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Rookies keep safe distance Shares trade risky business

‘A person of limited income whose financial strength is weak is misguided if he decides to invest in the stock market without any experience or knowledge of the system and thinking he might gain huge profits, even if he survives on a simple monthly salary. There is no doubt that Allah the Almighty, is forever our source of sustenance and people have profited from investing in shares, but the situation is similar to ‘rules with exceptions’.

“There are profits and excellent revenues in the stock market, and it’s also true that unimaginable losses have been experienced as well in the market. Experts and individuals familiar with the stock market may become easy prey and incur losses, while ignorant people who know nothing about trade and betting may gain unexpected profits. It’s all about luck! “Some people liken the bourse to the game of scratch and win, as most individuals who speculated had lost their shares. Others also consider the bourse as a form of gambling, which the state bans. A friend of mine who planned to retire from his job grew much interest in stock market suddenly and started paying visits to the bourse to get to know the system, because he did not have enough money at the time. He started gaining profits on a daily basis and became familiar with several aspects of the bourse.

“After retirement, he decided to join in the trade full time, with a good sum. Unfortunately, his investment coincided with the beginning of the global financial crunch in 2008. Although he gained a considerable profit at the start, he lost the entire savings and his retirement funds when the crisis intensified, due to little or no experience he had in the stock market. He’s still suffering from the loss. “Another person went into the bourse with less than KD 10,000 and bought shares upon a piece of advice he received from a person inside the stock market. The man knew nothing about the bourse. He deposited the money and was issued a receipt of purchase from an office.

After that, he left the bourse completely. Three years later, the man went back to the stock market to check his shares. He had even forgotten the name of the company he invested in. Using the civil ID number, he found out the name of the company to receive a surprise of a lifetime. He had gained over 270 percent profits! “In these two scenarios, we realize that the stock market does not follow fixed principles, as in supply and demand. The market is suitable for major institutions and specialized companies that possess huge capitals; besides, the sector is run by specialists with established investment portfolios and funds are invested in the bourse based on scientific factors and rules, and with insight to analyze the market technically and financially with the help of consultants and experts.

“The irony of the situation is that these major institutions and companies are even subjected to incur huge losses, as profit is not guaranteed in the sector. There are uncountable scenarios in this regard. Some people contemplate on investing with minimum shares in banks, real estate companies and other service companies, based on their distinguished performance, but the investor must be cautious because he is the one to win or lose. A walk in the stock market is similar to walking on a thread or crossing a pool, which in the Kuwaiti dialect, is known as ‘Slippery trail’.  

“The bourse is attractive and seductive, it’s a place where millions and billions of shares are negotiated; nonetheless, gaining profits there isn’t guaranteed. Those who are not fully acquainted with the market should keep away, because they will answer before Allah, the Almighty, about their savings. They will also account for the manner in which their savings were used. Moreover, their families have the right to these savings, so they must think twice before investing in risky environments where the chances of losses are greater than gains”.

By Yousef Awadh

By: Yousef Awadh

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