Froma Harrop: On "Personal Accounts"

Are Americans smart enough to manage their own retirement savings? No, as a matter of fact, they're not. Americans are amazingly dumb about investing.

Take my friend John. An auto mechanic, John was an absolute genius under the hood of an Alfa Romeo. But he was vain. A crook called offering to get him into commodity options, and John thought he had entered the gates of high finance. He forked over 10,000 of his hard-earned dollars. Of course, they disappeared.

Now, if John had caught someone stealing the $30 radio in his car, he would have ripped him to pieces. But he accepted his $10,000 loss like a sweet little lamb.

"Aren't you angry?" I asked him. No, John replied. He understood that the investment was risky. Had it gone well, he could have become very rich. John had been rolled and didn't even know it.

That was an out-and-out con, and an extreme case. But every week, fresh evidence bubbles up that Americans don't get the basics of ordinary investing.