Lesson in how to be rational investors

A video of Song Hongbing being surrounded and attacked by some members of the audience as he gave a speech in Taiyuan, capital of Shanxi province, has gone viral on the Internet in recent days.

Members of the audience rushed to push and even hit Song, the author of the once-bestseller Currency Wars as they blamed him for their losses, which they claim was the result of induced investment in a non-ferrous metals investment exchange in Kunming, capital of Southwest China's Yunnan province.

The angry investors said that they invested in the exchange because Song supported investing in what was called the world's largest rare metals exchange when it was set up in 2011. In July, the exchange published a notice which showed it had a liquidity crisis.

In his micro blog after the Taiyuan clash, Song denied he had any interests in the exchange and said the losses investors suffered had nothing to do with him. He also said he was forced to write the letter he issued, in which he apologized for investors' losses and will do his utmost to help them retrieve their losses.

Another video uploaded on the Internet around the same time showed Larry Hsien Ping Lang, a Hong Kong financial expert who is often invited to speak on the mainland, being besieged by investors in Shanghai. The authenticity of the video is yet to be confirmed, but in his micro blog, Lang, also made a statement denying any links with the Kunming investment exchange.

The two videos have again highlighted some of the problems in China's investment market, including deliberate fraud by companies, the lack of sense of responsibility among some public figures when they recommend investments, as well as the immature state of mind of many domestic investors.

The country now has laws and regulations in place banning false and exaggerated advertisements, and holding celebrities responsible for any misleading or false advertisements for the products they endorse, but few companies and their spokespersons have received the punishments for such activities when it comes to investments. Driven by selfish economic interests, many public figures still indiscriminately endorse companies without considering the effects of their recommendations on small-scale investors.

But that does not justify the behavior shown in the videos. It is irrational of people to pursue the money they have lost as a result of failed investments by force. Whether Song has played an improper role in this instance, should be up to the courts to decide; investors should pursue legal redress if they feel they have been wronged.

Despite their willingness to invest, many Chinese small investors have long exhibited an irrational and imprudent approach to investing. It is common for many of them to irrationally buy when prices are high and short sell when prices go down, whether in the housing market, or in stocks or gold markets. There are even such scenarios as angry stock and house buyers smashing the facilities of stock exchanges and developers' sales offices when prices fall.

Every investor should be responsible for their own investment decisions and activities. Any failed investment should not be attributed to the experts, analysts or others whose words they have blindly followed.

However, the two online videos of angry investors resorting to violence as they look for someone to blame for their losses does highlight the need for the country to better regulate the country's investment market. It has also sounded the alarm for public figures, cautioning them to think twice before they offer investment advice to the public, to prevent any of their remarks from excessively influencing and misleading those without too much specialized knowledge.

The author is a senior writer with China Daily.