The Five Dumbest Things on Wall Street This Week

Sleepy Time at the SEC

1. Blind, Deaf and Mutual

The mutual fund industry is in a mess these days. But, lucky for the folks at Amvescap's AVZ Invesco and Marsh & McLennan's MMC Putnam, the Five Dumbest Things Research Lab is on the case.

As you may recall, over the past two weeks we've been asking for entries in our latest reader contest: "How to Fix What's Broken in Mutual Funds." We asked for creative suggestions, and we got them.

Here's a sample:

• Measure: To supplement the standard mutual fund ratings from Morningstar, David Holden suggests new ratings -- ones that the Securities and Exchange Commission would issue based on "type, degree and duration of corrupt practices."

  The new ratings, which Holden suggests calling "Darkstar" or "Deathstar," would have to be prominently displayed in any mutual fund company's advertising. "Over time," writes Holden, "the persistently offending funds would lose any credibility and customers, I would expect."

• Motivate: Several readers want guarantees that mutual fund managers will put their own money on the line. Ray Back, for example, thinks anyone in the investment business should put 100% of his or her money in the very vehicle he or she manages. That, writes Back, should neutralize the pernicious attitude of "It's not REAL money, it's not MY money, it's THEIR money."

  Another variation on that theme, forwarded by Carl Erickson, is to run mutual funds like hedge funds. "No profits, no pay," writes Erickson. This scheme, he says, "eliminates herd-like adherence to 'benchmarks' -- whatever they are -- and makes managers work for their money."

• Minister: Don't try to fix mutual funds, suggest other readers; fix the investor. "The public are poor investing consumers because they don't know any better and, without thinking, will turn over their hard-earned cash for commissions, fees and sales charges," writes Capt. Ben Rost. "High schools can offer personal finance classes."
• Meditate: Al Erickson's reasonable strategy is to do nothing at all. "Let the market do it," he writes. "The removal of billions of dollars from the untrusted funds should help. ... Please, no more laws!"

Good ideas all. But they don't match Louis A. Wayadande's winning entry:

"Maybe the government should start an agency that's responsible for overseeing the mutual fund business," writes Wayadande. "This agency would have complete oversight of the industry. They could issue fines if a fund commits fraud, or close them down if they go too far. It would be like what Eliot Spitzer is doing, but on a national level!"

"Oh, stupid me," writes Wayadande. "We already have the SEC!"

2. DaimlerChrysler's Error Bag

And the correction-of-the-week award goes to DaimlerChrysler DCX, the company behind this public relations gem from Tuesday:

In the news release, "Chrysler Group Reports November U.S. Sales Increased 3 Percent," issued earlier today by Chrysler Group over PR Newswire ... the last sentence of the release should read "Chrysler Group finished the month with 533,467 units of inventory, or an 85-day supply," rather than "533,467 days of inventory" as originally issued inadvertently.

Just so you don't have to do the math, 533,467 days of inventory translates into 1,461 years of cars. So who says automakers are clueless about long-term planning?

3. Driven Insane

Speaking of automotive Dumbness, we at the lab must now pause to complain about a distressing trend we've seen in car advertising of late: the Annoyingly Omnipotent Driver.

Of course, 79% of car commercials on TV are annoying -- in particular, the ones in which a stunt driver accelerates his SUV to around 95 mph on a picturesque country highway, undistracted by a single other living creature on the road. Traffic cops included.

But the new ads -- the ones featuring the Annoyingly Omnipotent Driver, or AOD for short -- are irritating in a new and different way. They don't perpetuate the usual fiction of car advertising: that buying a rugged vehicle will transport you to some enchanted getaway, when actually the biggest adventure you'll have is negotiating the A&P parking lot on a Saturday afternoon.