KUALA LUMPUR: It has been almost 24 years since the 1993-1997 Bull Run that the Malaysia stock market witnessed such a huge influx of retail investors.
Many new retail investors are turning to the stock market due to the Covid-19 pandemic and lockdown, seeing it as a way to ease their financial constraints.
However, this has also prompted many opportunists to emerge on social media platforms taking advantage of retail investors.
“Many retail investors are genuinely good, hardworking people who are just trying to live a better life. Sadly, they fall victim to those who consider them as “lambs to slaughter” and capitalise on their lack of knowledge,” said financial columnist and author Ng Zhu Hann, better known as Hann.
Hann is the author of Once Upon A Time in Bursa – The Money Equation. Before writing the book, he had blogged under the pen name Tradeview and is well known among retail investors.
Little was known about the writer behind the moniker until the launch of the book in May 2021.
Hann, a lawyer by profession and formerly the Chief Strategist of a Fortune 500 Corporation, was referring to the recent viral video clip where a radio host had received a distress call from someone who was contemplating suicide after following the advice of a group of “fake gurus”.
The victim had purportedly lost his job due to the pandemic and was hoping to make some income from stocks. However, he lost all his savings after allegedly following the advice of the “gurus”. The man then thought of taking his own life so that his aged parents would get the insurance payout.
“Many say the stock market is a zero sum game designed for the rich and powerful. I beg to differ. If one were to invest in well-managed companies for the long-term, one’s investment will grow along with the companies’ earnings at no one’s expense.
“The stock market only becomes a zero sum game when people adopt a punter’s mindset. I grew my investment portfolio by setting aside some money to invest in companies that I like every month.
“Of course I made plenty of mistakes and lost money as well but learning from your mistakes is crucial,” Hann said.
Hann explains that the stock market was originally premised on harnessing the collective strength of investors to help fund a company’s growth. However, what started out as a good idea morphed into something that can also cause tragedies, owing to man’s greed.
“Often it is the common people that suffered the brunt of any stock market collapse or pump and dump schemes.
“In spite of all the tragedies, many retail investors still hope to “get rich quick” speculating in the stock market leading to a vicious cycle. Ignorance is not wrong but ignorance coupled with greed is a lethal combination,” he said.
Fake Gurus and The Real Deal
“These fake gurus mostly rely on social media platforms to draw in unsuspecting victims by flaunting their expensive watches, cars or mansions.
“Truly successful investors on the contrary are humble. Warren Buffet, Peter Lynch, Dr Neoh Soon Kean and Fong Siling are good role models,” he said.
Hann’s Once Upon A Time In Bursa hit the bookstores on May 30, making it the only book by a Malaysian author to top the MPH Bestsellers’ List for Business Reading in June.
Publishing company AcePremier chief executive officer John Lim said financial education is still at its infancy stage among Malaysians, and this was a cause for concern.
He started AcePremier 12 years ago and started specialising in the publication of financial books two years ago.
“While scouting for a financial author, I came across Tradeview’s articles and I like the way Hann shares his own investment journey. He encourages people to analyse a company before investing in a stock.
“Instead of opting for a shortcut by going to an investment guru, why not learn how to analyse the stock yourself and make an informed decision?”
Meanwhile TED Optimus Sdn Bhd chief empowerment officer Warren Mak, who is former Bursa vice-president (Investor Education) said the Securities Commission is doing a good job updating the public on the latest scams and unlicensed entities.
“However, people always think they will never fall victims to scams. Sometimes the people conducting investment courses may not be “fake gurus”. They may have the theoretical but lack the practical knowledge.
“Then of course there are the “syndicates”, or what we call the “Big Boys” who show up on social media platforms to offer free training only to lay market traps for unsuspecting retail investors,” Mak said.
With 28 years of investment experience, Mak’s advice for retail investors is not to be emotional.
“Do not panic when the share price goes down. If you invest in a fundamentally strong company over the long-term, one almost always makes money,” Mak added.