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E-Trade stock pop quiz
Make sure your trades are... informed
There was a beautiful period from mid-2020 to mid-2021 where you could throw money into almost any stock and it would go up. It was magical. The meme-stock era had everyone feeling like they were an investor. As is often the case, something is deeply wrong if everyone thinks they can invest.
2022 was a rude wake-up call for almost all retail traders. The free money era ended, and much of the money pumped into the economy from the pandemic dried up. Stock prices went into freefall for a hot second and many fortunes were obliterated overnight. Thankfully, tech has rallied since then and indexes are back at an all-time high, largely carried by gains in the largest technology stocks (thank you, Mark Zuckerberg).
Anyone with the appropriate identity verification and a few bucks can now trade stocks, but sometimes I wonder if they should be able to. 90% of people who try to actively manage their portfolios underperform when benchmarked against major indexes.
This got me thinking… what if there was even a tiny bit of education implemented to approve someone as an investor? You could imagine some sort of quiz like the one pictured above as a means to verify people even know what they’re buying.
Even if some brokerages implemented this, others would not since they are incentivized to get people to trade more, not less because of the underlying PFOF model. This isn’t a finance newsletter so if you’re dying to know what PFOF is, just Google it.
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