How Smart is the Average Investor?

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How smart is the average investor? Inquiring minds at the SEC want to know. One of the mandates of the Dodd-Frank bill is to improve the timing, content, and format of disclosures to investors regarding financial intermediaries, investment products, and investment services. While that all seems important and even necessary, one shouldn't lose sight of the fact that there needs to be a focus on reminding investors that investing is a risk, and all the best practices in the world aren't going to change that.

We live in a finger-pointing society, and Dodd-Frank follows in that grand tradition, not only hoping to educate investors, but perhaps setting up opportunities to give investors someone to blame when their investments go sour. I'm keeping fingers crossed that we're not headed in this direction.

 

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