6/07/2012

Chew Sutat – The importance of retail investors




Finally a sensible voice from the SGX spoke. A stock market without retail investors is like a bankrupt with no cash. The retail investors provide the life supporting liquidity in a stock market. Getting rid of retail investors is as good as saying goodbye to the big funds and to the stock market. Someone must feed the big funds with profits, and this can only come from the retail investors. For the last decade or so, the big funds are happily sucking away the invested funds of the retail investors to a point that it is critically dangerous, that there will be no retail investors left to keep the market alive.

The pathetic state of the local stock market when the volume generated were mainly from machines and the funds must be telling unless the people in the know choose to put on their blinkers. The pathetic value of many stocks in the main board is another indicator that the market is in the intensive care ward and could go kaput any time.

What is seriously wrong with the market is obvious. It needs to provide a level playing field for big and small investors. The retail investors cannot be victims to unfair practices like trading against machines and computers. These must be removed if the market is not going to die a premature death.

Derivatives or instruments that are pure gambling chips that destroy the value of stocks or against the true value of stocks are also detrimental to the viability of a stock exchange. When healthy companies could helplessly see their stocks being sold down indiscriminately because the funds bid them down through a complex web of derivatives with no regards to the sound fundamental of stocks, it is a very destructive process that must be stopped to save the stocks and markets. When good companies cannot grow the value of their stocks in the market, there is no reason for them to continue listing in the market. Similarly, retail investors cannot continue to plough their money into good stocks for long term investments only to be destroyed by derivative play.

The third point is the uncontrolled influx of unlimited number of stocks in a small market that could not swallow them. To make matters worst, many of the foreign stocks are fly by night stocks and investors have no real recourse to claim back their investments lost through foul play. The exchange has to act responsibility to protect investors and their money by not indiscriminately allowing questionable foreign stocks to be listed here.

Protecting the small retail investors is the key to a healthy and sustainable stock market. The small retail investors must not be left at the mercy of big funds and their destructive machines in an unlevel playing field. Looking at the long term, many serious flaws in the market system and mechanisms must be rectified or else the market is sure to head towards oblivion must quicker than we known. The truth cannot be hidden for too long. It is not only unhealthy, it is sick, very sick.

Would there be strong political will and a little wisdom to make the necessary changes to save the market?

19 comments:

Anonymous said...

I knew we were in trouble many years ago.
When a local talent pronounced that SGX would henceforth be operated on a "disclosure based" regime.

So please "open your eyes big, big".

Matilah_Singapura said...

Too much of the SGX is dominated by government corporations and their cross-ownership.

Samll investors are the necessary "suckers" that need plucking so that the big cheeses can get rich and fat.

Level playing field? Get fucking real lah. Better take your small-time money and go Turf Club or Marina Bay lah.

Got casino?

Anonymous said...

The exchange must seriously think of doing away with all the gambling instruments and return the market to what it was before, a market for investments in stocks, not a casino.

Matilah_Singapura said...

@anon 746

Good luck with that. Exchanges are profit driven enterprises. Institutionals, funds and the machines deal with the serious money.

You swim in shark-infested waters? Then prepared to kena makan.

The world ain't gonna change so that you can "feel happy". ;-)

Matilah_Singapura said...

Example of what a financial derivative looks like

If you don't understand it, what the fuck are you doing in a market which is (largely) propelled by this kind of "alien" product?

Are you nuts?

Chua Chin Leng aka redbean said...

Matilah, if you don't know what you are talking about it is best you keep your mouth shut. The market is not as innocent as layman like you think.

What is happening in western modelled stock exchanges today is worst than the minibond and toxic notes saga. When the market imploded, the authorities would not be in a position to claim I dunno, caveat emptor. The people that would go to jail would be those running NYSE.

Anonymous said...

Anyone in SGX brave enough to tell Bocker that computers hooked to the SGX to trade against retail investors are wrong and must be stopped?

Anyone in MAS thinks it is their professional responsibility to tell the SGX about this unfair practice?

Anyone in the Min of Finance thinks he has the moral responsibility to save the stock market, the jobs of 10,000 people, and the small investors from this unfair practice?

Matilah_Singapura said...

redbean, WOW! Temper, temper!

I am no finance whiz. But I have the cow sense to recognise when the jig is up because some fuckers are rigging the game.

I sold out -- everything -- in 2006/7. Except for one IPO I bought in the 1990's, and the stuff the "genius" (not!) fee-hungry fund manager has in my retirement (superannuation) account -- which I can't touch -- I own ZERO stocks. I don't even consider myself "intelligent" for doing this...I just got lucky, and that "luck" or "cold feet" or call it whatever you like, saved my small-time retail ass from getting severely burnt in the market implosion which ensued shortly after.

