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Just like how you should choose your friends wisely, you should also pick your stocks with care. An IEC investor survey revealed that most of the investors surveyed failed to do their research properly, and about three-quarters acknowledged that the advice from friends and family influenced their investment decisions. When it comes to stock investing, don't just rely on hearsay and buy into the hype. Market manipulators typically prey on the herd instinct of the retail investors to reap huge profits at their expense.

Market manipulators artificially inflate or deflate the price of a stock without a care about the business and prospect of the companies, nor the creation of value for the companies and shareholders. They may not necessarily be the majority shareholders, but can work behind the scenes to manipulate the shares of companies.

Retail investors who tend to follow the herd and trade on rumours on highly volatile stocks can easily become victims of the "pump and dump" schemes. When the stock price surging, hopeful retail investors may be tempted to join in for a free ride. However, most of the stocks controlled by market manipulators are indeed highly speculative and without investment value. The share price usually exhibits high volatility without reasons, e.g. share prices of these companies can increase by a multi-folds, and tumble just as fast. Therefore, it is very important to carefully study the fundamentals of the stock to avoid suffering painful losses at the hands of the manipulators.

IEC Chairman and SFC executives explained and discussed several topics concerning stock investments and shareholders' rights in radio interviews. You can click the following links to review the interview segments.

Hot topics of finance and investing (in Cantonese only)

 

 

 

7 November 2017