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
( AVZ) Invesco and
Marsh & McLennan's
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
( 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.
Your Motoring Fantasies
No, in the new ads you'll stay in that traffic-laden urban area in which you're already driving. But this time around, the fantasy is that driving the new car will give you some magic power over all the other people on the road. And on the sidewalk, for that matter.
In the Infiniti ad, to refresh your memory, a whole city street -- both cars and pedestrians -- freezes motionless as the AOD weaves through traffic. Only after the AOD departs the scene does the rest of the world dare to start moving again.
The more elaborate Camry ad features a young man tooling along in some urban area as he undergoes a Sorcerer's Apprentice-type discovery: He can make anyone outside his vehicle do whatever he's doing inside it. When he drops an empty coffee cup, a shopper drops a shopping bag. When he cuts a hard right turn, so do all the pedestrians. And when he backs up, so do all the people walking by and all the other cars on the street.
The message here is that if you buy this car, you'll have supernatural power over the people around you. Which is, of course, exactly the opposite of what actually happens when you drive your shiny new car into the city.
Sealed inside your vehicle, inching along crowded city streets at an average rate of 5.4 mph, you're helpless. You're stuck. You're fighting for parking spaces with all those other shiny new cars bought by people who saw the same ad you did. You're at the mercy of the elements, both natural and unnatural: the double-parked garbage truck, the rush-hour gridlock at 40th Street and Eighth Avenue, and the inevitable backup on the Cross Bronx Expressway.
See, that's the great thing about advertising: It paints an enticing picture of the opposite thing that will happen if you buy a particular product. Forget about all those other cars remaining motionless while you zoom along: You're the one who's going nowhere.
4. McNuggets of Wisdom
Speaking of advertising, we often wonder why we're wasting away our career at the research lab when we could be out gathering hard-hitting financial news stories like this one about
But then we head over to the vending machine to get a bag of potato chips. And by the time we get back to our desk, all those ambitions have melted away.
5. To Ryanair Is Human
ace columnist Peter Eavis has been keeping an eye on discount Irish air carrier
Well, now it's our turn.
Peter's objection nowadays is a subsidy he suspects Ryanair is receiving to operate out of Brussels-Charleroi airport. Ours is a lot more frivolous than that.
See, as the British newspaper
pointed out this week, Ryanair performed plastic surgery on its airplanes. That is, Ryanair redesigned the "angel" silhouette logo that appears on the company's aircraft to give the previously androgynous figure a clearly female profile. (Click
here to see the before-and-after pictures.)
We're talking breast enlargement. Hooters Air gone Irish. Another case of inflated corporate figures, if you will.
We had all sorts of important questions to ask the folks from Ryanair. When did they change the logo? Why did they do it -- as in, was there any more to the change than the adolescent fixations of Chief Executive Michael O'Leary (who dressed up in a French maid's uniform for Ryanair's recent annual report)?
How much, if anything, is this costing Ryanair shareholders? And is it an angel anyway? (To our eye, she looks more like the singing harp from the Mickey Mouse version of Jack and the Beanstalk.)
The spokespeople from Ryanair ignored our questions. Which may have been the most intelligent thing the company has done all year.