August 20, 2012

Why Mom and Pop Investors Are Taking a Pass on Stocks

There’s a lot of talk about the individual investor getting out — and staying out — of the stock market, but a column that ran over the weekend in The Washington Post does a good job of putting together all the reasons why. Barry Ritholtz, who runs the finance blog The Big Picture, raises the question “What has driven the typical investor away from equities?” and writes:

“The short answer is that there is no single answer. It is complex, not reducible to single variable analysis. This annoys pundits who thrive on dumbing down complex and nuanced issues to easily digestible sound bites. Television is not particularly good at subtlety, hence the overwhelming tendency for shout-fests and silly bull/bear debates.”

 

Mom and pop investors have had enough of Wall Street scandals and the portfolio whiplash that comes with high-frequency trading, Ritholtz says. And even if Wall Street’s problem with being ethically challenged doesn’t bother you, the lousy returns of the stock market probably does. Read article.