Wall Street WARZONE

“Investor Education?” No, Just More Marketing & Sales Hoopla From Wall Street’s Relentless Propaganda, Hype & Brainwashing Machine!

by Paul B Farrell, JD, PhD
| | 5/4/2010

One of Wall Street’s central goals is the accumulation of more assets under management … and “more is never enough.” The greater the assets under management, the more fees and commissions Wall Street can charge for relative little management, and the richer insiders get. When they do (reluctantly) sponsor “investor education” programs, they are in fact marketing and sales tools to get new business. As former SEC Chairman Arthur Levitt once put it: “Most of the players in this highly profitable industry are reluctant to spend more than a pittance on educating fund investors because funds know they can make more money off uninformed investors.”

Just as the Pentagon knows psych-ops disinformation strategies work, Wall Street knows these so-called “Investor Literacy” and “Investor Education” programs are tools to indirectly manipulate investors. These programs don’t help investors, they hurt: America’s national saving rate dropped from more than 11% in the early Eighties to below zero in recent years even as these programs grew. They are designed to control Main Street investors by broadcasting Wall Street’s slanted messages and neutralizing counterattacks.

Remember “The Planet of the Apes” with its fascinating sci-fi role-reversal: In that world, humanoids are the dumb beasts. Apes and their relatives are the intelligent beings: That’s right, Apes, Gorillas, Orangutans and Chimpanzees were running the world! That sci-fi fantasy is in danger of becoming reality, not just in the Wall Street jungle, but throughout America. In the world of economics and investing, evolution is rapidly reversing itself. Humanoids are being overpowered. Street Apes are rapidly spinning us back along the food chain. In that brilliant sci-fi drama, the cast of characters is divided very simply: Humanoids are America’s 95 million naïve and passive investors. They are enslaved to the elite special interest Apes and their clansmen dominating the Wall Street-Washington-Corporate-America Jungle.

Mixing metaphors and using radical new “intelligent design” theories from behavioral finance, the Apes tell us that hurricanes are opportunities for “economic stimulus.” They also want humanoid investors to believe that other faith-based theories are good for America: Such wizardry as pork barrel spending, deficits-don’t-matter logic, tax cuts for the super-rich, preemptory wars, no-bid drug contracts, medieval science curricula, and outsourcing trade policies that are building China and India into super-power competitors. Moreover, this evolutionary reversal of evolution is being accelerated by a steady stream of clever “investor education” initiatives. Yes, they are “clever” because the Apes want us to believe that “investor education” will help humanoids build million dollar retirement nest eggs.

“Investor education” is a dangerous fairytale

But the Wall Street Apes initiatives are creating the exact opposite, America’s savings rate has dropped below zero in two decades. And as bizarre and contradictory as it sounds, that is exactly what the Apes secretly want! They do not want humanoids to be independent thinkers. They want Americans to indulge, spend, borrow and spend more.

Consider the facts: Two years after the fact, the SEC still hadn’t figured out how to spend the investor education money included in the $1.4 billion Wall Street settlement fine from the 2002-2004 scandals. Plus, the states-run Investor Protection Trust is wasting millions on television programs that would never go prime-time and probably end up competing with Saturday cartoons. For example, the Mutual Fund Reform Act of 2004: Congress killed a bill which had a provision to stamp out “investor illiteracy,” proof that Washington’s Apes believed America’s 95 million Humanoids are still unevolved “illiterate investors.” And they wanted to keep it that way.

The real truth is that we already have too many useless “investor education” programs! Some have been around a long time, like the Mutual Fund Education Alliance, formed in 1971. Check them out: Notice how they all echo the same dull, ineffective messages: Alliance For Investor Education, American Association of Individual Investors, National Association of Investor Corporations, and lately the Investment Company Institute has chimed in with a new program, “Funding Your Future.” So the bottom line is that the fund industry has had extensive “investor education” programs for years.

Unfortunately, “investor education” is a dismal failure

They’re not helping. In fact, things just keep getting worse! Mounting consumer and national debt. Zero savings. Bankruptcies. Increasing poverty. On one hand, tons of “investor education” programs. On the other, Humanoid investors are regressing backward along the economic evolutionary chain.

