Stephen Stanton of TechCentralStation.com showed me something that I could not believe. It might not be an exaggeration to say that New York Attorney General Eliot Spitzer has done more to bring bad guys on Wall Street to heel than anyone in recent memory. Mr. Stanton pointed me to the "How to Invest" page maintained by the attorney general's office, which is a real stinker and desperately in need of update.
We can certainly understand how evergreen pages on a website don't often attract the attention of those who maintain them, but when your website explains that "stock prices are quoted in fractions of eighths for amounts less than a dollar" -- yet all of the major exchanges converted to decimals in January 2001 -- you know that it's been a while. What bothers me about this is that the "How to Invest" page isn't buried deep in the directory, hidden in obscurity and uncovered only by Teoma. This is a prominent, easy-to-reach page.
Were the updating the only issue, I'd be OK. But the advice here is really bad, quite unbecoming of a man who fashions himself the great protector of investors. (Note to Eliot Spitzer: Please, please, please, don't stop fashioning yourself that way. We appreciate it. Promise.)
But goodness gracious, this page is abominable. It offers scant education on the inherent risks of investing. There's no mention that even in situations where you have clean, competent management, things can go very badly. It tells investors to consult the advice of full-service brokers and investment analysts, even though Spitzer has been involved in uncovering just how dirty and conflicted such advice can be. Not that it's all dirty, but one would think that there would be a warning of some sort on the New York attorney general's site.
It wouldn't even be hard to offer examples. He could start with former Merrill Lynch
Spitzer's site offers no advice on learning to discern company fundamentals, no information on index funds, nothing on time frames or needs for liquidity, or for the potential of total loss. Instead there are some soft how-to's -- as if investing is the same as, say, a "some assembly required" toy -- as well as shills for mutual funds and the securities industry.
And that final part may be the key. The New York attorney general has chosen to use his office to fight corruption down on Wall Street. But he is an elected official, and the last time I checked, Wall Street was still in New York, employing thousands of potential voters, contributors, and so on. So while we would like to see the same zeal on educating investors about the pitfalls of Wall Street from Spitzer's office as we do in its willingness to prosecute, perhaps the potential collateral damage here is just too high.
That's just a theory, of course. It could be that the document's just in need of an update. If I may be so bold, may I suggest starting with the 13 Steps to Foolish Investing?
Stephen Stanton also coined (or at least promulgated) one of Bill Mann's favorite terms: "South Park Republicans."