Tuesday, August 31, 2010

Review: No One Would Listen

I realize I'm way behind on reviewing this book, seeing as it was released way back in March.  But I figure I'll post some thoughts about it anyway, just in case anyone out there is still debating whether or not to pick this one up.  Nevertheless, No One Would Listen, by Harry Markopolos, tells the story of Harry's nearly decade-long investigation of Bernie Madoff's Ponzi scheme.

Kindle for Android
I first heard about the book when Harry appeared on The Daily Show on March 8, 2010.  His passion and frustration regarding the entire debacle was enticing, and I purchased the Kindle version as soon as I saw the show.  I figured it would be an opportunity to try to reformat Amazon's eBook to something I could read on my Palm Pre.  After futzing around with it for a week, unfortunately, I couldn't get the page breaks to transfer right and I just got one GIANT block of text on my phone.  But when I switched to the Evo, Kindle for Android (use a barcode scanner on your phone to scan the QR code at right to find it on the Android Market) was available so I began reading NOWL shortly thereafter.  This was my first experience reading a book on Kindle for my phone, and it was a very pleasant experience.  I'll write more about my experiences using the Kindle for Android software versus the latest generation Kindle device versus reading an old-fashioned hardcover after I receive my Kindle at the end of the week.

But I digress -- back to NOWL.  After the first few chapters you get a real feel for the type of person Harry Markopolos is.  He's a stand-up guy, ready to fight the good fight, which is nice to see after seeing so much of the ugliness that Wall Street has shown us in recent years.  Harry is also a quant -- a math geek.  I'm by no means a quant, but I've always excelled in math and science and I appreciate what we have to learn from such disciplines.  I sometimes wonder if I'd have ended up in the financial industry if I hadn't pursued engineering and then gone to medical school.  Either way, as a fellow nerd, I sympathize with a lot of what Harry went through.

Throughout the book, he struggles with people who don't understand his analysis and how he knows Madoff is a fraud, just as so many people fail to understand when I try to explain to them that vaccines don't cause autism or that evolution is essentially scientific fact.  If you read this blog, you've probably felt the same way at one point or another, and you'll appreciate where Harry is coming from.  His tale is a real eye-opener for how incompetent management and regulation can fail not only individuals, but entire companies and a large sector of the entire financial industry.  I could draw a lot of parallels between the mathematical ineptitude of senior management at these hedge funds and the SEC and the scientific illiteracy of much of the public and of those in charge of political office, education, etc.  It's disturbing to see it so plainly in NOWL, but it's a reality we need to face if we ever wish to fix the problems that allowed frauds like Madoff's to continue for so long.

Harry knows his stuff.  Similar to what I experienced while reading The Big Short by Michael Lewis, you'll be ambushed by a lot of financial jargon here.  It was somewhat frustrating when Harry would just go on and on about these complicated financial instruments one after the other to demonstrate how ignorant some people in the industry are (and thus how ignorant you are for not knowing what they are either!), and at times I felt like he was just showing off.  It isn't written as well as The Big Short, but over time you do still get an idea (albeit a rough one) of what he's referring to when discussing these concepts.  He could have done a much better job in explaining some of these things, but on the other hand, with how complicated some of these financial instruments are, he might not have been able to explain it in a way that makes sense to the majority of his audience.  He uses some clever analogies to describe the incompetence of the SEC on several occasions, which were amusing until about the last 10% or so of the book.

Harry's OCD-like attention to detail and mathematical prowess are what allowed him to catch onto Madoff's scheme so quickly.  As an author, these traits can be aggravating at times, but I'm not sure you'll find a more honest, first-hand account of the SEC's incompetence or the financial industry's inability to think critically when it came to Madoff's impossible returns.  It's worth a read, and although Harry does get a little preachy and too technical at times, the story he tells is too important to skip over for such minor annoyances.  I know financial reform was signed into law just over a month ago, but I've been traveling too much and haven't had time to really learn about it.  I'm just hoping they took to heart some of what Harry said in his testimonies before the House and the Senate.  We certainly need the change.

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