Friday November 11. Why Wall Street likes dumb investors. By Paul B. Farrell, MarketWatch

Friday November 11. Why Wall Street likes dumb investors. By Paul B. Farrell, MarketWatch

An 'illusion of skill' among investment professionals obscures luck's role in determining performance. But they still profit by manipulating clueless, irrational nonprofessionals -- us.

Financial-literacy programs are getting popular again. Warning: They don't work. Maybe for 7% of us. But for the rest of Americans, they are a big waste of time and money.

Even best-of-intentions financial-literacy programs like Jump$tart, RichFitUSA, APCPA accountancy programs and the President's Advisory Council on Financial Capability will never work. Never.

Financial-literacy programs reveal a subtle lesson in behavioral-economics brainwashing. Your brain is irrational; you can't rewire or reprogram it. But Wall Street can. Wall Street has seven clever ways to turn your irrational behavior against you, to manipulate you, to siphon off your money.

Want proof? Just think about the past decade. Factor in the 2000 dot-com crash, the 30-month recession and the 2008 meltdown, and guess what? On an inflation-adjusted basis, Wall Street lost 20% of America's retirement money from 2000 to 2010. And they'll do it again.

Get it? Financial literacy is a cruel joke that Wall Street insiders keep playing on investors, local governments, school systems, Congress and the president.

Here's why even best-of-intention programs will never work: They assume, erroneously, the human brain can retrain itself to make rational decisions about investing, finance and budgeting. But when it comes to investing, no matter how intellectually gifted you are, your emotions will trump reason.