Investor 'Does Not Have Faith' In the Stock Market: Siebert
Wall Street veteran Muriel Siebert has seen her share of downturns, yet none has been quite like this.
“It has a different feel to it,” she said in an interview with CNBC.com. “We want a marketplace where people are going to take their retirement money and build up stocks for their retirement. They’re not doing it to the same degree anymore. I have customers who are sitting on cash in their accounts because they don't have the same confidence. Cash has lost its value in terms of creating income for them.”
Born during the Great Depression, Siebert has witnessed economic cycles as a Wall Street trader and a bank regulator. She started her career as a $65/week trainee in research to become the first woman to hold a seat on the New York Stock Exchange in 1967. Today, Siebert heads Muriel Siebert & Co., her discount brokerage firm.
“What scares me, disappoints me, the public does not have faith in the marketplace,” she said. “You don't see the same public trading that we've seen. We've got to get that back. Public investors are responsible for a lot of the success of this country.”
This comes at a time when the Dow is flirting with the 11,000 mark. Although a positive employment report last Friday lifted investor spirits, volume remains light, suggesting retail investors are still shying away from the marketplace.
Siebert faults a lack of transparency, particularly in derivatives and dark pools. While derivatives have a place in the markets, she said, they should be registered.
“We used to have more transparency as to what was going on in the markets,” she said. “It was actual trading, so you could analyze it a little better. If you take a dark pool, you've got to have some transparency with what the trades are. Force them to put it on the tape when it happens; force them to identify short ticks.”
In the meantime, Siebert recommends investing in municipal bonds. In the case of a water bond, for instance, bondholders are paid from the funds generated from water bills.
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But for public investors to return to equities, she said, global securities regulation is essential. Siebert recommends that the SEC and Federal Reserve hold a global meeting with their foreign counterparts to establish uniform securities and banking rules.
“If we're going to get into some of these products that are not the safest, let us all play by the same rules,” she said. “If we had global regulations, we wouldn't have one of these speculators going against the next one. I don’t want people who can’t borrow money in the United States going to London to borrow.”
The FDIC and Fedshould also do more to encourage banks to make loans, said Siebert. One way of doing that would be to give banks a larger percentage to loan against their existing capital. The government should also analyze whether the banks are using TARP funds properly—not to speculate for themselves, she said.
“The banks were pigs,” she said. “A bank has an obligation for the public's money. Some of the things they were doing was outright gambling.”
But regulation from Washington can only go so far, said Siebert.
“These people are passing laws and they don’t know the system,” she said. “Until you work in the system and you work with people that were specialists, and analysts, and portfolio managers, and people at banks—this is the financial industry— why don’t they have a team of people that are working in the system everyday?”
Siebert tried to see President Obama to recommend that he focus on jobs first and then health care.
“There are just too many people in this country who don't have jobs,” she said. “And they are workers; they are not people who are slackers. I'm talking about the Clevelands, the Detroits. We may never have some of the same kinds of jobs again.”
Siebert is calling for a bipartisan coalition to identify the next breakthroughs in technology and biotech innovation. She believes that developing new industries in the States is key to reinvigorating the economy.
“We need to find and encourage the next Bill Gates,” she said. “We know that there will be new technology coming. Don't you think we should be encouraging the next guy in the USA so it can be manufactured here?”
During her lifetime, Siebert broke a number of barriers for women. She has often been called the “First Woman of Finance.” Yet despite a few top female appointments with Shelia Bair at the FDIC and Elizabeth Warren at the Congressional Oversight Panel, Siebert contends that women’s advances in the financial world have not been sufficient.
“We still have not made it to the top of Goldman Sachs or to the top of Merrill Lynch,” she said. “We’ve never had a woman head of the Fed. We’ve never had a woman Treasury Secretary. I mean she has half the title, secretary.”