August 18, 2022

Stocks: More Mysterious Than Crypto?

In an attempt to support growth in retail investing, the World Economic Forum recently partnered with BNY Mellon and Accenture to survey what leads people to participate – or not – in capital markets. The 95-page report includes this sad finding:

Gaps in financial education are the primary barrier to investing: In France, Germany, the UK and US, retail investors feel they have a comparatively better understanding of newer, less established products (e.g. cryptocurrency and non-fungible tokens or NFTs) compared to more traditional asset classes (e.g. bonds and stocks).

Diving deeper, nearly 40% of investors said they don’t understand stocks or bonds. Another 18-24% said they don’t know where to access these products! Meanwhile, 40% of global retail investors hold crypto, and Bitcoin is making its way into retirement portfolios.

Having spent my entire career to-date in the public company and capital markets space, being the type of person who mostly just holds boring old index funds, and having just written a blog about complicated regulatory questions & uncertainties surrounding digital assets, this news fills me with both dismay and FOMO. Maybe what stocks need is a spokesperson who is younger than 90 (no offense, Warren & Charlie). According to the survey, 70% of retail investors are under 45 years of age.

Despite crypto’s rise, we’re nowhere near an inflection point. This Reuters article says that the value of the global equity & bond markets still dwarf crypto – $124.4 trillion and $126.9 trillion in 2021, respectively, compared to $3 trillion for crypto (and that’s before the 2022 slide). The survey details how this class of “investments” (?) comes with its own challenges…

Liz Dunshee