Stock Huckster at Work
Anybody see TD Ameritrade’s President of Retail Distribution, Tom Bradley, on CNBC’s Squawkbox show Wednesday morning? I’ve never seen a better “hard sell” of stock investing’s purported virtues, carefully designed to make the knees buckle of even the most beaten up (by the 2008-09 meltdown) “retail investor.” If you’ve been paying attention, you’ve read my critiques of the Wall Street marketing machine. Mr. Bradley’s salesmanship is an excellent case in point.
My apologies for the 30-second commercial that may precede Mr. Bradley’s interview.
(If the video doesn’t work for you, try this link: Direct link.)
For fun, shall we analyze Mr. Bradley’s pitch a bit?
Bradley: “Long term investors on our platform recognize that if you have not been in the stock market, if you got out of the stock market and went to cash in 2009, you missed out on one of the greatest rallies in the history of financial services.”
Money Counselor: In other words, give us your money and don’t take it away—no matter what—until you’re cashing in for retirement expenses and plan to die soon. This strategy, coincidentally, would also tend to maximize TD Ameritrade’s and Mr. Bradley’s income. Also, unmentioned is that “one of the greatest rallies” merely returned stocks to the level they reached in 2000 and again in 2007 before in each case crashing by about half. If you’d followed Mr. Bradley’s advice and bought and held, you’d have achieved roughly zero capital gain over the past thirteen years.
Bradley: “Cash levels are at highs, in excess of 20%, on the retail [i.e., you and me] accounts. Professionals have much lower cash values.”
Money Counselor: Message: To feel “professional,” buy as much stock as you can. Cash is for amateurs and losers.
Bradley: “I think there are a lot of young folks who are concerned because all they’ve seen are some down trends in the market and volatility in the market. Look at since 2009 what the market has done. Once the young folks become more educated in the market, in the long term they’ll see that the trend line points in the right direction.”
Money Counselor: Patronizing, eh? If you’re young, you can’t be savvy enough to understand investing? No, you need Mr. Bradley and his ilk to show you the One True Way. Once the “young folks” become more “educated”? Substitute “naive” for “young folks” and “indoctrinated” for “educated” and you’ve got the central tenet of Wall Street’s marketing strategy. And “look at since 2009 what the market has done”? Yes, let’s look: Since 2009 the market has recovered the tremendous losses of the 2008-09 meltdown. That’s it. Woohoo?
Bradley: “One of the worst things you can do is sit on the sidelines and not participate at all.”
Money Counselor: Prepend this statement with “For TD Ameritrade and Tom Bradley,” and I agree completely.
Making the Rounds While Stock Highs Are in the News (the Worst Time to Buy, per the “Professionals”)
I’ve just tuned in PBS’ Nightly Business Report and I see Tom Bradley’s making an appearance there too, repeating almost verbatim the same messages he delivered on CNBC. The full court press is on: Sink your savings into stocks or you’re a dunce!
Here’s what’s going on: The Dow just set an all-time high, and that puts stocks on every mainstream newscast. Mr. Bradley recognizes the opportunity to grow his and his employer’s income, which are directly dependent on the little guy and gal trading and owning stocks. So he makes himself available to the CNBC’s and Nightly Business Report’s of the media world to preach the gospel to an audience already made ripe for conversion by innate greed & envy instincts and desperation to save enough to allow retirement.
Isn’t this just capitalism at work, as it’s been practiced since Neanderthals swapped stones and animal jawbones? Sure. But here’s the thing: Your and your family’s livelihood are at stake. Mr. Bradley misrepresents or glosses over stock investing’s risks. Like all expert salesmen, he delivers a subtle message designed to pluck the right emotional strings and manipulate the psyche, which decoded and stated overtly is this: By not investing the lion’s share of your savings in stocks, you’re not only ignorant, you’ve just missed out on making a ton of money like all your smart, well-off friends have done. Why don’t you get some help, you poor, desperate sap, from a professional like my employer?
Where was Mr. Bradley during the 2000 and 2008 stock price meltdowns? Assuming he practices what he preaches (which I doubt), he likely was watching in terror as his nest egg shrank by half, just as were all those who’d succumbed to his marketing tactics.