Don Quixote

The occupy Wall Street movement would be better served by avoiding the marketing schemes cooked up by Wall Street. Wall Street makes money when money moves from one broker to another and one asset class to another. Wall Street also makes money regardless of market direction. Your retirement plan should be risk adjusted and own equities, globally diversify and rebalance. Avoiding the Wall Street hype will increase your return dramatically

Daniel Kahneman, a Princeton psychology professor and Nobellaureate, says we “would be better investors if we just made fewer decisions.” But we don’t. Even professionals, the “people who are specifically trained to bring” rational decision-making skills “to problems, don’t do so even when they know they should.”You simply cannot rewire and reprogram an irrational brain and make an investor “less irrational.” And yet, as well-intentioned as they are, the financial-literacy idealists keep fighting a losing battle. They’re like Don Quixote tilting at windmills.

Luck vs. skill in investing

View more MSN videos Go to CNBC

I was involved in a federally funded program following the Enron-era stock-scandal settlements. While advising a congressional committee on fund reforms, I looked at the many problems with promoting financial literacy. I reviewed the long history of failed attempts, including the Mutual Fund Educational Alliance, which has been around since 1971. Guess what? The fund industry was exploiting those educational initiatives as a clever marketing opportunity to manipulate investors.

7 ways we’re getting taken

In spite of the hype about financial literacy, the programs all have a fatal flaw: Wall Street doesn’t want smart investors. Wall Street makes its billions off investors who are clueless.

Here’s how a leading neuroeconomist, Richard Thaler of the University of Chicago, put it: Wall Street “needs investors who are irrational, woefully uninformed, endowed with strange preferences or, for some other reason, willing to hold overpriced assets.”

Bottom line: The last thing Wall Street wants is 95 million investors wise to Wall Street’s con games. Wall Street revenues would drop substantially if financial literacy really did work.

Like a chess master, Wall Street will always be several steps ahead of the Main Street investor. Here are tools that stack the deck:

Commission brokerage plans that work to Wall Street’s advantage.

Cleverly crafted marketing and sales systems that mislead naive investors.

Favorable Securities and Exchange Commission regulations won by Wall Street lobbyists.

Deceptive portfolio alternatives, practices and advice that skim fees.

Systemic data manipulation with stocks, bonds, mutual funds and derivatives.

Psychological profiles of investors that are used against them.

High-frequency trading algorithms that run circles around individual investors by making thousands of trades in hundreds of milliseconds.