Sometime late last year, when I was reading the day’s news, I came across an article by Cullen Roche (link) about just how lacking most people’s knowledge of basic finance truly is. As usual with such articles, it really didn’t mean much to me at the time. It seemed like a serious problem, but I didn’t realize just how bad it really is until I joined Quora (question and answer site for those who don’t know). A few months worth of answering questions on Quora made it clear that the problem is not just that most people don’t understand basic financial concepts, but so many people seem to strongly believe things that are not even close to being true.
Questions I frequently come across include:
- How do I make money from penny stocks?
- When will Bitcoin overthrow the banks and set us free?
- How can I find my Wells Fargo account number on wellsfargo.com without a statement? (I’m not making that up, it was a question someone asked…I really want to know why they didn’t think to call Wells Fargo)
- Is it a good time to buy Twitter stock?
- Where do you believe Tesla’s stock will be in 5 years? Why?
- Has the stock market outlived its utility?
I could go on and on, but that should convey the general idea. I will say, I think that there is merit in asking questions when you don’t understand something. The problem seems to be that too many people really don’t know that they don’t understand the basics. They don’t realize that no one can tell you what stock to buy or even what your asset allocation should be. Too few people bother to specify a time horizon or risk profile when they ask such questions. There is a depressing amount of focus on big name stocks like Twitter and Tesla. Hearing about Bitcoin is annoying as hell now. I swear to God that if I have to listen to another just out of undergraduate punk with a computer science degree talk about how by this time next year everyone will be using Bitcoin for any transaction and it will be the end of the banks and bla bla bla….bad stuff about the Federal Reserve is usually included for bonus points….few things make me want to punch someone in the face than when I have to see another article or news report like that.
Back on topic, I really am starting to get a sense of just how bad the Financial Literacy problem really is. I’m no economist, but I feel like that must have some major impact on the economy (not to mention people’s lives). What to do….?
