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Rewards, risks of amateuros stock traders

(China Daily-Xinhua)
Updated: 2007-02-06 11:34

Song has been following the stock of a certain media company ever since its initial public offering (IPO) three years ago.

After making an initial purchase of 1,000 shares for 7.6 yuan (97 cents) per share about three years ago, the university senior in Sichuan Province steadily expanded his holdings to 20,000 shares.

And then, when he thought it was time last week, he sold them all, earning 300,000 yuan ($38,667) in a single transaction.

The lure of the country's stock market has never been so strong, and the current bull market is drawing in loads of new investors, some of them just rookies.

Song, whose success in the market has earned him a reputation as a young prodigy, is just one example of the kind of stories that are emerging as more people experiment with trading.

A recent survey by jxnews.com.cn found that a growing number of college students in major Chinese cities are entering the stock market.

And they are not just there to try their luck. Gaining experience with personal finance management or putting classroom knowledge in practice are two other motivating factors for many young investors.

As counter-intuitive as it may sound, the survey found that economics majors account for only a small proportion of the student investors.

The only downside is that many students have been investing with money that their parents had given them to cover their living expenses. Whatever benefits they hope to gain from playing the market must be weighed against the possibility of losing these valuable funds.

The situation has stirred public debate, with some people saying the volatility of the stock market distracts students from their studies, while others argue that trading is a great way to gain financial skills.

"Not everyone is lucky," said Wang Mingmei, a researcher at the Academy of Social Sciences in Jiangxi Province.

Wang said the time and energy students spend on market research could be put toward their studies.

"If they pick losing stocks, they will have to starve," he said. "Not every one can afford that."