Bob Pisani prefers index funds to GE stock, but his book Shut Up isn’t quite for the value investor
Posted: Friday, November 25, 2022
Who in the world told Bob Pisani to write a book about behavioral economics?
Pisani's book, Shut Up & Keep Talking, is an answer in search of a question, a question that Pisani bluntly admits no one bothers to ask: "What do you own?"
Shut Up is a disappointment because Pisani, who has been CNBC's New York Stock Exchange reporter since 1997, breaks no new ground in the category of Investing and not much more in the category of Stories From The Good Ol' Days while mostly ignoring 2 of his specialties that really would make for good material: real estate and collectibles.
Exactly why Pisani is doling out investing advice, in a book of 400 pages, is a head-scratcher. He does live TV, not a hedge fund. He implies throughout that working on the floor of the New York Stock Exchange for decades has given him a certain amount of insight into investing. But most of that insight is simply quoting well-worn books and speeches from the respected, don't-try-to-beat-the-market crowd of Jack Bogle, Burton Malkiel and Jeremy Siegel, whom anyone can read or follow without taking a sharp elbow from a floor trader. Shut Up is a lot of advice and analysis from someone who admits, "I look at my investments twice a year."
Anyone buying a book of investment advice — especially a book with a hardcover list price of $29.99 — has a right to know the educational and professional background of the advice giver. Shut Up fires blanks. There's no mention of Pisani's curriculum vitae, neither in the text nor the jacket (nor on his profile page at cnbc.com). Several times, he mentions teaching a real estate course at Wharton in his 30s, which would seem to require advanced degree or specialty. Late in the book, almost incidentally, he mentions meeting Norman Mailer at a Berkeley lecture in 1975. Why was Pisani at Berkeley in 1975? We can only guess.
What he was doing until age 34 isn't fully clear. In Chapter 20, he writes that he "travelled extensively ... hitchhiked through Europe and the Middle East ... went to hundreds of concerts." Professionally, he says he was "working for my father in the 1970s ... co-taught a course on Real Estate Development at the Wharton School ... I struggled as a writer, worked for a law firm, and published articles in various periodicals."
OK, that's an interesting life. There have to be a lot of stories to tell. But most of the ones he spreads over dozens of pages in Shut Up are all job-related celebrity encounters that seem more like nuisances and could've been summarized in a couple paragraphs each. (What does Mike Tyson have to do with the stock market?)
There are 5 testimonials on the jacket of Shut Up, none from CNBC reporters or anchors or execs. There are 2 from panelists on "Shark Tank" while 2 others curiously use the word "irreverent." That's curious because Pisani mentions no feuds or grudges. Quite the contrary. The book is a relentless name-drop and includes advertisements for Pisani's friends' blogs and books. There's a Will Rogers element here. Pisani admits being a "glass-half-full guy." Even nice guy Al Michaels saved room for his dislike of Boomer Esiason and Mark Shapiro and Howard Cosell.
In one of the rare bits of opining on colleagues or the atmosphere at CNBC, Pisani calls David Faber and Jim Cramer "two mighty planets" of CNBC's "Squawk on the Street," but he says Carl Quintanilla is the "true star" of that show and "the perfect anchor," though Carl "rarely shows his hand," and viewers would be "hard-pressed to know his opinions."
Insiders will want to know Pisani's thoughts on Maria Bartiromo, the first TV reporter on the floor of the NYSE and Pisani's predecessor whose blessing was surely needed for Bob to get that job once Bartiromo moved to the anchor desk. In the opening pages, Pisani calls Bartiromo "tenacious" and a "huge success," but that's about it. (Keep in mind Bartiromo years ago left CNBC for the competition and is still the competition.)
In October 2022, Pisani's book received a fine reception on-air from CNBC hosts. On Oct. 18, Pisani told anchor Brian Sullivan about the book's recommendations: "The average person is best served staying in low-cost index funds. Secondly, don't ever try to time the market. Don't ever panic. Don't think that you know when to go in and when to go out because the academic evidence is you don't. ... Stay invested long-term."
