Paul's Insights: Chasing a quick buck sees investors lose money
Since late February we've seen intense volatility on the Aussie sharemarket. This has driven a massive uptick in the number of people trying to make a quick buck on shares. But not many have succeeded.
- {{x.value}}
{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter your SMS code' }}
Please type the 5 digit verification code sent to {{user.DayPhone}}
We cannot send you a code via SMS to {{user.DayPhone}}
Verify your mobile number
{{ content.trialHeading.replace('{0}', user.FirstName) }}
Please enter your mobile number and press send to receive a text message with a verification code.
{{ content.upgradeHeading.replace('{0}', user.FirstName) }}
The email address you entered is registered with InvestSMART
Please login to continue
We have sent you an email with the details of your registration.
Already a member? Log in
Looks you are already a member. Please enter your password to proceed
{{ upgradeCTAText }}
Updating information
Please wait ...
Your membership to InvestSMART Group recently failed to renew.
Please make sure your payment details are up to date to continue your membership.
Having trouble renewing?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
You've recently updated your payment details.
It may take a few minutes to update your subscription details, during this time you will not be able to view locked content.
If you are still having trouble viewing content after 10 minutes, try logging out of your account and logging back in.
Still having trouble viewing content?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
Please click on the ACTIVATE button to activate your Eureka Report 15-day free trial
Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial
Please click on the ACTIVATE button to finalise your membership
Unsuccessful registration
Registration for this event is available only to Eureka Report members. View our membership page for more information.
Registration for this event is available only to Intelligent Investor members. View our membership page for more information.
- You are already registered for this event.
- This event is already full.
- Please select a quantity for at least one ticket.
- {{ i }}
Forgotten password
Please enter your email address below to request a new password
- Indepth analysis of ASX listed shares
- BUY, Hold and Sell Recommendations
- Ideas Lab
- Special Reports
- Alan Kohler’s Weekend Briefing
- Interviews with CEO’s & top influencers
- Money Cafe and Talking Finance
- Super Advice and Q&A with Ask Alan
The concern is that this burst of activity coincided with one of the most volatile periods of our sharemarket’s history. I could understand if these first-time investors were buying stocks when values where down as part of a long term plan. But ASIC’s research suggests that’s not the case. Plenty of newly minted investors held onto their shares for just 24 hours, sometimes less, in a bid to profit from short term market movements.
Trying to time the market through short term trades is difficult at the best of times – even for professionals. Add in an extraordinary level of market turbulence and it’s even tougher. Not surprisingly, many of these recent share investors didn’t enjoy much success.
ASIC’s data shows that on more than two-thirds of the days between February and April when retail investors were net buyers, their share prices fell the following day. For more than half the days on which retail investors were net sellers, their share prices increased the next day.
As ASIC points out, for retail investors to attempt market timing in the current uncertain environment, is “particularly dangerous, and likely to lead to heavy losses – losses that could not happen at a worse time for many families”.
Buying quality shares when values are low makes sense as part of a long term strategy. Aiming to turn a quick buck through market timing can be a recipe for financial disaster. Chances are the only one who comes out on top is your broker.
At times like the present, when there is so much happening with COVID-19, jumpy markets, and a big shock to the global economy, it’s especially important to keep investing simple. Having a mix of investments, adding to those investments systematically over time, and taking a long term approach are steps we can all take. And it’s a far more proven recipe for making money than trying to time markets.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
