Small Investors in the Stock Market
Not what you're looking for?
You work for a large investment firm and recently wrote a position article on your firm's approach to investing for the small investor, titled "Investing Is for the Little Guy." The article now appears on your company's Web site. It has, interestingly enough, generated e-mail responses from potential clients, and your firm is asking you to address some of their questions for a Frequently Asked Questions (FAQ) segment that will be posted to the Web site soon.
Specifically, some of the respondents have compared investing in the stock market as a no-win situation, and only the institutional investors can win. These respondents would like a response that further clarifies your firm's position regarding risk in light of these types of statements.
- What disadvantages do small investors face when investing in the stock market?
- What advantages are presented to these small investors?
Purchase this Solution
Solution Summary
- What disadvantages do small investors face when investing in the stock market?
- What advantages are presented to these small investors?
Solution Preview
Small investors face several disadvantages when investing in the stock market. Due to the size of the stock market in general, one of the main problems is that small investors have much more limited resources compared to larger investors, including institutional investors. On average, the small investor will also pay higher brokerage fees than the large investor, who generally gets discounted fees due to the amount that they invest. This acts as an additional discouragement to a small investor, because it decreases the amount of capital that they have to invest. The small investor quickly gets overcrowded by the bigger investors, which may make it difficult for the small investor to invest in desired stocks.
Investors with diversified portfolios generally increases ...
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.