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SEC Says Retail Investors Are Clueless About Stocks

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In 182 short pages, this SEC study shows retail investors lack basic financial literacy.

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MINYANVILLE ORIGINAL The Securities and Exchange Commission has released a Study Regarding Financial Literacy Among Investors, and it reveals that many US retail investors are at best confused and at worst clueless when it comes to making an informed financial decision about "open-ended" companies, its term for equities.

"US retail investors lack basic financial literacy," the report says. "The studies demonstrate that investors have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud." That might explain the endurance of The Investment Scam That Refuses to Die which revolves around the Iraqi dinar; salespeople typically use circular and specious logic to convince would-be currency arbitrageurs that buying Iraqi dinars is a high-yield, low-risk venture.

But we digress. The SEC study was created to fulfill section 917 of the Dodd-Frank Act. The study represents the SEC staff's "distillation of the information gathered among retail investors in the United States, public comments, qualitative research (focus groups), quantitative research (online survey) and FLEC."

FLEC, according to a footnote in the document, "consists of 22 federal entities and is chaired by the US Department of the Treasury, [and] was established under Title V of the Fair and Accurate Credit Transactions Act of 2003 to improve financial literacy in the United States." Who knew?
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