What am I saying? I lost you at "Hello"? That's part of my plan, actually. If I can be cryptic enough for you to take the time to read my words again, then you are not the problem. But if you are blazing through these words, hoping for some Hot Stock Tip (Ticker: MOPE) that you can automatically feed into your online account order entry engine...
Hey. You. Problem.
"Opening an account doesn't require much more than filling out an application. Don't worry about the title application -- we haven't heard of anybody getting turned down," we claim in the intro to our new Discount Brokerage Center.
Accessibility. Convenience. Simplicity. These are all wonderful traits that can easily turn detrimental because they are, in fact, accessible, convenient, and simple.
Letting the chips fall where the may, let's take a look at the gaming industry. The odds may be pitiful down the Las Vegas Strip, but if someone boards a flight, hops a cab, and checks into a hotel room, at least that person has had time to think over the consequences. I'm not condoning premeditated stupidity, but it's certainly better than random acts of ignorance. I think. Sometimes. The live casino experience provides ample time to consider the potential losses and at what breaking point will it be time to check out of the hotel, hop a cab, and board a flight back home.
As grim as the "bricks and murder" neon casino scene might be, it becomes even more bone-chilling when one considers its online sibling. There you can max out your credit cards playing virtual slots without ever leaving your Underoos. We're talking grave danger when something so potentially damaging is so accessible, convenient, and simple.
Granted, this is gambling. There's no sugarcoating green felt and comped booze. It's the all-or-nothing medium where folks are placing blind faith on rolling dice or the turn of a playing card. Stock market research provides for clear advantages on a medium that historically rewards the investor -- as long as the investor knows what it means to be an investor.
Last year's Youth and Money Survey revealed that just 15% of students aged 16 to 22 understood money matters "very well." An amazing 94% of those polled expected to rely on their parents for financial guidance. With good reason, since the schools are failing to provide personal finance education.
But what happens next? They're out in the real world, with money to invest, and come across an ad on how easy it is to open an online brokerage account. If you can sign your name on an application and a personal check, and have mastered the art of index finger mouse-clicking, you're in.
So, at that point, do you think that 94% of them still hit up their moms and dads for stock tips? Do you think the 85% that are not "very well" off in financial training suddenly enroll in a FoolU crash course?
Hardly. Since there is no mandated buffer of knowledge wedged in between, it's like Lord of the Flies -- and we're all gettin' Piggy with it. Dreams of dot-com riches and initial public offering mother lodes hook the novice (which, amusingly enough, can be broken down into the words "no vice"). Eventually poorer, they see the error of their ways. They come to realize that -- new bumper sticker catch phrase alert -- new offerings aren't "pious" because they take "us" out of the "IPO."
The argument simmering in your head about now is that all this also happens with offline discount brokerage accounts. True. But there is that extra layer of action. The offline realm begs for premeditated trading. It's not a matter of being one click away from heeding the herd call of a CNBC talking head's stock pick.
We might all hate speed bumps but it's hard to deny that they ultimately protect us. It is way too easy to forget long-term buy-and-hold veritas when the lure of quick and cheap commissions are belting out that classic Byrds single, "Churn! Churn! Churn!" That's some mighty fertile soil to grow day trades on, and that leaves a big weeding problem behind.
Jerry knows the horror. Two years ago, "day trading with your eyes closed" made his top 10 list of scary things. And, why not? While historical returns show the market's positive return over any extended period of time, 90% of day traders walk away with bruises.
I'm not trying to strap a bogeyman mask on willpower. Willpower has the freewill to decide for itself what it wants to be. But when you make buying and selling companies as easy as clicking on a Dilbert strip or a dancing moose, it is easy for many to belittle the implications.
I know Jerry probably has some amazing stat on how the trend toward cupholders in cars has no relation to DUI convictions, but we know better. When you pave over the speed bump, it creates a better experience for the skilled driver, but you wouldn't want to be a pedestrian on that open road.
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