Too much financial engineering
The financial crisis is partly caused by too much financial engineering and pushing sophisticated products, instruments and derivatives to the ignorants. The days of govt bonds, FDs, stocks and unit trusts were gone. It is now a jungle out there. These sophisticated instruments are meant for funds and finance trained professionals. They are the ones who traded in these instruments for hedging, arbitraging, taking advantages of market inefficiency and their timely news and network of information. Asking the Ah Peks and Ah Mahs to invest in these instruments and expecting them to understand what they are in for is asking too much from them. In the stock exchange, there all also many derivatives and instruments that are not easy for the average punters to understand. Even the remisiers and dealers will have a hard time trying to manage them and trade these instruments to their advantage. They lack the skills, equipment, softwares and resources to compete against professional fund managers. It is an uneven playing field. The O level students pitting against the PHDs. Training derivatives, with their high risks and leverages, should not be marketed to the average investors. The watchdogs should also spend time looking into these instruments and gauge their usefulness in a market with unsophisticated investors.