SYWBS Part 3: The Other Investors

This is the third part of the "So you wanna buy shares" series. You may read the previous two parts here:
1. Part 1: Getting to know the share buying 'battle field' and what affects share price movements
2. Part 2: Getting ready for the opening gambit, a top down approach, and the importance of selecting the right industry to invest in.

Before we get down to narrowing down our stock selection and making our opening gambit, I think is it better that we take this opportunity to get to know the 'opponents' on the field.

As I have mentioned in the previous articles, 'playing' the stock market is not dissimilar to being in a battle of wits with other players on the field.

To quote Sun Tzu:
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
― Sun Tzu, The Art of War

So, who are your 'enemy' and who are you allies? Well in this game, no one is your enemy forever and none is your ally forever too. There is no loyalty except to profit and money. So your enemy today could be your ally tomorrow. It is therefore imperative that we spend some time getting to know the others.

The players in the market have been describe in many way and facets.Some categorized them based on their trading activity (passive investors, active investors, speculators), some based on strategy (long term investors, short term investors / punters), and some based on type. I prefer to start with the type of players, which I have dividend into the following categories:
1. Institutional player
2. Retail long term player
3. Retail punters
4. Market manipulators

Institutional players
Who: Unit Trust Funds, Government Linked Investment Companies (EPF, KWAP, Valuecap, Khazanah, Tabung Haji, PNB), Insurance Companies, Takaful companies, Foundations
Size: Very very large. This category of investor accounts for more than 2/3 of the stock market
Ticket size: very very large
Motivation: Keep the job. Hahaha. Although it might sound funny, but this is largely true as the funds are run by professional managers who are paid as long as they have the job.  That means there are other factors than the immediate task of making the trading profit (which is more difficult as when they move, everyone will be alerted).
Investment horizon: Very long term
Investment style: long term portfolio strategy. This is based on a mandate for each fund, like balanced fund, asian equity and the likes. So even if a share is hot some of these investors would not be able to buy it if it is not in the mandate. Likewise, even if a share is cold, they might need to buy them to meet the mandate. This mandate driven strategy is evident when, for example, a stock suddenly gets to be included into the KLCI index (I think SapuraKencana had this scenario). When a share gets included in the index, all the funds that has track the index may need to buy the share just so that they can ensure they track the index well. Likewise, if a share gets thrown out from say a Shariah index, you might see large and persistent selling pressure on the share as Shariah funds seeks to exit from the shares, even if it is making huge trading gain. They simply cannot go against the mandate. Profit is secondary, in a way.

Retail long term players
Who:Wealthy high net worth individuals (or corporations), mostly. They are normally assisted by experienced remisiers, brokers are financial consultants.
Size:  Large.
Ticket size: large. Due to the large size of their capital, they have to trade in larger volume to make up the return.
Motivation: Make long term stable return in terms of trading gains and dividends.Dividends becomes a significant consideration due to the size of their capital
Investment horizon: Medium to long term
Investment style: A mixture of long term portfolio strategy and opportunistic punting. These people are well informed and could take sizeable position. Their trading sometimes large enough to move the share price and could affect the trend of the share that appears on the technical charts.


Retail punters
Who: Wealthy and less wealthy individuals, mostly. Because punting requires a constant eye on the market, they are dominated by traders, remisiers and some career market punters.
Size:  Small to large.
Ticket size: Flexible. As punters wants to ride on the wave, their size can vary  depending on their appetite and risk assessment for each trade. But their size are not normally large enough to create and sustain a price wave, but they can add to prolong a wave. They cannot be too big as that would make it difficult for them to exit the wave without breaking it midstream.
Motivation: Make trading gains and the hell with everything else.
Investment horizon: Short
Investment style: Constantly picking stock on a daily basis. Focus more on trend rather than fundamental analysis.

Market manipulators
Who: These dark shadowy characters exists and sometimes some of the are caught by the regulators. To ignore them is to seek for death in the stock market.
Size: Large.
Ticket size: Flexible. The ticket size would be designed to be large enough to move the share price but small enough to run undetected.
Motivation: Make trading gains and the hell with everything else. These people usually work with inside information in hand and with the financial support of some opportunistic investors.
Investment horizon: Short
Investment style: They work to fool the rest of the investing public into buying (or selling) shares at artificial price which they know is not sustainable once they are out of the picture.Because they need to be able to have control over the majority of free-floating shares with the limited capital that they have, they usually target penny stocks or some fairly illiquid shares.


If you are a beginner in stock market investing, you need to know investors and over time, you would be able to sniff them out with experience. As we mentioned before, these people could be your enemy or your ally depending on where you are when they come in.

See you next time :-)

Invest smart peeps!
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You can read previous articles in the "So you wanna buy shares" series by clicking the link below:
1. Part 1: Getting to know the share buying 'battle field' and what affects share price movements
2. Part 2: Getting ready for the opening gambit, a top down approach, and the importance of selecting the right industry to invest in.

We share as the more we have the merrier, kan?