A vast network of laws and regulations is aimed at creating a more level playing field for investors, like criminal laws that ban securities fraud and the S.E.C.’s Regulation Fair Disclosure, which requires companies to widely disseminate market-moving information about themselves. Consider also the simultaneous public release of government information like employment data and the Federal Reserve minutes.
The goal is not just fairness, but to make capital markets more robust by encouraging the public — not just professional speculators — to invest.
“The reason America’s markets are the best and strongest markets in the world is that individuals always believed they could get a fair trade,” Mr. Schneiderman told me this week. “If you did your research well, you weren’t at a disadvantage because of information you couldn’t possibly access. It wasn’t a rigged casino.”
I've been thinking about this for a long time (since about 1988) and I've concluded that retail investors who have the common sense God gave gravel know they have no business playing in the fast lane of individual stock trading. Instead, their money is safey tucked away in a small but diverse portfolio of no-load, low expense, passively maanged index funds, as Burton Malkiel has been telling us for decades in multiple editions of A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. As an investing little guy myself, I've advocated that strategy for years on this blog and I put my money where my mouth is. Every dime of my savings is in such a fund.
Regulators do investors no favor when they encourage them to compete with the big boys. Instead, regulators should be doing everything they can to persuade us little guys to flock to index funds.