Comments on: Falling stock markets, even in China – some thoughts http://www.marc.cn/2008/01/falling-stock-markets-even-in-china.html Marc van der Chijs' Mon, 06 Feb 2012 06:48:24 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Marc van der Chijs http://www.marc.cn/2008/01/falling-stock-markets-even-in-china.html/comment-page-1#comment-1481 Marc van der Chijs Fri, 01 Feb 2008 09:53:00 +0000 http://mirrin.nl/?p=807#comment-1481 Thanks for the lengthy comment. I agree that we should not really feel bad for the investors that are losing money in the stock market this week. They should have done their homework before investing, but the problem was that most of them have no way to get unbiased information. <br/><br/>The risk I see is that there may be potential unrest if people lose all their money. However, if the stocks lose 1-2% per day (like happened this week) it is still OK. People can get out when they want to, it's better than if the stock goes down 10-20% per day (which cannot happen, as there is a 10% downward "ceiling"). Thanks for the lengthy comment. I agree that we should not really feel bad for the investors that are losing money in the stock market this week. They should have done their homework before investing, but the problem was that most of them have no way to get unbiased information.

The risk I see is that there may be potential unrest if people lose all their money. However, if the stocks lose 1-2% per day (like happened this week) it is still OK. People can get out when they want to, it’s better than if the stock goes down 10-20% per day (which cannot happen, as there is a 10% downward “ceiling”).

]]> By: Mr. Lu http://www.marc.cn/2008/01/falling-stock-markets-even-in-china.html/comment-page-1#comment-1480 Mr. Lu Mon, 28 Jan 2008 04:13:00 +0000 http://mirrin.nl/?p=807#comment-1480 Hello Marc, an article in Shanghai Daily mentioned last week, that the most of "investors" at the biggest open-air casino (which is what Shanghai bourse has become, in my opinion) are individuals. I can neither recall the precise number, nor did I a research what this ratio is at mature markets. However, my Chinese assistant is pretty cool-headed about the recent situation:"I know I bought a stock worth 2 RMB at 8 RMB, but since it has raised up to 11 RMB when I sold it, I am still happy with the profit." And as for the poor guys, who will not make it out in time, one can sympathize with their grief about life-savings, but on the other hand, as someone said, "Experience is the best school-only tuition can sometimes be very expensive." Even in mature markets there are hypes and bubbles, and investors, who lost, usually do not repeat their mistake, if they are lucky enough to have the second chance. - Second, evening news tend to replace rational thinking with emotions. Of course, I am human and I do feel sad seeing in news a family, who has just lost an UNINSURED house in the disaster, ("Look into sad eyes of these children, where are they going to live?!"), but if they ask for government support and meddling, that's wrong. Their father has been making his (wrong) choice all the time, choosing short-term gain over long-term covering of the risk. The same with the gamblers. I am not an economist, but in my opinion from the long-term point of view it is the best if Chinese government only use standard macro-economic measures, or allows investment in other markets and does nothing else. Why should others pay the bill of those people, who replaced their usually VERY good Chinese business intelligence and that useful mistrust and caution ("How can you charge me 7,5 for this piece of chicken, it should be only 7,3!!!"), with greed? Last: I also more than agree with you, that if Chinese companies were allowed to invest more freely at more mature markets, that would lower the risks also for individuals, who might participate and channel their money through investment companies to where it would yield maybe more modest returns, but at the same time it would also lower the risk. (Sorry for a lengthy comment.. :-) Hello Marc, an article in Shanghai Daily mentioned last week, that the most of “investors” at the biggest open-air casino (which is what Shanghai bourse has become, in my opinion) are individuals. I can neither recall the precise number, nor did I a research what this ratio is at mature markets. However, my Chinese assistant is pretty cool-headed about the recent situation:”I know I bought a stock worth 2 RMB at 8 RMB, but since it has raised up to 11 RMB when I sold it, I am still happy with the profit.” And as for the poor guys, who will not make it out in time, one can sympathize with their grief about life-savings, but on the other hand, as someone said, “Experience is the best school-only tuition can sometimes be very expensive.” Even in mature markets there are hypes and bubbles, and investors, who lost, usually do not repeat their mistake, if they are lucky enough to have the second chance. – Second, evening news tend to replace rational thinking with emotions. Of course, I am human and I do feel sad seeing in news a family, who has just lost an UNINSURED house in the disaster, (“Look into sad eyes of these children, where are they going to live?!”), but if they ask for government support and meddling, that’s wrong. Their father has been making his (wrong) choice all the time, choosing short-term gain over long-term covering of the risk. The same with the gamblers. I am not an economist, but in my opinion from the long-term point of view it is the best if Chinese government only use standard macro-economic measures, or allows investment in other markets and does nothing else. Why should others pay the bill of those people, who replaced their usually VERY good Chinese business intelligence and that useful mistrust and caution (“How can you charge me 7,5 for this piece of chicken, it should be only 7,3!!!”), with greed? Last: I also more than agree with you, that if Chinese companies were allowed to invest more freely at more mature markets, that would lower the risks also for individuals, who might participate and channel their money through investment companies to where it would yield maybe more modest returns, but at the same time it would also lower the risk. (Sorry for a lengthy comment.. :-)

]]>