Come back, little investor!September 24, 2010: 12:13 PM ET
What Wall Street can do to restore confidence, short of giving back the money it lost.
Small investors are fleeing the stock market in droves. Those who cannot gain access to a drove are doing it by themselves. That's lonely work. Pretty soon, all that will be left is the institutional investor, and you know what they say about living in an institution. It's no fun either.
You don't need to be a mind reader, astrologer, or securities analyst to ascertain the cause of this fiscal flight. The market, to put it in technical terms even a quant could understand, is nuts. One day it goes up on a wafer-thin piece of effluvium issued by a subdirectory of the Fed. The next day -- zoom! -- it careens downward because somebody burped in Belgium. Economists, seeking consensus on the economy, as is their wont, can't.
All is not lost yet, however. There are 10 simple steps Wall Street can take to win back the small investor.
1. Show them the money.
Wall Street should institute a program in which investors can drop by and see their hard-earned cash being turned into incremental assets that feed and water thousands of investment bankers, brokers, and support staff.
2. Impress them with edifices.
Wall Street is imposing. Nobody who stands in the shadow of the exchange can fail to be awed. When people are awed, it's a good time to ask for their money.
3. Provide counseling for those who have lost their faith.
The stock market is populated by those who seek an afterlife -- retirement -- with streets that are paved with gold. Worshipers in this church bow down before the shrine of perpetual growth, a phenomenon that is just about as rational as any religion. Faith can be regained, however, with time, counseling, and a lot of wine.
4. Hold pancake breakfasts once a quarter.
This works well for volunteer fire departments. People love pancakes, particularly with bacon. Put folks in that kind of expansive mood, and then hit them with all the opportunities that lie in store for those with a little bit of green and a good strategy.
5. Recast CNBC.
Confidence is hard to sustain when the fatuity, inconsistency, greed, vanity, hysteria, and stupidity of a system are on display, every hour of every day.
6. Put the stocks back in the stock market.
The next time some bonehead tanks the market with a bad decision, it might improve everybody's mood if he were imprisoned in genuine stocks, at the intersection of Wall and Broad.
It works for every other product nobody needs.
8. Give away a "toaster."
I use quote marks because nobody really wants a toaster, but the small investor does need little items that might lure him to the trading desk: iPhones, cheese logs, microwaves?
9. Set up a "frequent buyer" program.
Brokerages could offer benefits. (Google may never hit $700 again, but you've just won dinner for two at Applebee's!) Escalating levels of service could be offered to the really big losers, just like in Vegas.
10. Stop losing my goddamn money!
That's right. Are you listening? It's me, the little investor. I lost money when I went with blue chips. I lost money when I went with foreign money-market funds. I lost money when I went with tech and genetic engineering and infrastructure, and you know what? I want it back! How about that for an idea? Give everybody back all the money we lost during the past 20 years, while you were all making a big pile of dough. Then we'll come back so fast your head will spin!
Until then? I'll see you guys at the craps table. I like a game where at least I know the odds.