The Sunday Times carried a story about young people who were investing in stocks and CFD (contract for differences). Some made trading losses but are still keen to continue "investing" in the market.
It is important to use the correct term to describe the activity. It should be called "trading" or "speculating" and not "investing".
When one "invest" in a company, one has to study the fundamentals of the company with the intention of holding it for many years to earn its dividend and the long term capital gain. I know of people who bought blue chip shares and kept them for 40 years. That is "investing".
Those who buy and sell shares to make a short term gain should be called "speculators" or "traders" and not "investors". There is nothing wrong with speculating or trading in shares, or gambling in the casino, if the speculator is aware about the risk and is mentally prepared for the consequence of making a loss, while pursuing a gain. It would be wrong to be deluding that they are "investing" in the stock market.
I hope that our financial journalists will use the correct term to describe the activity, so that the speculators are not deluded into thinking that they are carrying out an "investing" activity.
It is important to use the correct term to describe the activity. It should be called "trading" or "speculating" and not "investing".
When one "invest" in a company, one has to study the fundamentals of the company with the intention of holding it for many years to earn its dividend and the long term capital gain. I know of people who bought blue chip shares and kept them for 40 years. That is "investing".
Those who buy and sell shares to make a short term gain should be called "speculators" or "traders" and not "investors". There is nothing wrong with speculating or trading in shares, or gambling in the casino, if the speculator is aware about the risk and is mentally prepared for the consequence of making a loss, while pursuing a gain. It would be wrong to be deluding that they are "investing" in the stock market.
I hope that our financial journalists will use the correct term to describe the activity, so that the speculators are not deluded into thinking that they are carrying out an "investing" activity.
6 comments:
rex comments as follows,
i am as well, disappointed, disgusted and angered at the Sunday Times articles. Reading between the lines and looking at the smiling pictures of the pretty heroines and heroes, it is easy to feel that these activities are wholesome even for young people "with nothing to lose".
On the contrary, young people should invest their time in skills to do their job well or start a business, not get into habits of buying shares for "investments" or CFDs for speculation. The sublimal message given in the tone of the articles is very misleading to ordinary people who will be tempted to think that it is a smart thing to do.
I also wish to suggest that CFD's Contracts of Difference in which buyers don't need to own the shares but just gamble on whetehr the stock go up or down - is no difference from Horse Betting. IT can be very addictive way to get quick gains without going through the usual restraining mechanisms.
The situation in Singapore will go worse. More people will go to Bedok Reservoir and kill themselves, it is not surprising. Our society is breaking up, no thanks to the money-worshipping model of the regime.
rex
I believe some will first speculate but when their speculating positions got stuck they will become long-term "investors" to collect dividends as pain killers for their unrealized capital losses.
Just another perspective for thought;
Paraphrasing from Dick Van Tharp.
"First identify the type of market that you are operating in. Then choose the strategy that best harmonizes with the market type you are in."
The Sunday Times "Invest page" is NOT worth reading anymore....
It is full of craps
Agreed that the impression one gets from that Sunday Times article was that
1) it was fashionable and smart of these undergrads to be doing "investments",
2) they must have bottomless pits of ready money to try out their strategies &
3) that real, honest work is only for the dumb.
Agreed with rex. Singapore is going to the dogs at the rate our society is unraveling.
I think we should recommend journalists who are not financially literate to attend your Financial Planning workshops.
I suspect such articles are written by "L plate" journalist trainees sent to interview fellow newbies to get some field experience. Hey! We all have to start somewhere...
LOL!
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