Periscope
Tales of two young investors
A one-time high-risk taker
Thomas Lee Kwong-wai, a year-three environmental science student, has made a loss in investing in warrants as he did not know the speculative and high-risk nature of the product.
Described buying warrants as ˇ§a risky gamblingˇ¨, Mr Lee said he once clicked on the stock price screen every minute to keep monitoring the ups and downs of the share performances. ˇ§Itˇ¦s a little bit stressful,ˇ¨ the student investor said.
He started investing in stocks and warrants as he considered only savings could not help him achieve goals like buying a car or a flat.
He put about HK$20,000 in the stocks and warrants of Cheung Kong (Holdings) Ltd. and HSBC Holdings plc while leaving HK$10,000 in his savings account.
He said he lost ˇ§a few thousand dollarsˇ¨ in warrants because he was in class and failed to track the performance of the stocks and make a wrong bet on the share movement.
The holder of a warrant on the stock of a company has the right, but not the obligation, to buy or sell the shares at a fixed price during a specific period of time. As there are ˇ§call warrantsˇ¨ that give the right to buy the shares and ˇ§put warrantsˇ¨ the right to sell, which respectively benefit from an upward or downward trend in the share price, an investor will make a loss if he bets on the wrong price movement.
ˇ§Warrants were so unpredictable. The stock price once had risen in a double after I just sold them out,ˇ¨ he said.
Mr Lee now prefers to buy stocks for long-term investment.
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