Fooling Some of the People All of the Time: A Long Short Story (Englisch) Gebundene Ausgabe – 27. Mai 2008

This is a brilliant book and an excellent story. However, to understand the story, the reader needs a background in corporate accounting, SEC rule-making, securities valuation, hedge funds, etc. David Einhorn is actually a very talented writer. However, the book may not be comprehensible without the required background knowledge.

The value of the book, is not actually the tale of accounting fraud at Allied Capital (ALL-ARCC was/is the ticker symbol for Allied), but the larger tale of corporate malfeasance in the years after 2000. Of course, there are some political aspects to this (not emphasized by Mr. Einhorn). The general shift towards deregulation of Wall Street, played a major role in this disaster. Of course, Wall Street deregulation started before Bush (under Clinton), but Bush embraced "Wall Street Crazy" and took America over a cliff. Sadly, any number of politicians (from both parties) protected both Allied Capital and Allied's "borrowers". An astute reader will even find miserably predictable stories of immigration fraud in this book.

Toward the end of the book, Mr. Einhorn recognizes the big picture and sees that Allied Capital was just the smallest part of a larger decline in prevailing standards of corporate conduct. The big picture (as outlined by Mr. Einhorn) is real value of this book. Perhaps the greatest disappointment is that Allied was never held accountable for its misdeeds (by the government), nor have the much bigger players since the crash of 2007/2008.

Full disclosure: I am a big David Einhorn fan. I have followed his career from Allied to Lehman to Green Mountain Coffee Roasters, and I listen to or actively search for transcripts of his speeches at investor events/conferences.

That being said this book was just ok and could've been better. The book starts off with a few chapters of background info on Mr. Einhorn. his early years, his entry into finance and the founding of his hedge fund Greenlight Capital. All good so far. Then he gets into his short on Allied. It starts off just fine as Einhorn goes into his speech the response back and forth from Allied and his investigations into the fraud. Then about 40% into the book the tedium sets in. The book goes from being a good read on the events between Allied and Einhorn to a highly detailed documentation of the fraud. And when I say detailed I am talking a mind-numbing level of minutia. Halfway through the book the fraud is already well evidenced and yet he continues to provide loan level examples of Allied's misdeeds. You really don't need to know about every loan to vietnamese shrimp boat operators or fraudulent Detroit small businesses to understand that Allied was doing bad things here. One or two examples and you quickly get the point.

And I get it, the book was written when Einhorn was still getting criticized over his long running battle with Allied. And so Einhorn must have felt that he needed to provide a ton of evidence to prove his claim. But that still doesn't stop you from thinking "I GET IT THESE LOANS SUCK LETS MOVE ON!!". And this is coming from a guy who works in the financial markets who deals with massive spreadsheets daily.

Despite the massive level of detail, this is still a good book for those who actively invest in stocks (or those who like to read about fraud). The levels management will go through to protect their own interest is spelled out in this book. Also complicit in this case is investors who willingly turned a blind eye as long as their dividend payments came through. This book is a great example of why due diligence should always precede the purchase of a stock, and just because someones opinion or position runs contrary to your own don't ignore it, look deeper

I wish I could give this book more stars but the overly detailed account drags down the good story. To be fair the subtitle of the book is "A LONG short story"

David Einhorn has given us a remarkable gift in this book. The work that he does each day, and which he has so carefully and capably revealed in detailed and documented fashion in this book, provides immeasurable benefit to each and every one of us every single day. I am sincerely grateful to David Einhorn for his relentless effort to hold the misbehaving stewards of our wealth and resources accountable for their misdeeds. It is an added bonus that he decided to devote a significant amount of his valuable time to providing this account of his work and his discoveries of the behavior of the many other players in the Allied fraud case.
Since their arrival, hundreds of years ago, the capital markets have evolved organically as generations of humans have gradually built the markets to transfer the ownership of the world's resources from the few, privileged families who once controlled the world, to the many. In the process, these markets have improved the visibility and transparency with which we are all able to observe, understand and influence the critical decisions which result in the eventual allocation of resources. As a result, the improvement in allocation of resources toward serving us all as individuals has delivered previously unimaginable improvements in human well-being and freedom from oppression and exploitation by those few at the top of the pyramid. And yet, while these improvements are real and remarkable, the progress made possible by the organic evolution and functioning of these capital markets continues to be held back by people who claim to be protecting us and serving us.
I've long wondered whether those people, who work in the many organizations and agencies identified in this book, are inherently 'evil' and desire to prevent humanity from obtaining the benefits which could be made available to all by enabling the ongoing development and expansion of capital markets in the developed and undeveloped world as they regulate the few who seek to control and regulate the many, or are simply 'clueless' and fail to understand and recognize the role that capital markets play in bringing these benefits (in spite of overwhelming evidence visible to anyone who travels from the developed (where capital markets have grown and evolved) to the undeveloped countries (where the power-hungry have successfully fended of the organic development and influence of local and international capital markets)). With this book, I now see that it is a combination of both, but there is much more of the former behavior than I suspected in the journalists, analysts, regulators, supervisory organizations, and throughout the government in the USA.
Given the evident greatness of the US economy and society in relation to so many other countries, I can only conclude that these problems are even more pronounced in many other countries. Only by exposing this behavior, and demonstrating how it undermines the functioning of the capital markets upon which so much of our modern material well-being depends, can we hope to continue to progress and enjoy the phenomenal benefits that await us as these markets deepen and improve. David Einhorn's contribution to this ongoing improvement is enormous, and yet will go almost entirely unnoticed by the billions of beneficiaries of his efforts. Even more unjust, a very vocal few of those beneficiaries will continue to declare him and other similar hedge fund activists to be the villains, while they themselves hypocritically work against us all in the name of 'protecting' us.
(Typed on a phone, please excuse the typos)