Ron Insana defies the critics
in How to Make a Fortune

          Posted: Wednesday, October 7, 2009

Ron Insana is determined to make this money-management thing work.

Insana is preparing a book, tentatively titled How to Make a Fortune From the Biggest Bailout in U.S. History, apparently due out in 2010. An advance copy was obtained by

Many CNBC watchers are probably aware that after a lengthy career as a CNBC/Financial News Network legend, Insana jumped ship to launch his own hedge fund, Insana Capital Partners, in 2006. That, by his own admission, fizzled. He then joined Steven Cohen's SAC Capital Advisors in 2008, but after the market crash, returned to CNBC as a contributor early this year.

For whatever reason, many — not just in money management, but the media — apparently were happy to see Insana get some sort of comeuppance. Perhaps it's just the disdain a lot of people have for hedge funds. Or maybe behind the scenes, Insana's career switch was viewed as somehow condescending toward financial pros, the idea that perhaps anyone can do it.

Some of the commentary during and after Insana's hedge-fund stint went like this:

David Weidner, MarketWatch: "When TV commentator Ron Insana starts getting into hedge fund management, it's probably time for everyone else to get out."

Paul Kedrosky: reminiscent "a little of Lou Dobbs going to at the peak of the dot-com bubble.”

Andrew Ross Sorkin, New York Times: "Running a Hedge Fund Is Harder Than It Looks on TV."

Evan Newmark, Wall Street Journal: "4 lessons from Ron Insana's folly."

Tim Arango, New York Times: "... career trajectory was viewed by some as a cautionary tale for journalists with fanciful ideas that they can do the jobs of the people they cover."

Insana is probably only one of many at CNBC who wonders if he/she can't do better than a lot of people they put on air. Howard Kurtz, in his 2000 book The Fortune Tellers, writes about another CNBC star (not a secret, but the name will be omitted because this review is not about that person) who "knew much more about the market than these movers and shakers. ... Occasionally he thought about making the leap, about chasing his own fortune..."

Apparently with hedge fund aspirations dashed, Insana is hoping to connect with the lower-budget retail investor. Weidner, in the Wall Street Journal MarketBeat blog, told readers in June that Insana had been "spamming" potential customers with offers of his $699 stock-picking service, apparently with the help of Jim Cramer's TheStreet.Com, with which he is affiliated.

Insana's first problem with How to Make a Fortune, a short paperback published by the Penguin Group, is identifying an audience. (This review is of an early, unedited manuscript, so as is custom, no direct quotes will be taken.) About half of the tips are suitable for sophisticated folks who watch CNBC, read the Wall Street Journal, might have a financial adviser, might even be willing to invest in real estate in another part of the country. The other half is beginner's advice seemingly apropos for people who've never had more than a savings account or perhaps were born yesterday, informing them of the Crash of 2008, reminding them to read the news, explaining who Warren Buffett and Bill Gross are and what REITs and junk bonds are. Repeating the adages of Buffett, which happens on CNBC and in all other financial media all the time, is one of the worst ways of preaching to retail investors who might just as well spend hours digesting from Tom Brady what it takes to be a great NFL quarterback and then giving that a shot.

Insana recommends his readers, to be informed, visit four major newspaper Web sites daily, as well as, curiously enough, a certain prominent news aggegator Web site that begins with a D (again, it's an unedited manuscript), perhaps one of the rare times said site would be singled out as an investor's must. Or perhaps not.

The theme is that most markets have bottomed or virtually bottomed and that not enough people realize it. Insana writes that now is the time to buy, based on the aftermath of historic financial shocks. There are the obvious references to the 1930s, 1990-91, 2000-01. He says it's not just stocks, but ETFs, real estate, muni bonds and junk bonds that might be unfathomably cheap, and also suggests TIPS as a potential tool against inflation. (Notably, he does not make references to gold.)

He openly scoffs at the community of well-known personal-finance experts, except for a couple, and he doesn't spare one or two you might think he would.

Like so many touting their investment advice, he writes that he bought stocks around this year's bottom.

Insana is just not a particularly effective writer. Pages are dotted with exclamation points. Too much of the material reads not like polished prose but aggressive salesmanship.

Any naysayer who gets about halfway through — which doesn't take too long — will be strongly inclined to write this one off. That's when, incredibly, Insana rallies. He brings a little life to the book with a candid account of his father's failed investment in ping-pong tables. He has a few interesting points to make about bond investing and about little-known government programs that can help investors. Somehow, many of the sentences ending in exclamation points start to sound funny.

Insana's thick skin is very impressive. There is a lot of evident enthusiasm put into this book. He seems unfazed by his skeptics, fully committed to this investing thesis.

Somewhere there's an audience for what Insana is trying to say. The Wall Street Journal has published all kinds of guidebooks to Stocks & Bonds, Personal Finance, etc., that are nothing more than basic knowledge but enormously useful for a non-professional investor who just wants to know the difference between a put and a call without having to wade through Wikipedia. Insana might better succeed at something like that. Attempting to deliver timely investing information in a book seems a non-starter, obsolete by the time it hits the shelves. Insana is aware of this, regularly singling out Web sites that deliver the most useful, timely information on data such as housing sales and government programs. So the book becomes little more than a (rapidly aging) cheerleader guide for a few nights of serious Web-surfing.

Something about this book evokes the scene in "Rocky II" where Rocky Balboa has opted for retirement and is interviewing for some kind of "desk" job. A sympathetic rejector says something along the lines of, "Why don't you fight? I read somewhere you're a great fighter."

Ron Insana is a highly skilled, elite television anchor. It is not an easy job, and he did it remarkably well. He might not be able to invest like Buffett, but Buffett isn't so good at interrupting a Fed governor with breaking news from Jane Wells either. Perhaps Insana grew jaded with whatever CNBC's direction was, or felt slighted, or was simply tired of doing TV. Nothing wrong with that, and nothing wrong with launching a hedge fund. He just doesn't seem nearly as convincing as an investor, pundit or adviser as he was TV anchor. That he's apparently unwilling to return to the profession in which he excels is either very impressive determination ... or yet another unnecessary example of Wall Street hubris.

How to Make a Fortune From the Biggest Bailout in U.S. History (2010)

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