Stock Huckster at Work

Mar 7, 2013 by

Stock owners' party

Beautiful, smart, and wealthy stock investors, no doubt.

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.)

Deconstruction

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.

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  • John S @ Frugal Rules

    Good post Kurt! I could go on and on about Bradley and TD, but I’ll leave my own personal dealings, as much as I can, out of it. You hit the nail on the head, Bradley is selling getting into stocks because that is their bread and butter in terms of money making. They claim that they’re a financial services company, yet all they really do is to try and convince their clients that they need to buy more and more. This is all so they can gather more assets so they can try and play on the same field as someone the size of Schwab. Sadly, for them, they’ll never make it. Ok, I’ll get off of my soapbox now. 😉

  • Brick By Brick Investing

    For some reason the video isn’t playing however you did such a great job I didn’t even need to see it. It amazes me how quick and willingly people are to swallow non sense like this. The want to make you feel like you’re too dumb to understand the stock market. So they pitch this “listen to me and you can’t go wrong” garbage and in the end it does nothing but hurt tons of families.

  • Sounds like bad advice, never forget the Money professionals make money whether you win or lose. If anyone is getting into stocks now, they should do it over time, dollar cost in. Personally, I think that anyone putting mad money into the market now is in for a dissapointment. But, I could be wrong!

    • Thanks Jose! Yes, fascinating to me that there’s no connection between money professional fees and portfolio performance. When a mutual fund (for example) does poorly, its fee makes investors’ losses worse. And when it does well, fees cut investors’ gains. Argues for ultra low cost investment vehicles like those Vanguard pioneered, seems to me.

  • Shilpan

    I can’t agree with you more, Kurt! It makes me feel sad that these jokers make insane money by preying on uninformed investors. You have to be a street smart to bypass this kind of brainwashing.

    • You sure do Shilpan. Thanks for your work toward helping people be smarter about investing!

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