The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails

Plain Speaking

Washington needs to address the language of disclosure. Wall Street will not do it. Too many companies are too skillful at speaking and writing in a language and format that defies comprehension. How many people know that it is usually best to first read the footnotes on corporate filings? How many people know corporations can improve financial results by depreciating assets? Issues of timing are also pertinent. Should corporations be allowed to post negative news that will hurt the stock price after the stock market has closed on Friday and everyone is gone for the weekend? Corporations use this tactic because they hope no one will pay attention. Perhaps, corporations should be required to state, clearly and simply, in plain language what happened to impact quarterly earnings. Companies that comply with those consumer-friendly reporting metrics could be awarded some version of the Good Housekeeping Seal of Approval by the investor laureate. Any company found to be investor friendly would likely be rewarded by attracting investors.

Clearly, some people will always behave like idiots. The greater fool theory will always be a defining characteristic of markets. But at least let people make bad decisions using good information. People have a right to have the facts—not just the people who control the market. There is good business sense in truly democratizing and simplifying financial information. Just look at the cost of cleaning up the credit crisis and the huge deficits ...