North Carolina Quaker Mark Hulbert has been tracking investment advisors since the early 80’s. In this week’s video, he talks about what motivated him to try to make Wall Street honest.
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Discussion Questions:
- Mark refers to the quote, “The steam that blows the whistle is not the steam that turns the wheel,” when referring to marketing and honesty when dealing with customers. What does this quote mean to you? What other contexts might it relate to?
- Mark draws on the Quaker testimony of integrity when he says that, “customers are far more attracted to truth telling”. In fact, this is one of the reason that Quakers have historically been very successful in business. Is this your experience? How does it apply to your professional experience?
Transcript:
I think the financial industry is not unique in this regard, but is particularly guilty of trying to obfuscate things. Wall Street is just known for putting everything in these complicated acronyms and making everything more complicated than perhaps it needs to be.
What If Wall Street Were Honest?
Mark Hulbert’s my name, I live in Hillsborough, N.C. The meeting that my family and I attend is the Chapel Hill Friends Meeting in Chapel Hill, though I’m officially a member of the Manhattan, Kansas Meeting where I grew up.
My day job is the editor of a newsletter called the Hulbert Financial Digest, and it’s a service that keeps track of the performance of investment advisors, so it’s like a consumer’s report of the industry. It was sold to MarketWatch—CBS MarketWatch at the time—which is now a part of Dow Jones a number of years ago, so I am now also a senior columnist for their website.
Getting Into Finance
So as I got out of graduate school I took a number of writing and research projects, and one of those was to write an article about some of these investment advisors who were speaking at a conference, all of whom got up and said how great they were and how much money you would have made if you’d only been smart enough to follow them.
And you knew that they could not all be telling the truth because they were contradicting each other, but you couldn’t also, a priori, tell which one of them was lying or if all of them were lying, and this was so offensive to my philosophical sensibilities and my religious sensibilities.
Quaker Influence
Yeah, I grew up a Quaker. I was born into it. My dad helped start the meeting in 1955. He was a conscientious objector in World War II and that’s when he became exposed to Quakerism and became a Quaker, so I was able to grow up in that faith, and a lot of it came through as osmosis, rather than by convincement, but it’s one of those things that as you grow older, you discover, “Oh, that’s why I believe what I believe!”
The Steam That Turns the Wheel
Most advisors, in fact the vast majority of them, do less well than they would if they just flipped a coin. Investment advice is so abstract, and so there’s not anything you can put your hands on. What other industry would be able to survive if 90 percent of them weren’t doing as well as you could by flipping a coin? It’s an incredible industry.
I’m trying to remember the famous Quaker who once told me, but it’s sort of the principle that the steam that blows the whistle is not the steam that turns the wheel. So much of the financial industry, their expenses are marketing. They are out there telling the world how great they are, and since most of the time they’re not that great, in addition to lying, it’s also that steam that’s blowing the whistle rather than actually doing their job.
The Simplicity of the Truth
Early on, there were threats of lawsuit and other kinds of threats that, you know, Who in the world was I to say these things about their track record? But it turns out that the truth is rather simple.
Customers, not just in the financial industry are far more attracted to truth telling, so if you were to say, “You know what, I really made a mistake and I haven’t done all that well, but I’ll do my best and I’ll do it honestly and I’ll involve you in the decision-making and we’ll be partners in trying to make it more possible that you can retire comfortably or whatever is your goal,” people are attracted to that.
In the end, things may not be all that complicated. There’s a lot of simplicity here, and it starts with the simplicity of the truth. And just that simple notion is so powerful, it cuts through a heck of a lot.
The views expressed in this video are of the speakers and do not necessarily reflect the views of Friends Journal or its collaborators.
If Wall Street were honest, it would not exist.
What If Wall Street Were Honest?
Wall Street is an honest marketplace. Yes, there is dishonesty in many “advisers”, just as there are dishonest car sales people, bankers, real estate agents, insurance sales persons and every other human who makes his living “selling” for their livelihood.
Yes, the world and its inhabitants are imperfect, but that doesn’t relieve the “buyer” of individual of responsibility in the conduct of their singular or collective life. Making and protecting wealth is hard work, without that work and diligence there will always be someone available to take advantage of our failures (ignorance, laziness, haste and greed). Most often Faith alone is insufficient and is il-advised when conducting any type of business. The viewer should bear in mind that “greed” is a two way street with sad results for only the “less greedy”.
Remember Quakers, “Let he who is without sin cast the first stone.”
Change the title of an otherwise thoughtful and well-done video. The title speaks to a “Poor Me” mentality and not the basic Quaker principle of personal responsibility.
William J Russell