Why Singapore investors always lose money in shares

For the past few years, there has been a proliferation of young investment bloggers in Singapore. While I am not sure if this is a good phenomenon, it certainly reflects a growing interest in the stock market among young Singaporeans. However, have you paused to wonder why Singapore investors always lose money in shares?

Many years ago, a veteran in the stock market told me that when taxi-drivers, housewives and students start to dabble in shares, it’s a warning sign that the market has peaked. In fact, for the past few years, the stock market in U.S. has rallied and surged to multiple highs. Entering the market during this boom period can be dangerous because many stocks have risen beyond their fair values. In such case, the return of your money is far more critical than the return on your money.

You must have heard of Warren Buffett’s famous quote “be fearful when others are greedy, and greedy when others are fearful”. To be frank I am not sure whether Warren Buffett practice what he preached because in reality, nobody knows how he invests behind the scene. In reality, telling this to someone who try to find value stocks in the current market is akin to telling a horny male to remain celibate, and thus, I often find this quote unhelpful.

For me, it is almost impossible to tame greed and overcome fear if we lack of self awareness. Most people fail to realize that their greatest enemy is not Mr Market, but actually themselves. Your emotions, behavior and decision-making determine the outcome of your investments.

How often were you tempted to buy a stock when a friend boosted that he made a killing from it? When was the last time you bought a stock at the top and ended up incurring huge paper losses? Indeed, most of us are controlled by our emotion brain when it comes to investing. Not knowing how to manage our emotions can be financially fatal and I have seen far too many intelligent people making stupid investment decisions.

To nurture our emotion brain and make it an asset, we need to understand and train our thought processes. After reading Wai-Yee Chen’s NeuroInvesting, I am even more convinced that our money personalities drive our investment philosophy and principles. Henceforth, I encourage readers to read her book and find out how to become a better investor.

As an investment advisor to high net worth individuals, Wai-Yee Chen has spent years watching her clients make investment decisions—some good decisions and some not-so-good decisions. Though confronted by the same market variables, those clients often make very different choices with very different results. Here, Chen argues that it’s usually not the data that affects investor decision-making as much as the way investors themselves think. In NeuroInvesting, Chen argues that investors can change the way they think in order to change the way they invest. She presents four elements that affect investor decision-making and reveals how investors can rewire their brains to make better investing decisions for better returns.

Magically yours,

SG Wealth Builder