For the past few days, I’ve been down in Florida, a place I once called home, driving between St. Pete, Winter Park, Sarasota and Venice to speak to local chapters of the American Association of Individual Investors. Since I (and the rest of team footnoted) spend a lot of our time in front of our respective computers reading filings, the past few days have provided some interesting insight into the lives of ordinary investors.
Granted, it’s hard to equate these past few days with a controlled focus group. Indeed, people who attend AAII meetings probably tend to be more interested in investing, or they wouldn’t show up. That’s why some of the questions, and the assumptions about how things work, were pretty eye-opening.
I’m thinking of one older man in particular yesterday in Sarasota who told me that he owned 10 or 15 stocks but read zero SEC filings. “I don’t have time to read all those filings,” he said, pretty defensively. I asked him what else he did all day that prevented him from keeping an eye on his investments. I also asked him if he was too busy to care about a stock in his portfolio dropping 10 or 20 or 30%. He gave me a cranky half smile and said that he thought it was somebody else’s job to read them.
The problem is that for way too many investors, there is nobody else. Not your broker, nor your financial advisor. Nor some analyst sitting at a desk somewhere. And not even footnoted. As we say repeatedly, we can’t possibly read every filing. There were over 650,000 made last year. And, as good as we’d like to think our search algorithms are at finding the juiciest stuff, we only know what we’re able to find and have no way to accurately measure all of the disclosures we may be missing.
So I told the man that if he wasn’t willing to do at least a minimum amount of work, he probably shouldn’t own individual stocks. It’s a message that investing gurus like John Bogle repeatedly stress. And, yet here was this retiree telling me he simply didn’t have the time.
I told the man that I wanted him to promise me that he’d at least skim the proxy statement for whatever his largest position was — or whatever position he was most concerned about. We’re at the tail-end of proxy season right now and of all the SEC filings out there, proxy statements are the most fun.
Will he follow my advice? My guess is that just by judging his defensive response yesterday, probably not. Still, I hope that something I said may have gotten through to him and that he’ll find time in his busy schedule to read a filing or two.
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