Dear1 Dear2

Recently I’ve been wondering, is it that when people reach a certain age, have a job, and a certain amount of disposable income, they will start looking at the stock market? Since graduating, I’ve seen many friends around me start buying stocks. And the question I ask is, how much do they know about how the economy works and the company that their stocks are coming from? I think, for many, the stock market is viewed as a pseudo gambling den, buy and hope that it goes up. Maybe a better word for this is ’speculation’, but in essence it is just a fancy word.

I dunno much about investing myself so I shall not be commenting on how others buy stocks. Rather, I’ll just describe what I observe and why I feel that it is not right. Instead of properly research the company, reading their annual reports and analysing accounts, I have friends who buy on impulse, buying because ‘people on the forums’ say it is a good stock to buy. Because its price have fallen for the past 3 days. Because my friend bought it and is earning paper profits right now. Because I *think* it will rise. Huh?? Is that really the way to be investing? If so, why not bet on soccer instead? After all, it’s still win or lose, and u dun even need to pay the brokerage fee, and potentially u can gain higher returns on investment if the odds are good.

I think there’s a de-sensitizing effect as with all other things. At first, people are cautious, buying just 1 lot or 2 lots. Later, becoming more ya ya papaya, people start buying 10 lots, 20 lots, 50 lots. Then, they become numb to risk management and start short selling. It’s just like driving. As people gain more road experience, many tend to start driving faster and faster, which increases their risk. And chances are that they’ll only stop when something happens, and this ’something’ will usually be rather unpleasant.

All the money that we have right now are hard earned money. We didn’t strike any lottery, no Toto, no 4D. All these are earned by exchanging time with money, by working, by giving tuition. I think we should be prudent in spending and not develop risky gambling habits. Not that I’m against buying stocks, I just dun agree with how people any any how buy. I’m definitely someone with low risk appetite, so unless I have spare spare cash (repeated usage intended), or maybe have a dependable expert to guide me along, otherwise stocks are out of my portfolio for now.

-Dear1