Many new shareholders on the Oslo Stock Exchange have only been on an adventurous upswing. Now the leader of AksjeNorge warns against luck and encourages long-term.
From March 2020 until today, according to AksjeNorge, 127,000 new shareholders have joined the Oslo Stock Exchange. The new shareholders should not have lost money in the first place. The main index on the Oslo Stock Exchange has risen by a formidable 85 percent since the closure on 12 March 2020.
Last year, the increase was a nice 23.3 percent (see the graph below). That is more than double the return in a normal year.
Kristin Skaug, general manager of AksjeNorge, tells Nettavisen that in principle it should not have been possible to lose money during this period. The caveat is that private individuals are bad at spreading on different stocks and only bet on 1-3 different ones, something we will come back to
– What can you say about the newcomers in the stock market?
– 62 percent of them are under 40 years old. Last year, most young people came in the spring, but it dropped out during the reopening. Either they have withdrawn money from the stock market after the reopening for consumption or to cover living costs, or they have had loss positions.
Read also: Here is Sissener’s stock favorite: Almost like picking money on the street
Selects the United States
– The young are not so different the older. But when young people go into risky stocks, it is often in American stocks and then the most famous. Most young stock savers actually choose ordinary shares that most people already own, Skaug answers.
But the sharp rise in prices may have created an excessive belief in one’s own skills. Skaug hopes that some of these shareholders will secure the gain during the period and use it to spread over other shares. She’s still not sure.
– There is a certain possibility that they feel they have been declared geniuses with their share investments and have been extra brave and tough. But experts say that correction is not unlikely. The stock market has now risen for ten years in a row (see below, editor’s note), and last year we had only two negative months with a negative return. It was January and November, says Skaug.
She is worried that among the 127,000 who came in after the stock market crash in February and March 2020, few have much experience with the stock market.
Read also: Must take drastic measures in the economy: – It worries me very much
Luck
– From the beginning in this period, many have experienced a pretty fantastic return. They have been lucky and made good money if they have achieved a return near the main index or even higher. But it is important to have a slightly sober relationship with the future and the ability to be long-term.
Skaug thinks it is interesting that among the 15 of the most popular shares for private individuals, half of them are new companies on the Stock Exchange. One of them is the airline Flyr.
– You can ask questions about that, as they start at a time when almost no one is flying, says Skaug, who emphasizes that she does not give any stock recommendations. But Flyr has been hit hard after the IPO last spring, with a fall of 70 percent. The company recently had to raise more money.
Enormous debate
A company that has become a favorite among small savers is the more unknown and Dutch MPC Container Ships (medium-sized cargo ships). It has enough to do with the price increase, the share is up as much as 329.5 percent since the end of 2020 (see the graph below).
According to Skaug, a total of 4808 women and 12,700 men have thrown themselves into the share that was listed in 2020. When asked why this particular company has become a favorite in Norway, Skaug answers:
– We see that the share is discussed enormously in social media. Those who have participated have made a lot of money, and the share quickly became popular with women. But I hope many people see that when a stock has done so wonderfully well, you have normally been lucky.
For young men aged 20-29, the most common shares are Norwegian, the solar cell company Rec, the gaming company Kahoot! and the hydrogen company NEL
Read also: Several airlines take off on the Oslo Stock Exchange
Gender differences
One difference between the sexes is that women are much less represented on the growth exchange Euronext Growth, where, among other things, many of the new green companies are listed.
– We see that some of the companies that are transferred from Euronext Growth to the main list can be put into a share savings account. The scary thing about these companies is the risk, but for long-term investors it is an advantage to get in early, says Skaug.
– Do the small savers know what they are getting into when they invest in the new growth companies?
– No, I think the biggest problem with all the new companies is that many of the new shareholders do not know enough. They have realized that the company is green and can have a great growth. But the problem is that they do not look at the financial situation, Skaug answers, and elaborates:
More expensive debt
– These are usually companies with high debt or large capital needs and, depending on the circumstances, small incomes. If interest rates rise, loans become more expensive to service, while established companies often do not have debt to the same degree. Or equally expensive debt. It is not a matter of falling in love with companies that are engaged in something you are passionate about, but try to make sober assessments
A new risk factor is the record high electricity prices. Skaug says that listed companies also use a lot of electricity, and one question is how good the new companies have been at securing themselves,
Women between the ages of 20 and 29 have Norwegian as their favorite stock, followed by Equinor, Kahoot! and DNB. According to Skaug, it may look as if women have been somewhat slower in getting out of Norwegian or have greater faith in the airline. The values in Norwegian are down 99 percent since March 2020.
Skaug has also been concerned about one of the biggest mistakes small savers make is to have too few shares in the portfolio. Thus, the risk diversification becomes too poor.
Large share
– Absolutely, and we see only marginal change here in those who have the right number of shares. With a total wealth in the stock market of NOK 174 billion and NOK 267 billion invested in pure equity funds, individual shares make up a very large share of private savings in individual shares on the stock exchange.
– Few people have a very diversified portfolio, and those who do not save in equity funds in addition, are exposed to high risk. If they do not choose multiple stocks, they should choose mutual funds.
– What other mistakes do small savers make?
– A typical mistake we typically notice is that private individuals sit for too long with loss shares and go out too quickly when the market rises. It is researched on the mental here, that it is about believing and hoping that it does not fall anymore. Trying to “time” the market is impossible. But you invest to get a return over time, and if you wait too long, you never risk getting in.
Figures from AksjeNorge otherwise show that at the end of 2021, 544,403 Norwegians owned shares and equity certificates (savings banks) on the Oslo Stock Exchange. The values amounted to a total of NOK 174.4 billion. Last year, there was a net increase of 68,202 new private shareholders on the Exchange.
–
