Invest Local Not In Wall Street

ny Americans lost vast amounts of money when Enron went bankrupt, but those who saw the disaster coming did little to warn them. Instead, the company told investors to stick to their guns and spend even more on company stock—all while top executives scrambled to sell their own before it became worthless.

Examples like the Enron disaster and the collapse of the US housing market illustrate a principle I would like to see more investors understand: Wall Street doesn’t always care about what happens to individual investors. I see traditional investments such as stocks and mutual funds as carrying more risk than most people realize. I am particularly critical of long-term options like 401ks and IRAs that rely on these investments to grow money. Misunderstandings about how they work convince people to be passive investors and to lock up their money until old age. These instruments often produce less wealth with more risk than investors are led to believe.