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 “a risky gambling”, Mr Lee said he once clicked on the stock price screen every minute to keep monitoring the ups and downs of the share performances. “It’s a little bit stressful,” 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 “a few thousand dollars” 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 “call warrants” that give the right to buy the shares and “put warrants” 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.
“Warrants were so unpredictable. The stock price once had risen in a double after I just sold them out,” he said.
Mr Lee now prefers to buy stocks for long-term investment.
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