The nineties mania proved how “illiterate” American investors are. We followed the Apes like sheep buying silly dotcoms with no earnings histories. We weren’t evolved enough to avoid the big bad bear and the recession. Nest eggs vanished. Even though we lost $8 trillion in their markets, the clever Apes managing our mutual funds continued making their average $436,500 annual salaries—and we continue cheering for them, even though the stock markets have barely averaged one percent return annually since the peak in early 2000.

Step out of the fantasy folks: “Investor education” gets a big fat failing grade. Since the early eighties America’s zero-savings rate has collapsed from 11% to zero today as we drown in debt sipping $3.50 Starbucks lattes, filling up our gas-guzzlers, disassociating from reality while buying the latest iPod, XBox or plasma TV. Human evolution is in fact being reverse-engineered by the Apes in the real world of money, investing and economics. Yes, they are making monkeys out of us, but we’re willing victims.

The big secret? Save 10%! But we can’t even do that

Folks, investor education can be summarized in one simple formula that would make anyone a millionaire. This one formula is all you ever need to know about investing. And it’s not really a secret, it’s emphasized in every one of the programs above: “Save 10%!” It’s that simple. Here’s the corollary to the formula: “Nothing saved … equals nothing invested … equals nothing compounding … equals nothing for retirement!”

So why is America’s savings rate zero? Why are “investor education” programs such a miserable failure, a misleading, total waste of money? Listen closely, here are the two big, interconnected reasons that both humanoids and Apes prefer illiteracy, yet will continue denying reality while sliding back along the evolutionary regression trail!

First: 10 reasons investors stay “illiterate” by choice

The shocking truth is: Most humanoids do not want to be ‘educated investors!’ We’ve got priorities, better things to do. Seriously, we have full-time jobs, kids, parents and grandparents to worry about, and a helluva lot more. Yes, we want to retire as millionaires, but getting “educated” about investing takes too much time, effort and brain cells. So we have become unconsciously vulnerable to the Apes brainwashing PR advertising spin. In fact, by choice, many investors choose to remain illiterate about investing for these ten “reasons:”

1. After paying bills there’s no money left for saving and planning
2. Or they simple enjoy satisfying immediate needs and fun stuff
3. For many, planning for the future just isn’t how their brains work
4. Others are novices, naïve newbies, easy prey for Street hustlers
5. Many people have no interest in financial and economic matters
6. Others are too confused by the money math, and block it out
7. Some are dependent people and can’t make money decisions
8. Others say money is the root of all evil, reject the devil’s work
9. Many are too busy making money to become savvy investors
10. Lastly, our brains are our worst enemy, not created for investing

Humanoid investors are being steadily programmed to think short-term, focusing on the “now” – getting kids to little league, filling the tank, running errands, enjoying a daily latte … and buying whatever cable TV’s talking heads are pushing today. Behavioral science is proving our “long-term investing gene” is being erased from the humanoid brain. The Apes replaced it with an “immediate-gratification gene,” creating zero-saving consumer mutants.

Two: Primates fear “educated investors” will revolt

And that gets me to the second really big reason “investor education” programs are total failures. As much as the Apes rule is a fiction, so is Wall Street’s pretense of caring, they secretly hate the idea of having truly “educated investors” around. The reason is obvious: The Apes know that if the humanoids ever did get educated and were financial literate, there’d be a widespread violent rebellion against the jungle’s ruling Apes!

If iumanoid investors knew how Apes keep their greed machine secretly hidden … How much the Apes are skimming off the top … How much effort the Apes put into keeping humanoid investors enslaved to their stupid “faith-based” investing theories … a grassroots rebellion would sweep those Primates back to their jungle. That’s right: If humanoids ever realize the truth, they’d overthrow the Primates and their “faith-based” economics and take back the planet.

The truth is, my dear fellow humanoid investors, our self-appointed masters (all those Apes populating the upper echelons of Wall Street, Washington and Corporate America) are too intelligent, too self-interested, too arrogant, and too greedy for their own good. But stay tuned! Soon, we can safely and scientifically predict, this evolutionary reversal will slam headlong into the law of unintended consequences. Then, something beautifully unpredictable with happen (perhaps the reappearance of a new “Missing Link”) and the balance will again shift. In short, the Apes are destined to self-destruct, that’s the inevitability of history.

FirstPubDate: Oct’05

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