CBS MarketWatch senior reporter Steve Gelsi has spent years covering Wall Street and interviewing experts.
Now, in a new book he co-authored with Thom Calandra, "CBS Marketwatch Stories Behind The Numbers: How America Made A Fortune And Lost Its Shirt," he compares and contrasts the wisdom that ordinary Americans can offer about the world of finance. (CBS MarketWatch is a subsidiary of Viacom, which also owns CBSNews.com)
Gelsi told The Early Show that the book provides a rare window on the popular money culture that arose in America, fueled by the boom in financial information and the unprecedented rise of small investors.
The book interviews the corner-green grocer, retiring father-in-law, lottery winner, and folks in monthly investment clubs and more to get a perspective from average investors.
"There are a lot of books out there about people who are experts on the stock market, so I tried to do something different, to turn the spotlight around and shine it into the crowd and see what kind of stories I could come up with," said Gelsi.
A good number of these individuals have recently been battered in the market. Yet Gelsi and Calandra reveal there is much we can learn from their experiences. Some maintained a conservative strategy throughout the boom, avoided the Bear and escaped Enron. Suspicious of analysts, they've relied on their own information and instincts to make their investment moves.
"People love competitive things, it's almost like a sport, with winners and losers. It's somewhat entrepreneurial," said Gelsi. "You can almost be a fund manager of your own little mutual fund. It's a little bit like having a store with your own holdings, it appeals to the entrepreneurial passions of America."
Small investors combine resources and knowledge to create small investment clubs, which flourished during the Bull years. However, they have fallen off a little in the uncertain economy.
Gelsi said it's a good way for people who are not experienced to learn about the stock market. Investors are betting a little bit of money every month. They invest a little bit of money and learn how to research stocks. Slowly, investors build confidence in their investment club and start to help build the club's portfolio.
"The investment clubs made up of women tend to do better than men, because women don't try to guess the market as much they try to find good companies and hold on to them for a long period of time. They also are good at doing networking — talking to your kids, what TV shows they like, what kind of clothes they like, what kind of video games they like, what kind of food they are buying. This can provide a good basis for stock research."
Are the investment clubs as successful as experts? There's no absolute data on that. But individuals working on their own can often do just as well if not better than the experts.
"They tend to do what the pros do — review company statements, and a bit of their own research in the field," said Gelsi. "But sometimes individuals benefit because they take a longer term view on the market and they don't react as much to the day to day goings on."
Internet For Individuals
The Internet, says Gelsi, has become a powerful tool for individuals. Just think a few years ago, small investors had to wait until the next day to check newspapers on how stocks were doing. Now you can go online and get the latest news and stock prices.
"You can also trade stocks more easily and cheaply through an online broker account. At the same time, sometimes there's too much information. You can get caught up in the hype surrounding a stock. Rumors abound — especially on bulletin boards. And you can end up getting burned," explained Gelsi.
"Stories Behind the Numbers" interviewed a number of individuals from different backgrounds. Most had nothing in common but the desire to play in the market.
Gelsi talked with Jonathan Lebed, a teenager who was the younger person ever charged with securities fraud by the SEC. He chatted with 25-year-olds from San Francisco who were part of the dot-com revolution. He then spoke to middle school students in Valley Forge about how they did not want to be dot-com millionaires. Gelsi interviewed a 90-year-old African-American who is known as the father of investment clubs in the Washington DC area.
Gelsi also talked with day traders who changed the dynamic of the market. "I tracked down one of the most frenetic day traders of all, Tokyo Joe Park, who shared some of its insights into buying stock when everyone else is bailing out. Even during the bull market, it wasn't as easy as people thought, but there are still a lot of people who are making money by it," Said Gelsi. "You have to be very informed about rapid transactions, getting in and out of a stock several times a day. you definitely have to have a passion and a talent for it."
Gelsi concluded that the stock market is a huge passion among people in the U.S. and abroad. It contains elements that hold a very strong attraction for people.
"Number one, it has money. Number two, it is competitive — people love competitive things," said Gelsi.
Steve Gelsi joined CBS MarketWatch in 1998 after 12 years as an Internet journalist and daily newspaper reporter. He is an IPO Columnist, commentator, and markets and media reporter and serves as a TV and Internet correspondent covering Wall Street and invidiual investors from New York City.
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