• Home
• /
• Business

Stock experts warn small investors

"Small-time investors should not get into the stock market if they are not able to read financial indications," according to a report in the Arabic daily Al-Watan.

They should also refrain from selling any of their properties or borrowing from banks to invest in the stock market with the hope of making enough money to be able to recover what they had sold, and also being able to pay the bank loans.

The newspaper quoted financial experts as saying last week that the unpredicted changes in the stock market most of the time result in great losses to the middle and small-income group people. Some middle and small income group people mortgage or sell their homes and businesses just to get enough cash to enter the stock market.

While dreaming of earning big, fast cash, they face the hard reality of losing most or all of what they own and incur huge debts.

Experts said that if small and middle-income people want to enter the stock market, they must enter the market with what they have and not try to get a loan. They should divide their money into many investment portfolios to reduce risks.

They said that many people sell their homes or get large loans from banks to enter the stock market. Dr. Saleh Al-Rumaih, a teacher in social sciences in the King Saud University, said that stock market had become a social phenomenon. He said that many Saudis were now monitoring the stock market more than before.

"The unpredictability of the stock market affects large segment of small and middle-income people. Small and middle-income people dream of living in better conditions. Those that get loans from banks tend to fail in the stock market, which later negatively affects the living conditions of their families," he added.

The newspaper quoted an example of a middle-income Saudi, Abu Muhammad, who became a victim of the stock market. He took a bank loan for SR50, 000 to enter the stock market.

"I was encouraged by how fast people earned large profits in the stock market. I had no idea how the stock market works but I thought it would be easy and I will be able to double the money that I invested in less than a year. It did not work. I ended up losing SR26, 000 in three months. Losing SR26, 000 for a small-income man like me is too much. My salary is only SR6, 500 a month and now I plan to pay the entire amount I lost in two years," he told the daily.