Question

Thomas Weisel, chief executive of a securities firm that bears his name, believes that individual investors already have too much information. “Many lose money by trading excessively on stray data,” he says. Other industry professionals oppose the SEC’s fair disclosure rule (Regulation FD) for the same reason. The Securities Industry Association’s general counsel expressed concern that the rule restricts rather than encourages the flow of information. Other securities professionals argue that individual investors aren’t really capable of interpreting much of the information now available to them. Explain why you agree or disagree with these opinions.

Answer 1

The securities market happens to be a complex market where it takes lots of efforts to analyse the securities and ultimately arriving at a logical and beneficial conclusions.

I disagree with these opinions. The individual investors are the general public who rarely have an expertise of the securities market. They need all the possible data to analyse their investments. Also, they do have time to look for the data. So, in this case, all the information about the company will be provided to them. It is their hard earned money and they have all the rights to save it by making logical decision.

I did not like the logic behind saying that investors makes wrong decision because of too much information. If the individual investors do not make right decision, then that does not mean we should restrict the level of information to them. As said earlier, it is their hard earned money and they have a right to maintain or save their investment. So, no matter if the investors does not make the correct decision, every intermediary or the regulator is liable to provide whole gamut of the information.

In every emerging and or emerged market, the securities market regulator makes it compulsory for the company to disclose most of the information to the investors. They also monitor over these types of issues. All the information should flow to the investor in an effective and efficient manner.

The duties of the these types of companies are that they should make the data and information available to the group of investors. It is none of their business if the investor interprets the data in a correct manner or not.

I would also like to give the alternative to the idea expressed in the problem. Instead of restricting the information to the investor, these companies should educate their investors how to interprets the data in a better manner. The individual investors makes lots of decision on the rumours and the sentiment. So, they should be told not to make these as a bases for the investment decision. Rather, they should resort to all the data and the information about a particular company whenever making a decision.