Irrational exuberance

Paul Farrell is getting exuberant about irrationality.

I'm sick and tired of those arrogant, stuffed-shirts behavioral finance academics and high-priced Wall Street insiders looking down their noses at America's 95 million Main Street investors like we're clueless inferiors who can be easily manipulated using esoteric quant algorithms, so Wall Street's old boys club can make big bucks.

Here's how those eggheads and fatheads see us: Wall Street "needs investors who are ... irrational, woefully uninformed, endowed with strange preferences, or for some other reason willing to hold overpriced assets. Get it? Their goal is to get you to buy "overpriced" securities by keeping you "woefully uninformed" and distracted by "strange preferences." Why? Because that makes it easy for them to treat the market like a private hunting reserve where they can bag unwary targets at will.

On cable, in ads and sales pitches The Street panders to your ego: You're "the man," a "rational man." You can beat the averages, the indexes. But behind your back, they laugh; they know you're irrational when it comes to investment decisions. Moreover, they actually prefer a market filled with irrational investors. That way, they can manipulate you easily without you ever really knowing it.

Oh, they'll let you make modest gains, enough to keep you in line, to prevent a full-scale rebellion. But the playing field's not level and they're backed by an elite force of roughly a million in the financial-services industry -- brokers, salesmen, advisers, analysts, talking heads, slick admen, slicker lobbyists -- "foot-soldiers" armed with superior tools, advance data, huge monetary incentives and the protection of friendly legislators and regulators.

But you already knew all this, right. Since the Buttonwood Agreement created the NYSE in 1792, Wall Street has always been able to control the markets and manipulate investors to its advantage. It's been a one-way street for a long time.

So what is new? Behavioral finance, the new science of irrationality, also known as behavioral economics, quant-trading, neuro-investing, etc. Wall Street has added this powerful new "weapon of mass manipulation" to its arsenal. And with it Wall Street has refined "mind control" to a high art, making absolutely certain you do not stand a chance trading. [Weapons of mass manipulation.]

You bet "I'm mad as hell." It's time to stand up to those self-appointed "arbiters of rationality" ... tell them "we're not going to take it anymore" ... that we're going to stop playing their game by their rules ... that we know there's a better way ... that we really can do everything "wrong" (that is, ignore the rules of their "rational investing" game), and still live happy and die rich ... playing by our own rules.

Unfortunately that's not easy, it challenges the "rational" mindset that's so deeply locked into our cultural brain it sounds almost anti-American. Look around, "rationality" is everywhere....

This rigid, ultra-rational mindset is blinding us, transforming 95 million investors into robots who believe that if you want to become a millionaire you must minimize irrational behavior and maximize rationality.

Well folks, they're wrong and they're misleading you! If you really want to be a successful and happy millionaire, I say shift your focus and aim at becoming an "Irrational Millionaire!" I believe it's time to go contrary, debunk the conventional wisdom and embrace irrationality.

We need to see the world differently.... Forget that "rational man" mantra, it's a myth. Forget the new science of behavioral finance, their quant math and algorithms. Why? Because none of that stuff will ever change your basic irrational nature ... that's what you are and always will be. [There's more, including "9 traits of the successful 'Irrational Millionaire'", if you're interested.]