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A good time to be afraid of stock market |
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Written by JOAN LAW KAI-EN
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Tuesday, 20 May 2008 |
The raging stock market is luring university students to become investors in real life. Some may regard it as a valuable and golden opportunity for them to apply what they have learned from school in reality. However, this may be putting their own personal wealth and family assets at risk.
 Researchers at the Chinese University of Hong Kong interviewed 203 citizens and university students between July and October in 2007 and studied their investment experience. The poll found that last year the university students had on average earned only $3,000 per year, and the majority of them earned less than $2,000 per year.
Making fast money from the stock market is tempting to many university students; especially when the local media recently featured excitable coverage, portraying a 22-year-old university graduate as a “stock god”, following his success in boosting his family’s wealth from US$9,000 to US$448,700 within 36 months.
This case undoubtedly tempts more money-thirsty students to put their faith in the stock market, with the hope that they can make a fortune before they graduate.
But, how many can tell exactly where and how to invest their money in the market? Maybe no one can tell because they have no clear idea themselves.
According to figures from the Tung Wah Group of Hospitals Even Centre, which was originally established to deal with gambling-related problems, the number of stock addicts had increased from ten in 2005 to 21 in 2006 and further to 29 last year.
Social workers said a lot of undergraduates were racking up huge debts on credits cards to fund day trading. Some of them used their student grants and loans from the government to invest.
While the students will supposedly start paying off their loans once they graduate from university, recent figures from the Student Financial Assistance Agency showed that 6,311 cases were not able to do so in the 2006/2007 academic year, which is ten percent more than the previous year. It is suspected that these cases reflected students’ participation in the stock market.
The Education Bureau has expressed concern about this problem, saying they would make sure that the money lent to the students is appropriately used and would take action to accelerate their return of money to the government.
What is more worrying now is how to prevent student investors from becoming over-involved in the stock market.
Looking at the craze for stock trading, a lot of university students — especially business majors — believe that their investment knowledge is broad enough to earn money in the volatile market, and they continue to pile up loans and family savings for investments. Ten percent of students had pumped over half their savings into the markets, according to the recent poll at the Chinese University.
Most local universities have stock clubs, where students can use fake money to make hypothetical investments in the stock market to simulate the real life market and investments. Yet, many students regard playing in this virtual stock market as too nonprofit. They want to earn real money.
It may be true that they are already good enough in their school. But do students forget that stock markets will plummet and risks have to be born? Even professional investors may not get any reward in the tipsy market.
Earlier in January 21, a huge market crash made many professional investors lose lots of money. Imagine if a student risks his or her grants and loans from the government or even family assets in this competition and thus loses all the money, then a young person will be bankrupt, unable to pay back his or her tuition fee.
Does it necessarily mean that investments hold no value or meaning for students today? It may not be. Educators believes in hands-on experience. In this case, the best way to get hands-on experience is actually to pick the stocks. Investment is also one way of learning how to manage our own personal wealth. Managing our own money is sometimes a challenge for students in Hong Kong, where the materialistic lifestyle is always leading us astray.
Now as a student, he or she should really consider again whether it is worthwhile to take such a high risk on investment at this moment. We should never overestimate our abilities with investments when we are still students. Similarly, we should not underestimate the risk and consequences which unsuccessful investments could bring to our future.
Edited by WILLIAM KWOK YAN-WING
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Last Updated ( Tuesday, 20 May 2008 )
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