That's a perfect soundbite, one that doesn't require an accompanying 400-page book. It's advice that many people have already discovered in books by Burton Malkiel and Jeremy Siegel and others (relentlessly cited and sourced in Shut Up). It's also not exactly exciting. Pisani seems oblivious to the fact that a lot of people play the stock market (hopefully with cash they can afford to lose) with hopes of hitting it big, not just to belatedly reach some kind of arbitrary retirement goals after a late start.
What makes Pisani mostly unique on CNBC is his background in real estate. His dad was a great success, and Bob reported on the industry for 7 years. What type of person should consider investing in real estate and in what locations, what kind of tax and/or lending strategies should an investor pursue, what are the biggest setbacks, how does one ride out the ebb and flow of the real estate market ... Pisani declines to opine.
Pisani is unique for something else — concert posters. His collection publicly emerged in 2020 as CNBC reporters started doing TV hits from home. He notes the popularity of his wall decorations on the Twitter feed Room Rater. He also mentions collecting comic books in the 1960s and showing his copy of Tales of Suspense No. 39, the first Iron Man comic, to Robert Downey Jr. at the NYSE.
Vintage comic books and concert posters are no longer nostalgic pastimes, but alternative investments. Comics in particular, along with sports memorabilia, shot to the moon during the pandemic and haven't returned to earth. Collectibles, aside from million-dollar artwork, rarely get mentioned on CNBC. Would $10,000 on a Batman comic make more sense than $10,000 in the Vanguard Mid-Cap Index? Or what about $5,000 for Batman and $5,000 in the VIMAX. The latter is a lot more liquid; the former is a lot more fun and, most likely, a lot more valuable over time. In 400 pages, Pisani never takes up those options.
Chapter 21 is all about the book's best story, and it's not even that much of a story. Pisani said he wanted to bid no more than $400 or $500 for a 1975 Black Sabbath poster and figured he'd easily have it at that price. Instead, he got caught in a bidding war — he indicates that there was one other bidder, but perhaps there were more — and ended up winning the poster for $3,499, "plus a 10 percent buyer's fee." (He's lucky there; some sites charge a 20% fee.)
It's not revealed when this auction occurred. Pisani deems the poster "pretty cool" but apparently considers the buying experience a defeat, stating he "snapped" in bidding far more than he believed the poster to be worth. Addressing this supposed mistake, he actually consulted with a psychologist to determine why he bid so much. That expert gave him 4 reasons of mumbo jumbo instead of the obvious, that evidently the poster was worth more than Pisani expected and he sensed as much. At least one auction house has reported selling 1975 Black Sabbath posters in 2022 for $4,500 and $2,750. They do not appear to be the same poster Pisani is describing, and in fact, Google searches turn up many variations of 1975 Black Sabbath posters.
It would be interesting in the book's limited photo gallery to see some of the gems of Pisani's collections, instead of poor-quality NYSE floor shots of celebrities who have millions of other photos taken of themselves. Pisani could tackle a lot of interesting subject matter — How does one safely hang and appreciate an expensive poster without subjecting it to light or other damage? How easy is it to sell a poster? What happens when a person buys a great poster for $750 and then sees a better quality version of that poster listed a month later for $600? How does one distinguish a vintage poster from a $20 reprint? Are current music posters a viable investment, would it make sense to start looking for souvenirs after hearing a hot new band?
And what about the autograph market? This doesn't seem to be a Pisani hobby, but he does report that the day rock legend Jimmy Page visited the NYSE, "hundreds of floor traders" brought their vinyl copies of "Led Zeppelin II" and "Physical Graffiti" hoping to get them signed. (Page quietly avoided them by exiting through a side door, Pisani says.)
