Safely Prosperous or Really Rich: Choosing Your Personal Financial Heaven

Chapter 7

Listening to Wall Street

Wall Street's conventional wisdom has been 180° wrong almost forever. Here's why, and how to tell.

For four years back in the late 1950s, I was the soloist and announcer with the Air Force Band and Singing Sergeants. That was government work, however, so we only worked two hours a day when we weren't touring about a quarter of the time. So I got a job with a New York stock exchange brokerage. I learned some enduring lessons:

• The firm made recommendations for us to sell to our clients that were in the best interest of the brokers; sometimes the trading department had stocks in inventory and had higher-than-normal profit margins, and promised higher commissions.
• We were under constant pressure to sell higher-margined financial products, such as front-load mutual funds, tax shelters, and other financial-planning instruments.
• The firm's more mainstream recommendations were always aligned with the consensus of Wall Street, which turned out to be pretty darn wrong more often than not.
• No customer would buy a stock if you weren't bullish on it, so it was easy to convince yourself that you were bullish because you were a commissioned salesman. No bullish recommendations would mean no buy orders and no commissions.

After I finished my four years with the Air Force, I tried to continue in that business, but I determined to become more discriminating and use my best judgment. Until then, I had just been a loyal employee and I trusted the house, believed ...