10 ways the Wall Street profit-making machine manipulates Main Street
I’ve been observing the Wall Street machine in action since my days at Morgan Stanley years ago. The truth is, Wall Street really doesn’t need a sophisticated high-tech “Infinity Machine.” They’re already in a Snowden-style low-tech “Singularity,” “accelerating returns” skimming money from 95 million Main Street investors.
Remember, Wall Street has only one goal, make insiders superrich, and shareholders rich. The public interest and the rest of the world are never part of their competitive algorithms. Never.
They achieve their goal with the basic ideas of behavioral-finance geniuses like Richard Thaler, by keeping investors in the dark, dependent, irrational and uninformed. Very simple. Here are 10 of Wall Street’s high-tech/low-tech weapons used by their psychological/neuroscientific/behavioral finance cyberwarriors to control their casinos:
1. Hire psychologists, neuroscientists to manipulate the media
Use consulting contracts, grants and retainers and lock up the best talent to work to keep America’s 95 million individual investors “irrational and uninformed” as Thaler says.
2. Free experts constantly deliver Wall Street’s message to media
Network, cable, bloggers must fill their channels every day. Talking heads are free advertising for Wall Street to manipulate investors using so-called news content.
3. Invest megabucks on lobbyists to control politicians, government
Lobbying is one of Wall Street’s best investments. Lobbyists control Washington: control politicians, fight reforms, push favorable laws, regs, spin the truth to mislead investors.
4. Fuel anxiety by pushing the investor’s buy/sell/ trade button
Wall Street’s a casino, makes money on “the action,” skimming a percentage off the top. They fuel investor anxieties, fears, optimism, volatility, maximize action on exchanges.
5. Kill our savings button, undercut self-confidence, long-term planning
Wall Street uses neuroscience technology to sow doubts about retirement security, do-it-yourself investing, how indexing beats trading, then overloads us with misleading ads.
6. High-frequency trading, misleading Wall Street and Main Street
Short-term online trading makes Wall Street billions annually. Hyperactive traders have a competitive edge using high-tech neuroscientific strategies, plus keep markets churning.
7. Brokers trained on aggressive selling and closing techniques
Securities are sold not bought: Broker’s advice is self-serving, often misleading, anything to get a commission. They’re trained to use high-powered psychological techniques.
8. ‘Investor education’ programs are self-serving sales gimmicks
Most Wall Street-sponsored “investor education” programs are loaded with new business, sales and promotional gimmicks. But they help Wall Street present a “we care” persona.
9. New ‘designer’ funds based on latest fads to replace losers
Fund companies constantly design new funds based on the latest fads, for anxious investors chasing higher returns, driven like teenagers who need the latest video games.
10. Retirement gatekeepers: kept in the dark and manipulated
Two-thirds of all funds are controlled by corporate pension and retirement managers. So Wall Street focuses sales pitches on easy to manipulate naïve plan managers.
Yes, Wall Street is already in its “Singularity.” The rest of us must wait till 2045. Meanwhile, Americans need to start asking the hard questions now: Will these new “Infinity Machines” have a soul with a conscience? Know right from wrong? Stop drones from killing good people? Force corporations to put the public interest ahead of shareholder profits? We need to ask the tough questions today ... later may be too late.