If you've read my emails or seen me on the telly, you know that I want every Australian to be an investor.
Being able to harness the opportunity that comes from compound returns, through ownership stakes in some of the best businesses on the ASX — and on the planet — is something that should be available to everyone.
I expect the world's stock markets to be the best performing asset class over time, measured in decades.
Done well, investing gives us freedom — the freedom to choose.
Investing — the last step in the process of getting your financial life in order — is one of the most powerful ways to take control of your financial destiny.
(And yes, I think The Motley Fool can help. But even if you never join one of our services, the above still stands.)
I have to tell you, though, I was pretty devastated to read the latest missive from the corporate regulator, ASIC, yesterday.
See, the recent market volatility, far from scaring people away from shares, has seen them come to the market in droves.
Apparently, the number of new accounts being opened is up by 3.4 times, compared to before the COVID-19 pandemic.
So far so good, right?
Sort of.
Tell 'em what you said, ASIC:
"The average daily securities market turnover by retail brokers increased from $1.6 billion
in the benchmark period to $3.3 billion in the focus period."
Thats a big jump, but okay…
"We found that some retail investors are engaging in short term trading strategies unsuccessfully attempting to time price trends."
Oh dear.
"Trading frequency has increased rapidly, as has the number of different securities traded per day, and the duration for holding the securities has significantly decreased: indicating a concerning increase in short-term and 'day-trading' activity."
What???
"There has been a substantial decline in the average time between trades by the same investor in a particular stock. On average, this was 4.5 days in the benchmark period and one day in the focus period."
For the love of God!
"In the week 16–22 March 2020, based on a sample of 12 Australian licensed CFD providers, retail client losses were just over $428 million gross (or $234 million net)."
…
I mean…
Seriously…
Come. On. People.
I'm always happy to see more Australians take an interest in investing and the stock market.
I'm pleased when they figure that big falls might present a long term opportunity.
But I have a word for many of the people who were enticed by the promises — I mean 'indicative results, and don't forget you can also lose money… but still, open an account!' — of brokers, software sellers and assorted other ticket-clippers:
Suckers.
Sorry, but there's no other word.
They sucked you in, probably bled you dry, and skipped off to find another victim.
They don't care if you make money or lose money — they just want you to trade: early and often.
Now, I'm not blaming you. I'm not criticising you.
But I want you to know that's how they treated you: as just another sucker.
And it makes me mad as hell.
I'm really pleased that ASIC has come out with its report this week. I hope — desperately — that it's a salutary warning for those who have started down that path: it's not too late to take whatever money you have left and run.
And for those who are yet to commit to some costly day-trading software, or fancy CFD-trading account:
Don't.
As much as I'd love you to start investing, I don't want you to do it like that.
I'd rather you never do it at all, than try the 'get rich quick' disaster, lose a fortune then give it all away in disillusioned frustration.
Cos I've gotta tell you: that's what your future holds, if you go down this path.
Don't take my word for it — ask ASIC.
"Hang on" I hear you say, "aren't you the pot calling the kettle black?"
Nope. Not even in the same postcode.
I don't want you to rush into anything.
I don't want you using CFDs (gambling — sorry, I mean trading — products that magnify your losses (and gains, if you ever make them)).
I don't want you day-trading stocks or trying to guess where oil is going next.
This isn't the TAB. And you're not punting your beer money.
I absolutely do want you to buy shares
But I want you to do it slowly, and steadily.
I want you to buy quality businesses.
I want you to own those shares for years.
I want you to add money, regularly, to your investment account.
I want you to get rich slowly… not go broke quickly.
So, it's time to wise up:
You've worked too hard for your money.
Made too many sacrifices to give it up too easily.
You're nobody's patsy.
Don't let them play you for a fiddle.
Don't be a sucker.
Invest, don't trade. And for the love of God, stay away from CFDs.
Fool on!
