You’ve seen this image a lot in the last few months, or some version very similar.
Bewildered (old or middle aged works best) retail investors with their heads in their hands.
‘What’ it seems to imply ‘were we thinking?!’. Or ‘I should have stuck to the ponies’ (which, BTW, you can’t in China).
Yes folks, according to the financial press, it’s as you suspected. China’s stock markets are driven by know-nothing numpties who buy and sell stocks based on the poorest of information and for the basest of reasons, they just want to make quick bucks [Shocked! Shocked to find gambling going on in here!]. Well look at them now.
Prejudice confirmed we’re invited to move on; but are the images consistent with reality? Are Chinese retail punters really swaggering old rubes betting on lucky numbers happily crowing about fooled by randomness gains but thunderstruck by losses?
Not exactly.
Zhixin Dai, Meng Yong and Nathalie Odin from the University of Lyon, the Shanxi University of Finance and Economics and the University of Lyon respectively tasked 300-students to go out to 17-provinces in China with a questionnaire to get more color on retail investors and their results paint a more nuanced picture.
If there is such a thing as the ‘average’ Chinese retail investor they’re between the ages of 31-45, they have a college degree and they have less than 10-years experience investing in stocks.
Two startling things emerge from the study. The first is the marked difference between gender in investing attitudes. Men are overall more ‘rational’, loss tolerant and optimistic than their female counterparts. The second and more disturbing discovery is where retail investors are getting their information from; a shocking (well, to me at least) 90% said their decisions were in part based on either media reports or friends’ advice [N.B. Never, ever, ever trade on the advice of others!]. 10% bragged they used ‘inside information’! Oh dear.
In summary; is the Chinese retail investor old and daft? No; young and naive? Perhaps.
You can read the (short) paper in full via this link A Portrait of the Individual Investor
Happy Sunday.
Not so photogenic, but probably nearer reality.