in and writing about technology from Silicon Valley. He had the good fortune to learn the ropes from an old school traditionalist, which allowed him both to be successful in the old fashioned sense (achieving a top analyst ranking, as determined by clients) and to understand the transition that happened in the 1990s, as analysts became more involved in investment banking and, in many cases, lost their bearings in the telecom/Internet boom and bust markets (Jack Grubman being the penultimate example).
What makes Kessler's book so powerful is that he calls it as he sees it, from his objective, fundamentally grounded insider's viewpoint. He's made enough money, he's happy in his career, and he cares deeply about the future of Wall Street, so he's not out to perform character assassination; he truly wants to point out what went wrong (and does so in a very entertaining fashion) and make suggestions for reform. He doesn't put much weight in additional regulations and prosecutions, believing that reputation is a more effective mechanism for ensuring proper behavior over the long term. Rather, Kessler pushes structural economic reforms such as a "synthetic Goldman Sachs" in which stock research could be performed by truly independent, stand-alone entities (TheStreet.com isn't there yet, according to Kessler), and ending IPO lockups, to eliminate the huge post-IPO pops that happened during the boom and which led to such a frenzy of deal making. The Dutch auction method for allocating and pricing IPO shares, which Google is using during its upcoming IPO, could also eliminate this problem.
Wall Street Meat is a must read for Wall Streeters, and people involved in the financing of technology companies. Individual investors (especially tech stock investors) would benefit greatly from reading WSM, to learn Kessler's cautionary tale of how the Street really worked during the boom, and what perversions remain.