10 myths Wall Street Uses vs Main Street

Another Paul Farrell screed about some of the less desirable aspects of how Wall Street does its business. This time out, Farrell goes over the myths and fantasies that are part of the Wall Street marketing machinery:

know Wall Street and Corporate America hate the regulatory spotlight.
They also hate dealing with Main Street investors. They prefer the
shadowy world of lobbyists, campaign donations and mega-billion-dollar
private equity buyouts that take blue-chips off the market and out of
the eyes of securities and banking regulators.

More proof? Corporate America and Wall Street are now engaged in a
relentless PR campaign to convince Congress and the SEC to roll back
"burdensome" Sarbanes-Oxley requirements and other market reforms in
order to minimize disclosures, raise the "wall of secrecy" higher and
hide as much of their activities as possible from America’s 95 million
Main Street investors."

Wow, that’s a pretty serious accusation. So what are these myths that are used by The Street to confuse and bamboozle investors? Here’s Farrell’s top 10 list:

1. Divine intervention
2. Sci-fi movies, cartoons, self-help books
3. Investing as a sport
4. Wall Street’s gambling casino
5. Conspiracy theories
6. America’s shadow government
7. Investing on ‘The Planet of the Apes’
8. Wall Street’s war against Main Street
9. Psych-ops warfare
10. Psychological war within your soul

The excerpt does not do the piece justice — go read the entire article.


The 10 myths Wall Street employs in its war on Main Street
Paul B. Farrell
MarketWatch, 7:16 PM ET May 14, 2007

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  1. oooh commented on Jun 3

    he was at morgan stanley? boy that does more to ruin their image than anything he writes.

  2. V L commented on Jun 3


    The sad part, most of it is true…

    “America is a plutocracy, where government is controlled by the wealthy elite.”

    “While in the shadows, they use secret behavioral-finance commandos to sneak behind “enemy lines” (weak psychological defenses of na├»ve investors) and secretly skim the cream off the top using brainwashing tricks.”

  3. Winston Munn commented on Jun 3

    It should say volumes about the credibility and risk in CDOs when one realizes that the concept of the CDO was originated by Michael Milken.

    Source: Bloomberg.com. Quote: “Michael Milken, the junk bond king, created the first CDO in 1987 at now-defunct Drexel Burnham Lambert Inc., says Das, author of `Credit Derivatives: CDOs & Structured Credit Products'”

    And from the same article a little bit about staying out of the spotlight.

    Quote: “Almost all CDOs are sold in private placements, and their current values aren’t posted anywhere. “There is absolutely no transparency,” Das says. “It’s difficult to get current values or information about the underlying assets in the CDO.”

    Financial regulators have effectively outsourced the monitoring of CDOs to the rating companies. No less an authority than the U.S. Office of the Comptroller of the Currency, which regulates banks, depends on the rating firms to assess the quality of CDOs.”

    No regulation. No oversight. The ratings agencies who help put together the CDOs then also rate them while diclaimering away any responsibility for loss….

    Gee, can anyone play or do you have to be an invited guest?

  4. Contrarian commented on Jun 3

    It shocks me that this man is allowed to write for a mainstream media outlet. People who express these opinions are usually not taken seriously. Just Friday, on Kudlow and Company, Peter Schiff was asked if he was a communist for suggesting that foreigners might stop buying U.S. treasuries in the future.

    Good article. Thanks.

  5. Tom C., Stamford,Ct. commented on Jun 3

    Pretending Paul Farrell doesn’t have a point is naive. The whole retail structured product business is largely a scam. I don’t blame the firms for trying but buyers need to understand what they’re getting into. Greed and fear are probbably the easiest attitudes to sell into. Honestly, if retail investors understood what they were doing wire house revenues would be cut in half and client returns would double.

    The first thing we should do if ‘America is a plutocracy’ is get rid of the FED and get back on the gold standard. Then repeal most of the legislation, amendments included, originating from the ‘progressive era’.

  6. Dodney Rangerfield commented on Jun 3

    I think he’s a moron on purpose. His altruistic gift to humanity is permanent cynicism and bearishness. He knows that when the last bear throws in the towel, the next great crash is here. I think the Nasdaq bust convinced him his true calling was raining on all parades. Retire and become a relatively well-publicized perma-bear so that you portfolio fluctuates less.

  7. michael schumacher commented on Jun 4


    permanent bearishness??

    As if to say that permamnent bulishness just ignores just about every economic indicator known to man (that is at or below recessionary levels).

    That piece is not bull nor bear it’s a commentary on the social behavior of the market (and it’s makers) on how it sucks up and spits out the uninformed.

    If any of that is news to you then…..I guess the air just got let out of YOUR bull market.


  8. Tom C., Stamford,Ct commented on Jun 4

    DR- Cynical? Watch the street’s sausage factory turn out products for the masses first hand and tell me if you’re not at least a little surprised at the blatant yet subtle mislabeling that occurs. The retail ‘distribution channel’ doesn’t even know what it’s selling half the time. Some of the stuff is a joke. It’s almost sociopathic. You take all the risk, we make all the money.

  9. undergroundman commented on Jun 27

    Perhaps the biggest scam is mutual funds, which regularly don’t beat the market index funds. Does Average Joe investor know that? Of course not. And the mutual funds and their media network are certainly not broadcasting it, because index funds don’t spread the wealth around like mutual funds.

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