Chapter 11. The Retail Investor: Victim or Fool?

Perhaps it's not too surprising that mutual fund companies bought dot-com IPOs on their own account and flipped them to retail investors for a handsome profit—mutual funds are in business for profit themselves. But what surprised many people was that mutual funds loaded up on shares of companies that many fund managers and fund executives, like other professionals, knew to be very speculative paper. To a significant degree, they were buying these stocks for the public's pension plans. When the market crashed, so did the pensions of many people.

How should we interpret this: Was the small investor a victim of fund managers who were speculating without the retail investor's knowledge, or was the small investor a fool who didn't do his or her homework and got what she or he deserved?