What Goes Up

What Goes Up: The Uncensored History of Modern Wall Street as Told by the Bankers, Brokers, CEOs, and Scoundrels Who Made It Happen offers the history of seventy years of the stock market, told almost entirely in the words of the people who ran it, from primary sources and author interviews. It starts with Charlie Merrill, of Merrill Lynch, who had the original idea of bringing stock market investing to ordinary people, and the firm of Morgan Stanley, which started because the Glass-Steagall Act of 1933 required J.P. Morgan's bank to divest itself of its stock business.

Through the 1950's the main approach was Benjamin Graham's “value investing,” the idea of basing investments on the intrinsic value and profitability of corporations. By the 1960's, known as “the Go-Go Years,” a bull market fueled the creation of mutual funds that got a higher rate of return than more conventional investments. The 1960's also brought the seemingly radical idea that women could be brokers.

The so-called Nixon Recession of the 1970's brought temporary calm to the market, but late in the decade the firm of Kohlberg Kravis Roberts and Company introduced the concept of the leveraged buyout, which began as a way for firms to improve their capitalization and ended with small, new corporations able to swallow larger more traditional companies.

The next step, in the 1980's, was “junk bonds”—risky, high-yield items used in takeovers and buyouts. On Monday, October 19, 1987, the market suffered its greatest single-day fall since the Great Depression. Surprisingly, though, the market soon righted itself and went back to rising. Junk bonds fell from favor, and some of their worst abusers were convicted, but other forms of investment arose. In 1998, Long-Term Capital Management, a supposedly riskless hedge fund, almost collapsed and might have brought another crash, but it was saved at the last minute. Only the collapse of the technological bubble and the revelation of particularly horrendous abuses by Enron brought some calm to Wall Street.

What Goes Up tells all of these stories, and the personal interactions behind them. Its many voices are harmoniously blended in the telling, and while there are relevant stories that may never be told, Eric J. Weiner's book presents most of what we know.