‘Non-Savvy’ Investor lost $350K CPFOA
A investor claimed he lost $350K of his CPF monies investing in shares in a ministerial dialog. 1 minister was quoted as saying “Most investors lost money because they are not savvy”.
Does this mean that savvy investors don’t lose money? What’s the meaning of being ‘savvy’? The freedictionary.com defines ‘savvy’ as being ‘well informed and perceptive; shrewd; practical understanding’.
I think the real problem is not that investors are not savvy, but that many investors thought that they are savvy when in fact they are not. This is a problem of being over-confident, a common Behavioral Finance bias.
Too many investors are over-confident and feel that they are savvy, or they believe that their friends, stock brokers, advisers, fund managers are savvy. They believe in the so-called stock tip, insider info, the sure-make investment, the next great investment frontier and what have you. All these talk typically come from people who speak confidently, many a times mis-placed. Remember your friend who insisted a stock must rise? An investment sales who guaranteed you super returns?
Perhaps, the first step to be savvy is to admit that you are not savvy and stop being so confident. As the Hokkien saying goes ” kiang tio ho, mai gay kiang”. So stop being ‘gay kiang’.
Tags: Investment Blunder