The biggest news in the Straits Times in the last few days was, and still is, the arrest of CAO CEO Chen Jiulin for fraud and insider trading. Everyone I know, knows someone who has lost money from the CAO stock crash just a few months back. It was pretty easy to tell… the people who were going around, muttering to themselves, with knitted eyebrows, on the very day, when news of suspension of CAO stock trading was announced.
However, they soon pushed it to the very back (this little dark closet, into which they stuff unpleasant experiences and conveniently forget about them) of their minds and happily continued with their stock market trading. Sigh.
One of the stock trading books says, “if you find the aunties and uncles at the fish market passing each other tips on stock trading, it’s time to get out of the market….”
Doesn’t this look familiar to you? Yep yep! It’s a typical stock chart! What do you mean, it looks ugly! I drew that myself!! Can you imagine the pain I had to go through to draw this chart, using the Paint software and a touchpad?? The cramp my poor fingers had to go through!!
Anyway, as I was saying…. Do you see the tiny red arrow squiggle? Right, that’s the point where instituitional investors inject their huge amount of funds. As a result, it drives the price up sharply.
At this point, dealers, research analysts saw this and quickly put in their own trades. Sorry, minus the research analysts, that would constitute insider trading… So, the dealers put their $$ in.
In the middle of the night, Ah Wei is awakened by the incessant ringing of the phone. It’s Ah Wei’s stock dealer on the phone,”Hey! Hot tip hot tip! Stock ABC is shooting up. Put your money in!!!” Overwhelmed by gratitude and appreciation (Dale Carnegie, my idol, says that you have to show gratitude and appreciation so that people will work harder for you…), Ah Wei puts a hell lot of $$ into ABC and falls back to sleep. Therefore, the price goes up even higher, as all the sleepy Ah Weis throw their money in.
The news spread like wildfire…. The next day, Ah Wei goes marketing and overhears the auntie at the fish stall tell the ah ma at the pork stall,“Waa! Hot Tip! My son’s dealer called him in the middle of the night to put in $$ for ABC! Waaa!! Guess what! This morning, the ABC REALLY go up by 100 points!!!! Eh! You want to put $$ in? I’m going to look at the tv screen (she’s referring to the updating of the stock prices at the dealing companies), then I’m going to put in all my savings! Won’t go wrong wan!!!!” So Auntie and Ah Ma go hand-in-hand to watch “tv” and put even more money in!!!
Satisfied with the earnings, now that price of ABC has shot up all the way to the sky, the big instituitional investors decide to perform a massive sell action. With the exit of such a huge amount of fund, the price plunges……… while the aunties and uncles are rejoicing in their sleep over their good buy.
The dealers are alerted to the sudden plunge, so they save their own skins first by quickly selling their shares. “Heng! At least i have made a bit of profit! Oh yeah! Have to call up Ah Wei to tell her about this!!”
Awakened in the middle of the night by the irritating telephone ringing again. Damn! I should have unplugged the phone before I sleep. “What.. what?! Sell!? Stock is plunging?! ok ok! Sell everything for me!!!” Ahhh!! There goes my investment! Have to start saving up again!
Some days later, when Ah Wei goes marketing, the fish stall is closed and another ah ma is selling pork at the stall…. The newspapers are splashed with stories of people turning into paupers overnight… people jumping off high rise buildings…. The red skull (Is my drawing so bad that you can’t tell that it’s a skull!!!! ok ok, you have to remember that I draw it with a touchpad….)signifies an end…
Therefore, when everyone is buying a certain stock, it’s time to move out….
He he… It’s easier to preach and practise…. Take the advice at your own risk.