Wall Street's central goal is to create a dependent investor, not informed, rational investors. Wall Street knows investors are irrational, insecure and vulnerable. Wall Street knows investors are easiest to deceive, manipulate and control if they are like sheep. Here are some notes from Paul Farrell (see bottom of message for his information):
- Short-term 'buy button' -- relentless stimulation. What a mind-control tool: Former SEC Chairman Arthur Levitt warned about the misleading negative effects of performance ads. They increase investor anxieties and trigger a need for instant gratification. They encourage optimism and the gambler's instinct, ironically increasing the frequency for short-term errors in judgment.
- 'Savings button' -- minimize long-term thinking
Psychologists look into your brain, know what makes you buy, sell, save -- information that Wall Street and Madison Avenue use against you. The reverse side of the "buy button" sows doubts about future retirement security. Our daily overdose of ads encourages buying now on credit, increasing debt, resulting in a negative savings rate. - Hyperactive trading -- Wall Street and Main Street
Short-term online trading is encouraged and increasing. Today only 30% of stocks are held directly by passive individual investors. Hyperactive full-time portfolio managers have a competitive edge using psychological trading strategies to beat naïve little guys. - Broker training -- aggressive closing techniques
Securities are sold not bought. Brokers are trained using aggressive psychological tricks. Inevitably, a broker's so-called advice is self-serving and misleading. Anything goes in closing a sale. Just get the commission. - New designer funds -- based on the latest fads
Using psychological tools, the machine can design new funds based on the latest fads that are appealing to gullible investors who can't stop chasing higher returns. Anxious investors want the latest trading gimmicks -- hedge funds, commodities, junk bonds, gold coins -- like teenagers buying the newest techno-toys. - Supply 'free' experts to the media
Remember dotcom talking heads like Merrill's Henry Blodgett and Morgan's Mary Meeker. Today, new ones fill the channels, 30 a day, every day, every channel, pushing their brand of snake oil. Wall Street advertisers love it! Talking heads are free advertising, adding to Wall Street's ability to control investors through media content as well as advertising. - Invest in lobbyists -- protect secrecy and nondisclosure
Wall Street also controls investors by severely limiting what Wall Street must disclose. Lobbying is one of Wall Street's best "investments." It is the largest donor to politicians. Their lobbyists control Congress and the SEC. They fight reforms and push for laws that benefit them personally. Then they spin propaganda to mislead investors. - Disinformation programs -- create a 'we care' illusion
Most Wall Street-sponsored "investor education" programs are self-serving new-business and promotional gimmicks. Wall Street knows these so-called "educational" programs are useless and ineffectual. But they help Wall Street types pretend that they "care." - Retirement gatekeepers -- keep in dark and manipulate
We know pension and retirement managers control 70% of all funds. So most Wall Street money managers rarely have to deal directly with an individual investor. Instead they focus sales pitches on 401(k), 529 and other corporate plan managers who are often just as naïve and easy to manipulate. - Brainwashing geniuses -- on Wall Street's payroll
Using consulting contracts, grants and retainers, Wall Street's "Brainwashing Machine" can lock up the best talent in behavioral finance and investment psychology to work on its side in perfecting the ability to manipulate America's 95 million individual investors. That guarantees Wall Street will achieve its goal of total and absolute domination of the investors' brains.From:
PAUL B. FARRELL
Wall Street's 'Brainwashing Machine'
10 psychological strategies controlling your mind
By Paul B. Farrell, MarketWatch
Last Update: 7:30 PM ET Oct 31, 2005