Stock addicts may gamble away careers
Updated: 2008-01-03 07:30
By Louise Ho(HK Edition)
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About 10 percent of Hong Kong stock investors become so overwhelmed playing the market that they quit their jobs to invest full time, a new survey revealed yesterday.
The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) surveyed 732 people in December. Of those, 358 said they invested in the stock market in 2007.
But only half of those investors had even "a basic understanding" of the companies they were investing in. And half said they bought a share not knowing the company's nature of business.
The aforementioned 10 percent said they quit their jobs, or wanted to quit, to follow the market more closely.
Almost 30 percent admitted to checking share prices at work, as well as buying and selling shares on the clock.
An overwhelming 70 percent of investors said that buying shares made them nervous or less focused while at work. And 60 percent agreed that the current market sentiment was "close to crazy".
DAB's financial affairs spokesman, Chan Kam-lam, said the survey found that, on the whole, investors still have a "herd mentality".
"Many people think earning money directly from the stock market is easier than earning it from a salary," he said.
He also pointed out that most people who quit their jobs for stock speculation were from the lower-middle class.
"If the market is good, they can earn HK$100,000 a month, which is much better than their salary," Chan said.
He urged investors to understand risks and not invest solely for short-term profit.
He suggested that the government increase education opportunities for investors, such as offering counseling classes through voluntary organizations similar to those offered for gambling addicts.
For housewife Lui Sau-king, who has bought shares for the past year, penny stocks are not on her shopping list.
When picking stocks, she always pays attention to the company's business and the industry's potential.
"I'll also read analysis in newspapers and magazines, but I always make my own decisions," she said.
She usually makes long-term investments, especially for blue chip shares and IPO applications.
She has made it a habit to check share prices every day, but she doesn't get scared when a share price goes down because she's invested long-term.
The current market sentiment is more stable than when the Hang Seng Index was up to 30,000 points, she said.
"As the index has gone down these past two months, people have become more experienced and have an observing attitude toward the market," she added.
Billy Mak, associate professor in the Finance & Decision Sciences Department at Hong Kong Baptist University, said the current situation of stock speculation is similar to the tech-stock boom in 2000.
"At that time, some people also quit their jobs to invest in shares," he said.
"In the current market, people think there is a great chance to earn quick money," he said.
But, "People should never quit their jobs for stock speculation," he advised. "When there's a financial crisis, you could lose your assets."
He also asked new investors not to be overly optimistic about the market, because share prices rise and fall.
While he agreed that the government could increase investor education opportunities, "It is the individual investors' responsibility to evaluate their ability to take risks", he said, urging investors to read company reports and analysises before spending their savings.
(HK Edition 01/03/2008 page1)