“Are financial markets rigged against the individual investor?
“Absolutely,” says Lance Roberts, CEO of Streettalk Advisors. “If you’re trying to look at the economic data that is coming out and you’re hitting refresh on your Internet browser you are so far behind Wall Street you’ll never catch up.”
But the information lag time is not the only problem facing individual investors.
High frequency trading also puts the little guy at a disadvantage. Traders who profit from this type of investing use powerful computers to react to market movements and patterns before any human possibly could. Along these same lines, major investing firms have moved their trading systems as close as possible to Wall Street to shave nanoseconds off the transaction time.
“The average investor really is at a disadvantage these days,” says Roberts.
Then there’s insider trading by members of Congress. Even our very own elected officials are using inside government information to profit at the expense of everyone else. The public outcry to ban this behavior, which has been going on for years, finally came to light after a CBS “60 Minutes” report last fall. Since then, a bill to prevent congressional insider trading has moved quickly through both the House and Senate, but likely still does not go far enough to make any real difference. (See: The STOCK Act: A Step Foward But Not Perfect, Says ‘Throw Them All Out’ Author)
“The average American is starting to kind of be fed up with the way things are, the status quo,” says Roberts. “The best that the average investor can do is play along with the game.”