Book Review: Trailblazers, Heroes, and Crooks


Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor. 2024. Stephen R. Foerster, CFA. John Wiley & Sons.

In 2021, the Washington Post reported that five-time FIFA world player of the year Cristiano Ronaldo triggered a $4 billion plunge in Coca-Cola’s stock market valuation. He replaced two bottles of Coke with a bottle of water at a press conference held in conjunction with a tournament sponsored by the soft drink maker.

As Stephen Foerster, CFA, documents in Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor, however, Coca-Cola’s stock price decline actually preceded Ronaldo’s snub and was at least partly related to the shares going ex-dividend. Foerster uses the Washington Post’s fact-check failure as a jumping-off point for illustrating how investors can be led astray if they mistake correlation for causation.

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Relatively recent events such as the Ronaldo/Coca-Cola affair combine with venerable ones already well known to students of financial history in this highly readable and instructive book. Foerster, a professor of finance at the Ivey Business School at Western University in London, Ontario, furnishes insights that will be new to most readers, even on a story as familiar as the South Sea Bubble.

He cites Andrew Odlyzko’s fresh findings on Isaac Newton’s involvement in the notorious bubble, published in 2019. Readers who are acquainted with the outlines of the Panic of 1907 and Bernie Madoff’s Ponzi scheme will gain by learning important details from Foerster’s account.

Similarly, many investors who lived through the US stock market crash of 19 October 1987 are probably unaware of the comparatively obscure Major Market Index’s pivotal role in the subsequent rebound.

They may also not know that Fed chairman Alan Greenspan was aboard a flight from Washington, DC, to Houston as the market plummeted. Greenspan breathed a sigh of relief when told (upon deboarding and after the close) that the Dow Jones Industrial Average was down “five-oh-eight,” thinking the speaker meant 5.08 rather than 508 points.

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As its title indicates, the book deals not only with famous scams and debacles but also with such innovators as Warren Buffett, Charles Ellis, and Hetty Green. They appear alongside less heralded but perhaps equally colorful characters, such as Leo “The Moon” Rugendorf and John “Donkey Ears” Wolek, bit players in the 1963 American Express salad oil scandal. Foerster’s heroes include Paul Revere, whose claim to fame in financial history is that he engraved the border of inflation-indexed bonds issued by Massachusetts in 1780.

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The author is a CFA charterholder and calls the designation “the gold standard of credentials in the investment industry.” Note, however, that Foerster seeks to make Trailblazers, Heroes, and Crooks accessible to the general reader by defining such basic terms as “short selling,” “IPO,” and “buying on margin.” He counsels non-professionals to consider owning passive index funds, likely to the displeasure of many active managers in his potential audience.

At the same time, Foerster points out the pitfalls of abdicating responsibility by relying on the widely used target-date funds. He describes them as “autopilots” because they never update asset allocations in light of new information about individuals’ risk preferences or tolerances. (As recently noted by Elizabeth O’Brien in Barron’s, one solution is to “off-date” by choosing a fund that corresponds to one’s preferred asset mix, rather than on the basis of an intended retirement year.

Neither does the author let the objective of aiding non-professionals deter him from highlighting issues that veteran analysts and portfolio managers can benefit from exploring. For example, he points out how a confounding variable may trip up efforts to adjust a portfolio’s geographic mix through use of country indexes. A switch from a US to a Canadian equity index, for instance, also produces a major shift in industry concentration.

In summary, Stephen Foerster extracts lessons from exceptional episodes in financial history that ordinary investors and seasoned professionals alike can put to profitable use. The bonus is that Trailblazers, Heroes, and Crooks is immensely entertaining from start to finish.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.


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