6/27/2013
Retail penetration encouraged
The SGX is trying another way to attract more retail participation in the stock market. The new scheme is to make blue chips easily available to small investors in small amounts of as low as $100 per entry per month.
Chew Sutat, the Executive Vice President of SGX said, ‘Equity investing is about saving and investing for the long term, not just about trading and speculating. It is not just the just the domain of the rich….A low retail participation is not ideal, because it means our capital market is not doing a good job of allocating savings towards investments, for the benefit of both savers and entrepreneurs.’ Quoted from Today and ST.
All the minor suggestions and schemes are meant to be good, to increase activities and participations by the retail investors. What is missing is the reason why the retail investors are fleeing from the stock market. Does anyone know why or nobody wants to know why? Most retail investors are losing their pants and their savings. How then could they find the money and the encouragement to return to the market?
Anyone wonder why are the small investors kept on losing and losing? If the stock exchange does not want to know the truth and think a little gimmicks here and there would bring back the small investors, I think it is a very serious case of delusion.
Stock markets from New York to London, Hongkong and Tokyo, are operating almost in the same way, with the big funds using their computers to trade against the small guys. Where is the chance for the small guys to make a little profit? How can the ordinary guy trade against the computers that are plugged into the exchanges to capitalize on speed and access to information that the small guys did not have?
Until stock markets are operating a system that is fair to both big and small investors, the small retail investors are not going to bite. Stock trading is cannot be a long term investment or a casino where the big funds are gambling with their computers. The first thing to do is to get rid of the unfair advantages of the big funds. Otherwise the stock markets across the world will be a slow march to certain death. The small retail investors just cannot afford to lose and lose. And the big funds will eventually find that there is just not enough small fish to fill their big appetite.
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12 comments:
"Most retail investors are losing their pants and their savings."
RB
That's because they did not invest in blue chips for the long term and they speculate.
Because in the long term, prices of blue chip stocks can only go up, although short term, say over a few years, there will be fluctuations. But the trend is up for the long term.
But probably many retail investors are also retirees, so probably they may not live long enough to see the long term. So this is a problem.
And what's the point of lots of money, even if it is billions, after one is dead? Or close to dying?
That's why I don't worry my HDB pigeon hole becomes zero value at the end of 99 years. Or care if PAP voted out in 50 years time.
As we speak now, Robert Mugabe of Zimbabwee is in town to seek medical treatment. Was stopped by police out-riders at Raffles Place during lunch time yesterday and saw a convoy of VIP cars passing by UOB Plaza.
"Buy Singapore Press Holdings, Singapore Telecoms and Starhub or other blue chips that offer a yield that is better than 3%. Do invest in as many shares as possible, to enjoy the benefit of diversification."
Quote from a investment guru's recent blog.
What do you think, retail investors?
So far OCBC is the only bank offering monthly investing account in blue chip. It is just like the gold investment account passbook years ago. I understand that this gold passbook thing has died a natural death. So would the monthly investment scheme. It would not appeal to the common people. I will rather use my CPF to buy trustee shares.
While it is true that the big hedge funds and institutions are trading with their computers, the algorithms are not the same. Analysis is different and so depending on what algorithm you use and how it is programmed, you win or you lose.
It's like two huge transformer robots slogging it out and some will die.
Smaller investors can take advantage of the cyclic swings of the markets to make money. The axiom is that what goes up must come down and what is now down will go up. To do this however, you need to be financially secure and the funds you put into the market are money you can afford to lose.
Most retail investors and retirees especially do not have this kind of mental discipline to trade in a manner that will take advantage of this cyclic swings. They rush in when the market is up and stampede to get out when the market is down. They are driven by emotions and herd mentality and therefore lose their pants.
This investment mode offered by OCBC is good for this kind of investors. Those managing the portfolio are professionals and hence they take a detached but professional approach to to market swings.
I leave it up to the investors. Buying of odd size other than the lot size will almost guarantee a bigger spread, moreover there will be counter party risk as this is almost CFD like. What the SGX should do instead is to reduce the archaic 1000 share lot instead, If they can do it for some shares currently trading in 10 share min lot size, there is nothing to stop this being applied to the blue chips. So I think OCBC is looking at a revenue point of view rather than the interests of the small trader. Retailers will definitely be the ones penetrated
The thing about big funds using their computers to plug into the exchange is a violation of fair play. It gives them a big advantage over the rest of the investors. This is illegal.
This development has turned all the stockmarkets into a totally different animal, one that allows that big funds to cheat on the small investors.
A rare few many still make some money on long term investing but their timing still must be right. While this rare few may think they are investing correctly, the scam is robbing away billions and trillions of money from other investors, including high net worth clients and pension funds.
Now this is not only a matter of immoral, but criminal.
All capital markets need suckers, or else there wouldn't be much point.
I have no sympathy for people who lose money in the markets. Fuck them -- they are STUPID, but they are also the necessary idiots.
No one "forced" them to play. With the growth of HFT systems in the industry, the uncle-aunty brigade still want to play, and bet their life savings (how fucking dumb can you get??) on some dream of "hitting it big" and "getting rich quick".
It boils down to this:
Money management -- zero
Emotional mental state -- continuous
Thinking that they are "right" -- always
Taking advice from "ex-spurts" -- the default
HFT is not going to go away. In fact more and more of our lives are going to be governed by algorithms.
....and you can bet it gets more "interesting" from here on out. ;-)
The stock market is just another playground like casino. People willingly go there and spend money. Singaporeans are daft. Toto, 4D, stock market, casinos all these are such tools to make the rich richer and the rest poorer.
No, the casino is better and safer. They are better regulated. There is a pretence to be responsible.
In the case of stock markets, it is total irresponsibility. Those who are responsible are turning a blind eye, looking the other way.
Advertising gimmicks on the prowl.
Big fish eats small fish in one big gulp.
Fools are the small fish struggling to become big fish. That will never be.
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