Stock trading can be a harsh, despairing experience

Stock trading can be a harsh, despairing experience

By E. Effendi

JAKARTA (JP): If you have big piles of excess money in your
home, you'd probably want to do just like I do. I invest it in
the stock market, so that I have my money working for me while I
only have to sit in front of my TV all day, wearing only my
underwear.

Of course you do not have to do exactly like I do, because
when I said I had a lot of excess money, I lied. But you probably
have a lot of it scattered in your living room, mostly under the
couch, making you eligible to be a potential investor in the
stock market and, probably, a patient in a mental institute for
having too much stress.

Yes, trading in the market can be a harsh and despairing
experience. That is why before you jump into that unpredictable
market, first you have to know whether you're really a stock
player kind of person. If you are aversive to risk, you might
prefer putting your money in a time deposit account. And when it
is due, you will receive the same old amount of money that you
first invested, plus a small amount of interest. But then the
risk-taker would say, "Where's the fun in that?" By being a risk-
taking stock investor, you can invest your money in a company by
buying its shares in the morning and then you can have the
excitement of losing half of the amount in the evening without
knowing how.

Then, if you have decided to play your money in the fast lane,
you have to find a reputable stockbroker. A stockbroker is a
person that connects you to the stock market, because, for safety
and administrative reasons, not everybody is allowed to buy the
stocks directly from the floor. In order to be a stockbroker,
someone must posses certain qualifications. He must have the
selling skills of an AMWAY representative to attract customers
and the shouting skills of Tarzan to scream, "MPPA! OK? No? BUNI?
TMPA? 70 lots!"

Then you might ask how to choose a good stockbroker. Easy. A
qualified stockbroker is the broker who can give you the most
financial tips. Based on the hot tips that your broker collects
in some golf games or expensive lunches, which they conveniently
charge as fees, you will eagerly buy those highly recommended
stocks.

However, as time goes by, you will find out that sometimes
your 'sure hit' stock does not perform as well as you thought it
would, based on the fact that now it has less economical value
than your plain wallpaper. You will then complain to your broker,
who will tell you that there are so many tips issued around the
floor and many of them are blown by some investors just to
control the motion of the price, or in your case, to drive you
insane. He will give you a long speech about the tips, whose
points are:

1. You could buy stocks based on the tips.

2. You shouldn't trust the tips.

Of course he can not completely understand your grief and
confusion, because no matter what happens, he can still collect
his fee (about 0.6 percent per transaction), which he will put in
his piggy bank. He never puts his money in the stock market and
his company also forbids him from doing that. Apparently, they
both are not that stupid.

Fortunately, you don't have to only rely on those undependable
tips. You can also gather some advice from many reputable
financial experts. Therefore, if you are not sure about the
effect of a national event on your stocks, you can always open
your daily newspaper to read their long technical and thorough
reviews, which basically point out that they are not so sure
either.

Those experts never be certain of what will happen next in the
market. They always come up with many different opinions, and
they never be sure about it. They always use the words
"hopefully", "usually" or "theoretically" over and over again.
They never use the words "definitely" or "You can take my house
if I'm wrong". However, they sound so brilliant when making
creative explanations about what has already happened.

That was what actually happened in the last two months, when
most of the stock markets in the world collapsed. The amount of
people who suffered from that financial tragedy showed us that no
one had predicted it before. But after it happened, many experts
made excellent analyses about the cause, just as it was so
obvious that only idiots could not see it coming.

They said it started when, after years of monitoring and
putting their money in technology stocks, those sharp investors
suddenly realized that the million dollar figures in those
companies' statements was actually a loss, not profit, which was
bad for business. That made them want to cut their losses and
sell those stocks right away, which affected all the stocks in
the market, including the stocks in the Indonesia market. Plus,
during this time The Jakarta Composite Index was also pressured
by some national unfinished issues, such as the recent government
vs. the central bank issue; the government vs. old government
issue; the government vs. government officials who were dismissed
issue; and the government vs. government's masseur issue.

Those are the causes that are mentioned by many financial
experts in Indonesia. However, when they are asked about what
should we do now, the opinions are varied:

1. Buy now, while the price is very low.

2. Don't buy now, the price could go even lower.

3. Wait for the technical rebound.

4. No, I mean wait until I find out what technical rebound
means.

Nevertheless, in the end, all the decisions are up to you. It
is your choice whether you want to follow the hot tips or the
experts' opinions.

Me, I will use a more reliable method, I will flip a coin.