Curb Your Enthusiasm: A recent survey found education levels had little to do with success in Mainland China's stock markets.
Photo: Shandong University

Translated by Andrew Vanburen from a Chinese-language piece in Shenzhen Commercial Post


That is surely the question a lot of Chinese investors are asking themselves these days.

After a rather robust start to the year, things have cooled considerably for investors in shares listed in Shanghai and Shenzhen.

An extensive nationwide survey revealed two important findings about those playing the market in China.

Firstly, we now know that one in ten households invest in the country’s capital markets.

And we also know that, unfortunately for these homesteads, nearly 80% of them have been losing money of late.

Even more intriguing is the revelation that the level of education an investor has accumulated under her belt has little to do with how successful they are in the stock market.

Here are the exact figures.

As of the mid-May, 8.84% of households in Mainland China had at least one member under its roof making investments in the country’s capital markets.

A Southwestern University survey found that experience mattered more than education in the stock markets.  Photo: SWU

Of these, only 22.27% have made money in the stock market over the past year, meaning that around 77% are losing money, or at the very least breaking even.

The nationwide survey, commissioned by Sichuan Province-based Southwestern University of Finance & Economics, questioned 32 sample groups from 25 provinces and regions in 80 cities.

As for how much education the respondents could claim on their resumes, 0.47% had no formal education, 1.44% had elementary education or less, 4.9% graduated middle school only, 10.53% high school, 17.61% trade school, 23.57% a two-year college degree, 30.66% a four-year college degree, 43.66% a master’s degree, and 29.17% a doctorate and above.

However, although more educated citizens were far more likely to put their hard-earned money in the market, the level of their learning had little if anything at all to do with their success rate in buying and selling A- and B-shares in the PRC.

For example, for those investors who never stepped foot inside a classroom, a third of these “uneducated” investors have recently either broke even or been profitable to some degree, much higher than the average for the survey pool.

Those shareholders who never made it past elementary school did a bit better, with 37.04% saying they avoided losses.

But for those whose peak level of education was reached in middle school, they were at the bottom of the survey sampling, with only 9.84% saying they didn’t lose money in the market.

Continuing with the survey results, 20.59% of trade school graduates avoided losing funds in the stock market while 25.4% of two-year college diploma holders managed to do as much.

There have been more tears than cheers of late from Chinese shareholders.
Photo: MOE

Four-year university grads did worse, with just 19.31% reporting profitable share trading activities of late, while just over a fifth – or 22% of PhDs in Mainland China -- made money in the bourses during the past year.

The commissioners of the survey said that the findings prove that formal education alone, in whatever subject, is no guarantor of success.

But age and experience apparently matter.

The survey also found that the longer investors tried their luck in the market, the better they did... generally.

New young investors were profitable only 16.14% of the time, while the success rate for middle-aged market players with more experience was 23.71%.

Meanwhile, “old-timers” with years of life and market experience had a profitability rate of 30.30% -- still unacceptably low from an overall standpoint, but far and above the best record within the "experience" groupings.

While no one would ever say it doesn’t pay to stay in school, it apparently also pays dividends to keep trying and persevere when it comes to investing in stocks.

See also:

ALL BLACKS: China’s Listed Brokerages All Profitable

HSBC: ‘Bullish’ On China Shares In 2012; Prefers ICBC, CCB, CITIC

NEW KID ON BLOCK: 21 A-Shares In Red; 4 In Hot Water

KINGS OF THE HILL: 12 Banks Produce Over Half Of All Listcos’ Profit

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