Monday, March 17, 2014

Elderly folks getting bullish?

I noticed that quite a number of elderly folks wanted to put their money to better use. They realised over time, that the miserable interest offered by banks are not keeping up with the general rise in prices. This had been going on for some time after all. Perhaps they heard stories where their friends, or sons or daughters are making a good harvest from investing in the stock markets. Being in a bull market for 6 yrs is a pretty long time for people to think that the good times will last another 6 years. So, the elderly folks are naturally interested because everyone around them are making money but not themselves.

That is all well and good, but it's a little worrying. Usually the elderly folks are pretty conservative. Look at my own parents. They only put money into fixed deposits and perhaps the occasional savings plan offered by insurance companies (aka endowment plans). When I told them I can get better returns, they jumped immediately. They are still conservative in the sense that they don't want to lose any capital (actually who wants to lose any capital?), but they are also unconcerned that I'm investing in the stock markets to generate better returns to them. My in-laws? They had been asking their daughter whether it's good to invest in this or that because their colleagues or bosses had been making a good profit on certain counters. Generally, I find that the risk profile of the supposedly most conservative bunch of people are rising. If I'm a hound on the scent of greed in the market, I'm sure I can smell a whiff here and there now. Fear, the yin-yang twin of greed, is taking a holiday for now.

This doesn't mean that the market is going to crash soon. But I think everyone should be more cautious and on the look out for more signs of exuberance in the market. The good thing about experiencing through 2 bull markets is that you get to see things and how people react to them. All these forms subconscious cues, or a hunch, that perhaps the beginning of the end is near. I remembered reading news articles of young students, skipping school and wanting to become full time investors because they are earning such a good profit trading in the market. Who needs a degree and a job when they can earn a few thousands per day?

Just start squirreling excess income into your war chest. A market downturn is useless if you do not have the means to make use of it. So save up, do your usual things, and perhaps when an opportunity opens up in the future, we can all be thankful that we still have bullets to fire.


Derek said...

Hi LP,

My alarm bells are ringing now. When the Uncle and Aunties buy, it's time for me to hide. :P

Anonymous said...

It's always at both extremes of the market that attract a lot of people. But most probably it's a different groups or sets of people.
And this will be keep on repeating as something quite "Natural".

Cory said...

SGX trading value is at one of lowest. The assumption and data seem do not match.

la papillion said...

Hi Derek,

Yea, me too :)

Hi temperament,

Yes, agreed. It's like musical chairs, isn't it? haha :)

Hi Cory,

I smell a whiff, not yet a strong scent. People are asking how to get into the market, not jumping queues to jump into the market. I think we haven't reached the bullish peak yet, where even the most unlikely person to invest are also in the market. If that happens, that's going to be a huge alarm for me.