Fuck the bourse lah. Too much shit you cannot control: super-duper fast machine trading, large institutionals, big money speculators, regulators asleep at the switch or corrupt...fuck that shit lah.

I like apartments -- easy to rent, nice cash flow, DIY maintenance for most jobs. Now and then you get an asshole tenant. But you just kick the fucker out (might have to call the cops to assist occasionally), but in the end you still have the tangible asset. In the stock market if you get wiped out, you have nothing.

Real estate market go up, go down...I don't care. As long as tenants are good and I have cash flow, can buy ticket come Singapore and stylo-milo at Holland V.

All markets are caveat emptor lah. Who can you trust in today's financial market? No one.

Plus what about that 600 + trillion in derivatives floating around? Sooner or later some counter party will fuck you up lah. They use fancy math to create "assets" out of debt, to INSURE other assets created out of debt.

Huh? Sorry lah, I'm not a quant, nor do I want to be one and I definitely do not even want to begin to pretend to be one.

Anyway, good luck to you fuckers lah. You are all much to big time for lil' ol me.

Chua Chin Leng aka redbean said...

Oops, I didn't mean to show temper lah. Just type too fast.

The thing is that when those you trust to do the necessary are no longer trustworthy, it is no longer a case of relac lah. There are 10,000 people whose lives depend on the industry and hundreds of thousands who have lost their savings because of fraudulent means.

Only in Sin can one fall back on caveat emptor as a defense. In Hongkong and the USA, they are going to hang them because of the Lehman crisis. When one claims to provide a fair trading system, it must be a fair trading system. The rest is caveat emptor.

Any merchant that is cheating their customers or selling toxic products cannot rely on caveat emptor to protect himself.

Matilah_Singapura said...

Caveat emptor: Oh you mean as a "defense" to protect themselves?

Really? Wah, damn garang. Cheeky fuckers!

If that is the case, my arguments have just got stronger. Obviously a few powerful rotten apples have spoilt the show.

If I were a retail investor in Singapore, I oso chuak lah. How many times you want to let people rape your pantat whilst the big well-connected elite brats are drinking bottles of Château Pétrus at $5k ++, whilst you go to your local kopi tiam to drown your sorrows in Tiger or ABC? Fuck that shit lah.

You cite Lehman. Remember CLOB? Retail buggers kena makan. Over 4 billion dollars. Wah, all my rimiser "friends" "advised" me to be their client. I go over for dinner at their place, even their mothers said I should "invest" with their children. Nah beh. Again, my kiasuism trumped my greed. Again, more LUCK than intelligence on my part.

After awhile, the "little guy" says "enough is enough". If the industry is so important to those thousands of individuals, then they should clean house from the bottom up

Finance is an emotional business. Once you lose your reputation for honesty, damn hard to attract the "little guy" -- the REAL people who put their own hard-earned money.

I'm betting on a crash -- a spectacular one when the toxicity of all those derivatives poison the market. Then -- rapid deflation. Which means, I can add a few more "small time" apartments to my final will, so that my heirs can fight amongst themselves :-)

patriot said...

Me salutes Matilah Singapura!

What he had written here SHALL HAPPEN, no escape.

Must also join him to say; no one is forced to gamble in the Stock Market.
No one should claim to be a victim if he/she loses in gambling.

patriot

Chua Chin Leng aka redbean said...

Patriot, this kind of thinking is like telling the Sinkies, don't like what the govt is doing, leave lah.

The people can expect the casino operators to cheat them by all means but not a legitimate institution set up by a govt. And neither can a govt do anything it wants and tell the people don't like, leave.

patriot said...

Redbean;

with the existing regime, I would exhort Singaporeans to leave Sin as soon as they can.

We are on the way to THIRD CLASS CITIZEN CATEGORY.

patriot

Anonymous said...

Stay in Sin and be exploited more and further ?
There won't be any end to the manipulation, exploitation and slave driving.

Matilah_Singapura said...

Folks, I keep telling you HOTEL HOTEL HOTEL!

You have no more cuntree left you can call your own lah. Hard to accept, I know. But IMO, better you take 10 deep breaths, realise the mass delusion, and set yourself free.

Got follow-the-breath?

Chua Chin Leng aka redbean said...

Matilah, you want to advise the Sinkies on how to change the hotel back to country?

Matilah_Singapura said...

Not even if someone put a gun to your head. ;-)

I like to see silly people gabrak. Entertainment lah.

Anonymous said...

Time to fire bonkers and the guy in MAS.

Anonymous said...

If you are going for mоst excellent cοntents lіke
me, only ρaу a visit this site daily ѕinсe it
pгеsents fеature contents, thanks

Feel frеe to visit my hоmepage; payday