Small investors have a hard time keeping up with traders and the market in general when it comes to picking stocks. There is clearly asymmetrical information, meaning that the small investor finds out about news much later than the trader working on the exchange. For example, by the time “Joe” gets home from work and checks how the market did today, his stock that announced quarterly loses has already dropped 50% before he can even think about selling it. In addition, most people who don’t understand finance and how to read financial statements invest merely on hearsay or hunches, which are sadly more wrong than they are right. So if I had money to invest, I would most likely use a random way of picking my stocks.

Tags: Investors, stock market

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This entry was posted on Friday, July 6th, 2007 at 4:38 pm and is filed under Internet. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.