MAKKAH, 6 December 2005 — Many investors are calling for the creation of special institutions to educate people about the in and outs of stock market so that investors properly understand both the benefits and the potential risks involved, Al-Madinah reported.
Financial experts are saying that investors entering into the market without the knowledge that fortunes one day can disappear the next in times of market volatility, as it did two years ago when a market drop put many small investors belly up.
Some swooned and some went into apoplexy because they lost their savings — something that doesn’t happen to investors with balanced portfolios with a variety of financial instruments, from bonds and metals to stocks of varying risk, return and liquidity.
So why not just offer classes to teach investors the ropes instead of letting investors wind up on them?
“I’m surprised that government authorities and the private sector are ignoring the call to create these awareness institutions and programs,” lamented investor Basem Felimban. “This won’t only benefit the investors but the stock market and the economy in general. Today, investors are entering the stock market with no knowledge or experience, which results in total failure.”
It’s not as if most Saudis have MBAs or investment. Playing the market as if it is a roulette game usually ends with similar results to a game of chance.
“There’s no mercy or emotion in the stock market,” said investor Khaled Al-Shareef. “Once the money is lost, it’s gone.”
Al-Shareef said knowledge is power.
“The only thing they know about the stock is the name of the stock they are buying,” Al-Shareef said.
“A general awareness program will help smalltime investors gain knowledge and avoid mistakes. It’s sad because smalltime investors do not differentiate between good and bad stocks. The Ministry of Commerce and the Jeddah Chamber should do something.”
These smalltime investors admit they could use a little help.
“Smalltime investors like me, and there are many in the stock market, are always after the profitable stocks,” said Rabah Askar.
“We are also victim to stock rumors. If we look at the stock market, we see only a few people who have the knowledge on how to deal with it. I think the blame falls largely on the Ministry of Commerce and the chamber for not educating the public.”
A Ministry of Financial Education? Some investors say that even with a clear understanding of the financials, the market always will be a crapshoot.
“The stock market is unpredictable,” said banker Sadaka Muhammad. “You may learn theories that give you some knowledge, but it’s still not enough.
“Even the best stock market people with all their knowledge and education are facing difficulty dealing with it. The stock market needs those who can read it and predict. The idea is great, but don’t think that it will be enough.”
