RIYADH, 26 August 2005 — Experts in the stock market have warned small- and middle-income group people from rushing into the stock market. They warned the small-time investors from getting into the stock market if they are not able to read financial indications, the Al-Watan newspaper reported. Financial experts say that the unpredicted changes in the stock market most of the time result in great losses to the middle- and small-income group people. Some middle and small income people mortgage or sell their homes and businesses just to get enough cash to enter the stock market.
While dreaming of earning fast cash, they face the hard reality of losing most or all of what they own and face huge debt. Experts say that if small- and middle-income people want to enter the stock market, they must enter the market with what they have and not try to get a loan. They should divide their money into many investment portfolios to reduce risks.
Experts say that many people sold their homes or get large loans from banks to enter the stock market. Dr. Saleh Al-Rumaih, a teacher in social sciences in the King Saud University, said that stock market became a social phenomenon. He said that many Saudis are now monitoring the stock market more than before.
He said, “The unpredictability of the stock market affect large segment of small- and middle-income people. Small- and middle-income people dream of living in better conditions. Those that get loans from banks tend to fail in the stock market and later negatively affect the living condition of their families.”
Abu Muhammad, a middle-income Saudi, was a victim of the stock market. Abu Muhammad took a bank loan for SR50 thousand to enter the stock market. He said, “I was encouraged by how fast people earned large profits in the stock market. I had no idea how the stock market works but I thought it would be easy and I will double the money and I invested in less than a year. It did not work. I ended up losing SR26,000 in 3 months. Losing SR26,000 for a small income man like me is great. My salary is only SR6,500 a month and now I plan to pay the entire amount I lost in 2 years.”