Shanghai’s stock market fever can be ruinous
Published: Jun 30, 2015 06:38 PM

When I called my elderly widowed mother, who lives alone in my hometown, recently to inquire on her health, she evaded my question and instead directly asked me about the 70,000 yuan ($11,284) she gave me a few months ago to invest on her behalf. Here I was worried that she had caught a fever, when what was really ailing her, along with the rest of the nation, was stock market fever.

Under the spell of some family friends who had made high returns on China's stock markets back in March, my mother immediately called me in Shanghai. "Everyone else is earning vast sums of money from playing the market, how can you let me miss this chance?" she chided. "You say you care about me, but how can you call me every other day without giving me the insider information from your profession as a journalist?"

After an hour of guilt-tripping me, she said I could make up for being a bad daughter by taking her 70,000 yuan retirement savings to invest in the markets using my supposedly insider knowledge. As dead-set as I was against the idea, I really couldn't blame her, for I too once caught the stock market bug.

Back in 2007, while anguishing from the boredom of being a full-time housewife, I killed my daytime hours by investing the family's grocery money in Chinese stocks. During the hours that my daughter was away at primary school, I sat in front of my computer refreshing the stock ticker every second for the latest quotes. I became so obsessed that the daily direction of the markets dictated my daily moods: sometimes I was up, sometimes I was down.

But on May 30, 2007, the Shanghai Stock Exchange experienced a huge correction. At the start of the day I had a portfolio worth 1 million yuan. By 3 pm, there was only 900,000 yuan left. On the second day, my account was down to 810,000 yuan. On the final day of the crash, my shares were worth only 600,000.

It was a loss that I accepted gracefully; if you play with fire you will get burned. But I dared not tell my parents, whose money I also dabbled with. So my husband and I agreed to fib, telling them that their investments were unaffected by the correction. As far as they were concerned, I was a golden trader.

So you can imagine my hesitation to put my mother's precious retirement savings into the latest bull market. As early as March I sensed the impending disaster of the bubble bursting. As I learned from my year as a day trader, what goes up always comes down.

After the local markets took a devastating yet inevitable plunge the other day, I thought it was good timing to let my mother know that I never actually invested the 70,000 yuan she sent to me. I expected she would be elated to know that I had used sensibility and smarts and all the other things she had taught me in my childhood. Just like when I was a little girl, I waited for her praise.

"What!" she shrieked on the other end of the phone. "You didn't earn any money for me? What a waste!"

At these words, my heart dropped faster than shares of the Shanghai Composite Index. "I … I thought you would be happy," I muttered dejectedly. "I warned you that it was a bad idea. Millions of people lost their life savings. Don't you feel lucky?"

"No! You should earn some money for me as soon as the next opportunity comes around."

I hung up the phone biting my tongue. Ancient Chinese wisdom tells us to respect senior citizens in society as we would the elders in our own family. So while I can't chastise my mother - or the rest of the public - for their displays of greed during the recent wild ride on the Shanghai exchange, it is incumbent on me as a journalist to recommend society start displaying some prudence by making long-term investments in solid companies rather than buying and selling by the day. Playing the markets on the uptick does nobody any good.