The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails

The Tremendous Task

Each and every one of you is a prospective or actual member of a ‘sucker’ list, and when the stranger calls you on the phone to interest you in the purchase of securities, beware. Unless you have confidence in the integrity of the sponsors you ought to take special precautions before you sign on the dotted line or surrender your cash or the securities you now own. Over the country from time to time springs up the promoter with a worthless issue, a tipster sheet to lure you, and a battery of telephone salesmen to close the deal, to your misfortune. Be on your guard. The Commission cannot in the very nature of things police every transaction in America. Where it has evidence, rest assured it will strike. We have the tremendous task of educating the American public to protect itself against high-pressure salesmanship. No law has ever been devised or administered which successfully eradicated crookedness. The federal government, however, hopes to fill a much needed want, hopes to be a vigorous factor in the relentless war on stock frauds.

—Address of Hon. Joseph P. Kennedy, Chairman of the Securities and Exchange Commission, at Meeting of the Boston Chamber of Commerce, Nov. 15, 1934, U.S. Government Printing Office, Washington, 1934

It is debatable if Kennedy’s enunciated goal has ever been satisfied. Arthur Levitt, who led the SEC from 1993 to 2001, tried harder than most to protect the rights of individual investors. Even today, his speeches on investor education, ...