Stupidity has no cure

Good news for remisiers and investors. The SGX has signed an agreement to bring in more red chips to improve the vibrancy of the stock market with more new and promising stocks from China. With the experience we had with CLOB shares and the first generation of red chips, SGX must have learnt a lot of good practices to introduce into the system before bringing in more red chips into the market. I am very sure they knew the risks involved and have done their homework to make sure history does not repeat itself and Singaporean investors would not be robbed once again. I am very sure many safeguards have been put in place by now. No? Doing the same thing all over again?

Let me try to recall what happened. My memories are fading fast, maybe getting dementia soon, how many red chips were IPOed here and how many left, yes left got two meanings, left the market, delisted or simply disappeared, or left in the market that you need to scratch with a changkol to find them? And how many are left with prices that are more than 10c, how many are left with prices that are 1c or less than 1c like 0.1c or 0.2c?

Don’t get me wrong for bringing up such memories. I know some are making good money by trading in these micro value stocks that can double in value by moving just one bit like from 0.1c to 0.2c. From a $1m investment it can become $2m if the stock moves by 0.1c. This is very, very attractive, better than buying Merrill Lynch, City Bank, Goldman Sach or SBC.  If more stocks in SGX are 0.1c, there will be more opportunities to double your money.

Another point, when new IPO red chips are brought in, there is likely to be a new round of euphoria and with more suckers coming in to chase up the prices. My advice, oops, cannot advise, just my wild guess, if new IPO red chips are in play, it may lead to a secondary play in the tired and retired micro chip stocks of 0.1c. When the attention is turned to these micro chip stocks, there will be good opportunities for some to double their money for sure.  This is the silver lining in brining in more red chips into the market.

And for sure, the stock market will be more vibrant with more new investors rushing in with their money to invest in the red chips, for the long, long term. Just be warned, investment in stocks is for the long term and one must be prepared to hold out for 20 or 30 years and 0.1c stocks could turn into diamonds and worth like diamonds.  Oh, let me balance my views, micro chips of 0.1c can run up to several cents, those new red chips of several cents or dollars can also run down to 0.1c. Historically this has proven to be possible. Must be the work of gravity I think.

Trade with care and make a lot of money if you can. Get your savings ready to invest in the red chips that are coming this way. Just be prepared for the long haul.

I have a suggestion, not sure if this is good or not. All the new red chips should have a prefit CE in front of their names, eg Spring Chicken should be listed as CE Spring Chicken.  CE is not meant to be abbreviation for China Equity or Cum Entitlements. It is meant to be Caveat Emptor, ie buyers beware.