A rising tide lift all boats

Jane, a 27 year old Relationship Manager who recommend investment products to clients, lost $90,000 over 2 days – as reported in the 8th October 2008 issue of The New Paper.

I would like to comment on 2 points.

• The lady mentioned that she has not seen anything as bad since she started her career – in 2003.
• 1 of her friends lost over $160,000 and feels that ‘the more he trades, the more he loses’

Investors who started investing in 2003 would find themselves right at the start of a bull market. Did her ‘experience’ of 5 years in a bull market made her think that markets can only go up and blinded her from the fact that markets can go down, or crash, like now? Humans sure have short memories. Maybe she did not have bear market memory as she did not go through 1 before. But this is not an excuse as she should have at least read up on such matters, especially when she is RM who recommends investment products.

In a bull market, investors would have made money easily as most counters or indices would have been defying gravity. A rising tide life all boats. You will most likely select a rising stock by throwing darts. No skill is needed. However, many investors have a illusion that they have great trading or investing skills. It is during bear markets like now that they find themselves caught. What happened to their ’skills’ now? Have their ‘kung-fu’ suddenly been abolished by another kung-fu master (in this case, a Bear) like you see in the kung-fu movies?

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