I think there’s a desperate need for good financial advice for individuals. I think unfortunately the incentives on Wall Street and in the money management industry and in the media create an environment where there’s very little of that. For example, one of the things that became clear to me over two to three years of studying the best advice for individuals was that it is crazy for individuals to try to pick stocks and it is crazy for individuals to try to pick mutual fund managers or hedge fund managers who can beat the market.
For 99 percent of individuals, it’s just devastating to their financial performance. Really what they should be doing is keeping their money in low-cost index funds and only rebalancing once every couple of years, and that’s it.
And yet the problem is as a brokerage firm, as an advisor, as a media pundit, you can’t just go on and say everyone should just buy index funds. Stop trying to figure out what’s next for Yahoo or Google or Apple. Just buy index funds and forget it. Financial TV would just have to fold up the tent. The good news is there are lots of professional money managers out there and there are very dedicated individual traders out there who do, in fact, want to dissect stocks every day and try to figure out where the next trade is. That’s where the whole financial media industry is; they’re catering to those people
A quote by Henry Blodget – From the book