Then there are the interesting business stories that Pisani avoids. He does note, in decent detail, the origins of CNBC. Every exec involved in it is praised; no one made any mistakes. (Everybody among the CNBC crews that he deals with is basically the smartest person in the room.) He does not note that a lot of CNBC's success stems from a few simple concepts, such as putting company names with the symbols on the ticker and keeping the Dow and S&P 500 graphic constantly on the screen. (Yes, in the '90s, you'd often have to wait minutes to see where the Dow was at.) And there was something of a first mover advantage. It could've been Financial News Network and not CNBC that we talk about today, but FNN, like the American Basketball Association, was maybe a decade too early, before this type of programming took off, and eventually went bankrupt.
About a hundred times in the book, Pisani notes that there were 4,000 people on the floor of the NYSE doing 80% of the volume when he started reporting from the NYSE in 1997; today it's less than 20%. This is both a significant business story and a tragedy. For all their efficiency and fun, computers have battered a lot of venerable industries. The NYSE is one of them. Here you had a place where people were still fighting for open outcry and fractional prices as late as the 1990s. Pisani could write about salaries and how these DMMs get paid, is it a steady paycheck every 2 weeks or does it go up and down with order flow? Pisani only gently notes the NYSE's leadership turnstile this century and its series of M&A. As an exchange, the NYSE embraced old-school industry while tech upstarts were flocking to the Nasdaq. The NYSE and Chicago Board of Trade both failed to embrace computerization as fast as their rivals, the Nasdaq and Chicago Mercantile Exchange, and eventually needed mergers to maintain a premier position in the financial markets that's sadly not as premier as 50 years ago.
A key source in the book is beloved Wall Street figure Art Cashin (pictured above with Pisani). Really, no one can go wrong with tributes to Art Cashin. But Pisani's 2 primary Cashin stories are laborious and confusing; one about traders learning of the JFK assassination, the other about J.P. Morgan establishing price discovery on a diamond stickpin. (The latter story ... hmmmmm ... could really use some explanation from Pisani about why J.P. Morgan writes a check for $5,000 but says in a note the check is for $4,000.)
A common Wall Street question in the 2000s is, Why does the NYSE still need people on the floor when the Nasdaq has no floor? This review will only say there's no good answer to that question, and that they better not think of ever getting rid of all those remaining DMMs.
There should be room in Pisani's text for those kinds of observations. Shut Up is relentlessly repetitive with Pisani's oddly primary focus, behavioral economics and typical investing mistakes, which has nothing to do with the NYSE floor or real estate reporting. His belief is that in stocks, nobody really outperforms over time, so the goal is to not get beat. The text is also acronym hell. Pisani writes as though readers may be sampling individual chapters and nothing else. Titles and descriptions of the most prominent figures in the book (Jack Bogle, Robert Shiller, Jeremy Siegel, Burton Malkiel, Art Cashin, mainly) are repeated in every passage, as though readers have forgotten from 10 pages previous.
Addressing a few debatable or controversial subjects, in Chapter 15, Pisani notes the various ways people try to determine a predictable pattern in the stock market and concludes there's "probably not" such a pattern.
In Chapter 22, Pisani concludes there's "little if any evidence that the average investor is being ripped off" by high-speed trading.
In Chapter 7, Pisani interprets Robert Shiller as believing, "Don't blame the dot-com bust on the media." (That's Pisani's words, not Shiller's.)
In Chapter 18, Pisani's observation about hackers obtaining earnings releases before the public saw them and how the hackers still, knowing those numbers, apparently couldn't predict how markets would react is a fair point but makes no mention that often the market reaction is not to the numbers but management forecasts on the earnings call.
Pisani warns against loading up on your own company's stock in your 401(k) after what happened to GE this century. There is surely irony there; that the original parent of CNBC basically ran itself into the ground. That's a fair point about not overweighting one's own company's stock, but people in the vast majority of S&P 500 companies during this time have probably done pretty well (especially if able to acquire the company stock at a discount), and if you worked for Apple, Amazon or Google and haven't bought the company stock, you're a moron.
