|  | | 2005 News and Press Releases | | |
HEADLINE NEWS:
Stupid Is As Stupid Does – What Investors Don't Know Is Definitely Hurting Them
Staff Writer – Marketwatch
Securities Mosaic. December 20, 2005
_________________________________________________________________________
EXCERPT: Most investors are stupid. At least that's what the Securities Investor Protection Corp. says; most even don't possess basic investment skills. "Few investors possess [the] needed blend of basic knowledge and smart behavior," SIPC found in survey released last week. SIPC is the agency that insures against losses in brokerage accounts up to $500,000. Not all brokerage accounts are insured by SIPC, a fact most investors don't know either. Nor do they know what types of losses SIPC insures. Ah, me. What do they know? Well, that they should review their brokerage/account statements, as 90% do. They also understand they should diversify, as 74% do. Unfortunately, this knowledge doesn't translate into action: more than three-quarters of those responding to the SIPC survey admitted they don't posses the knowledge to "behave" properly in the financial markets. Wake up, we're talking about you here. For example, less than half (41%) of investors understand that when interest rates go up, bond prices fall. What's more: almost one-third of you predict bonds will move in the wrong direction, while 16% say bond prices will remain the same. Fourteen percent of you are dumbstruck: either you didn't know or didn't answer. This illiteracy is Wall Street's fault. For years, brokerage houses have extolled their investor-education programs. They have even banded together through the Securities Industry Association, setting up an investor-education site, siainvestor.org. Its top "Hot Topics?" Annuities and mutual funds. But don't expect anything too deep. Unless, of course, you're considering borrowing against your home equity to invest in an annuity. (Don't.) Otherwise, the site basically explains what these investment products are. Important for all you cave dwellers. And it just posted new content on hedge funds -- explaining what they are. What's really happening is that Wall Street is providing mere lip service to the dilemma that has fewer than two in five investors knowing how sales commissions or fees work. Fewer than three out of five have ever read a prospectus, and most have never checked the background of their financial adviser because they (you) "trust" him or her. |
|
|
