FWALL
STREET
JOE PONZIOS NO-NONSENSE APPROACH TO
VALUE INVESTING FOR THE REST OF US
Joe Ponzio
Founder of www.FWallStreet.com
The author would like to thank Mr. Warren Buffett and Mr. Charles Munger for granting permission to reprint certain quotes and parts of annual letters sent to shareholders of Berkshire Hathaway.
Copyright 2009 by Joseph Ponzio
All rights reserved.
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ISBN 10: 1-60550-000-3
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To my children: Always remember what papa said, Why buy toys when you can buy the toy store?
Acknowledgments
When I sat down to write this book, it was April of 2007. The markets were flying high while Wall Street was celebrating a real estate and hedge fund boom. I saw a lot of problems developing and knew that a lot of investors were going to get hurt thanks in large part to Wall Streets ignorance... again. At that time, the thought of a book entitled F Wall Street seemed ridiculous. So ridiculous, in fact, that I was prompted to change the name of the book to something softer.
I feel grateful that Jon Malysiak at The Jonathan Scott Agency believed enough in this (then) poorly timed and harshly named project to give me a leg up. It takes a lot of moxy to promote a book entitled F Wall Street; it takes even more moxy to have the courage of your convictions. Jon has been one heck of an agent.
Through Jon, I was introduced to the fine folks at Adams Business. My experience with Brendan ONeill and Wendy Simard have been nothing short of spectacular. I would also like to thank the unsung heroes of the art department, the layout team, the marketing team, and everyone else at Adams who exceeded my wildest expectations.
I must also thank Lisa Schuble of Champagne PR in Chicago who worked tirelessly to promote this title. I set the expectation bar high and she nonchalantly stepped right over it.
In addition to thanking Warren Buffett and Charlie Munger for allowing me to use their copyrighted material, Id like to thank these two gentlemen for generously distributing their wit and wisdomsometimes in spoonfuls; sometimes by the bucketso that others could learn how to invest intelligently.
I am very fortunate to have a business partner and friend in Mike Trekas. Few people could wear as many hats as Mike without wanting to kill their business partner. But for Mike, its all about our clients and investors. He truly embodies our no nonsense policies at The Meridian Business Group.
Undoubtedly I would not have written this book, much less been involved with investing, had it not been for my late father, Dr. Alex Ponzio. His passion for the markets ignited mine. Together with my mother, Sue Ponzio, they created a household that fostered growth, creativity, and passion in everything we do.
Without my other parents, Dr. Manuel and Encarnita Grimaldi, The Meridian Business Group would be nothing more than a dream. My father-in-law helped form the company, and gently reminded me that nobody goes anywhere without getting a leg up from someone else, no matter how large or small, noticeable or not.
Finally, Id like to thank my beautiful bride Angela and our children, Carmen and Paul. The kids inspire me to become a better papa; Angela inspires me to live life without regretsto live life My Way.
Contents
FOREWORD
There must be a better way!
At a very young age I became extremely fascinated with money. I knew very little about how to earn it and make it grow, but I knew I wanted a lot of it. I guess many young kids get caught up in the I want to be a millionaire mindset when seeing their favorite athlete, movie star, or singer with all of the fancy material items. I never had any of that growing up. Money was always tight; still, we got by. But just getting by was not acceptable for me. It pained me, even at a young age, to see my parents struggle to provide a better life for our family.
Worse yet, nobody wanted to help us because we didnt have a big stock portfolio.
When I first started my career in the financial services industry as an investment advisor, I began to realize that I was being trained not to give sound financial advice but rather to push the hot, new investment product of the month. Every few weeks a wholesaler (a person dressed up in really expensive clothes who would try to convince us that his or her investment was the best out there) would stop by and take a group of us out for a very nice dinner and pitch his or her investments. It almost felt like our investment decisions were not made by the quality of the investment, but rather by who would give us advisors the best perks. That concept really started to bother me, and I lost sleep over it. I knew that people were relying on me to make the best investment decisions for them, and this definitely was not the best way of allocating client funds. My clients had worked very hard to build up a nest egg for themselves; I was not going to be the one responsible for letting that nest egg crack.
I often reflected on how hard my parents worked to save the money that they did. Increasingly, I saw myself as being one of those advisors who could destroy it all. I wasnt really allowed to invest outside of what the wholesalers and the firm told us to do. It began to haunt me, and I would wake up in a cold sweat. One day, as I saw the next thirty years of my life flash before my eyes, my chest tightened up. I would be miserable day in and day out, going through the motions of selling.
The next morning, I decided that I couldnt do it anymore.
I knew I had to leave my current job, but I wanted to continue to be an investment advisor. My quandary: Where could I find a company that would help me do what was best for my clients, not just what was best for the firm? I researched many different brokerage firms and found that they were all pretty much the same. Thus, I decided that the only way to continue as a financial advisor was to go into business for myself. The only problem was that I knew nothing about starting and running a business. So I started to think about my contacts in the industryI needed to link up with someone who also wanted to break out and start this new business venture with me. I remembered that a very close friend of mine had an older brother in the financial services industry; I immediately called him.