Bob Pisani and CNBC's Sue Herera at the NYSE in August 2012.
Obviously a fan of pop culture, Pisani curiously writes, "I dislike being around movie stars, because I don't have anything to say to them. I'm more comfortable with CEOs." Pisani may dislike being around movie stars, but Kathleen Turner supplied the best quote for the book, at the Russian Tea Room: "I don't know too much about the place, and I really don't think I should say anything at all, don't you agree?" Unfortunately, Shut Up unintentionally demonstrates what it's like being a celebrity out in public, even having to field questions while going to the bathroom from people who admittedly aren't really interested in talking to them.
And despite his apparent comfort level with CEOs, Pisani never interviews them on CNBC and rarely mentions them in this book. Instead he devotes pages and pictures to brushes with Walter Cronkite, Muhammad Ali, Barry Manilow, Aretha Franklin, Fidel Castro, Bruce Willis, Mike Wallace and Robert Downey Jr. One can only guess how many people besides Pisani have told Cronkite he made them want to be a journalist. In Chapter 6, Pisani claims in italics, "Walter Cronkite is interviewing me," because Cronkite asked whether the seeming explosion in financial journalism would continue. How Pisani supposedly learned things, as he claims in his Preface, from people like Cronkite, Downey and Mike Tyson simply from exchanging a couple soundbites at NYSE events is a stretch. The most useful celeb advice is probably from Barry Manilow, who told Pisani that during the lulls in one's career, when people think about changing professions, just keep going. Pisani gets credit here for informing readers which famous commercial jingles were written by Manilow.
Shut Up, the hardcover, is fairly well-edited, but with some mistakes and one egregious oversight, in Chapter 27, when he refers to the movie "Ray" and actually says "Ray Charles never saw the picture" — because he died before its release. In Chapter 11, there is "mediating" rather than "meditating." In Chapter 2, we have "poured over." In Chapter 12, "it's" should be "its." In Chapter 23, there's a "hair-brained idea." Actor Jerry Orbach is misspelled in both the text and the index.
Given his approximate age referenced in the book and the publication of the book this year, Pisani surely must be at least contemplating the prospect of retirement. Had he waited, he could've filled Shut Up with juicier stories about the behind-the-scenes goings-on at a prominent cable channel and issued far more candid assessments of television and the NYSE. But he's clearly not trying to upset the applecart, and maybe he's not planning to call it a career anytime soon. CNBC personalities younger than Pisani have neatly transitioned to part-time or free-lance work for the channel and remain visible.
A lot of books about a person's career seek clever titles conveying some sort of irony or paradox about the person's profession. Shut Up & Keep Talking basically makes no sense; Pisani explains that the last 2 words are a formal term used off-air in television, while the first 2 words are not a formal term but what the opposite term ("Wrap") means. If the book were all about Pisani's TV hits, the title would be more relevant, but any book titled Shut Up is throwing its author a challenge.
On Oct. 18, Pisani made an interesting comment about his book to CNBC anchor Brian Sullivan: "Why does the market keep going up ... it happens because we have capitalism, and we have capitalism as a ruthlessly efficient allocator of resources." For Shut Up, it's ruthless, but not particularly efficient. Capitalism here means $30 for a book that should be scaled by half in pages and price. That would be a decent value proposition.
Shut Up & Keep Talking — Lessons on life & investing from the floor of the New York Stock Exchange (2022)
Featuring: Bob Pisani, Art Cashin, Ralph Pisani, Maria Bartiromo, Walter Cronkite, Fidel Castro, Robert Downey Jr., Barry Manilow, Aretha Franklin, Jack Bogle, Burton Malkiel, Jeremy Siegel, Robert Shiller, Dan Colarusso, Jim Cramer, David Faber, Carl Quintanilla, Suzanne Petruzel, Joe and Cathy Zicherman, Chris Botti, Wayne Shannon, Mark Hoffman, Lacy O'Toole, David Zaslav, Bob Zito