Background of talking Taiwanese investor
Recently, due to the publication of my new book, “Andy Lin’s third US stock book “Investors Beautiful Heaven”, ship worldwide, free shipping to Taiwan“, I had to attend media interviews. Over the past three months, during various interviews, the hosts and media staff, besides being curious about how I achieved a 30-year annualized return and why I only invest in US stocks—a major topic of interest—were also the “investment habits of Taiwanese investors” that I mentioned in the book.
In my opinion, these “investment habits of Taiwanese investors” are actually the reason why most Taiwanese retail investors fail to make significant profits in the stock market. Therefore, I feel it’s necessary to list some of the “investment habits of Taiwanese investors” that I’ve observed in this article for your reference.
Almost no long-term investing
This is the most fatal flaw; see my other post for a detailed discussion. Please see my deep dive post of “Almost no long-term Taiwan investors“
Frogs in a well
Narrow-minded, self-satisfied; always believing Taiwan is the best, intolerant of dissenting opinions. Indifferent to the world outside Taiwan, self-satisfied, short-sighted, and prone to herd mentality.
Narrow Valuation Approach
Using only the price-to-earnings ratio (P/E ratio) for valuation ignores more important indicators such as revenue, cash flow, return on equity (ROE), and return on invested capital (ROE). Loss-making companies are immediately discarded without further investigation.
Preference for Financial Stocks
Taiwanese stock investors have a particular fondness for financial stocks. The number of investors holding financial stocks is equivalent to the number of active traders annually: 6 million, accounting for half of all Taiwanese stock accounts—a truly remarkable phenomenon.
Preferential Treatment for Real Estate
In the US, stocks are the largest component of their assets, accounting for approximately 50%. In contrast, for Taiwanese investors, stocks only account for 20%, with real estate consistently being the largest asset.
Pursuing Touted Stocks
Wherever I go, almost without exception, everyone asks me for touted stocks, inquiring about stock market trends. To put it bluntly, “The question determines the questioner’s level! Which stock to buy is irrelevant; why buy it? The process of forming the investment decision is what matters.”
Prioritizing Dividends Over Capital Gains
Taiwanese investors prioritize dividends over capital gains. High-dividend stocks are favored, with half of the investors focusing on financial stocks, failing to see the bigger picture. Two pieces of evidence support this:
The number of shareholders in stocks 0056 and 0050 is almost double.
How frantically have Taiwanese investors poured money into high-dividend ETFs in the past few years?
A Preference for Short-Term Swing Trading
Swing trading is the mainstream approach. Retail investors chase insider tips, and influencers instill incorrect investment concepts—leading almost all Taiwanese investors to believe that short-term swing trading is the fundamental principle of stock market investment. Discussions among investors always revolve around: which stock is “recently” hot, which company has “fallen a lot” or “surged by a lot” these past few days.
My book contains complete statistics: In 2024, day trading accounted for a staggering 36% of Taiwan’s stock market trading volume!
A Blind Faith in Formulas and Shortcuts
Following the crowd, a get-rich-quick mentality, wanting to make money but not wanting to invest time, a blind faith in shortcuts, formulas, and technical analysis, and a penchant for clever tricks. Almost all courses and stock investment books on the market designed for Taiwanese investors tout their unique technical analysis techniques; why? Because demand creates the market.
Celebrity Worship
In Taiwan, the psychological halo effect is almost fully exploited among investors. Any well-known financial scholar, celebrity, professor, athlete, politician, gossip figure, YouTubers, online streamer, or entertainer—anyone who gets media attention—is met with utmost reverence from Taiwanese investors. Their stock market investment pronouncements and methods are almost guaranteed to be widely quoted, forwarded, and reported—regardless of whether these statements are reasonable or truthful.
To Taiwanese investors: use your brain! “Reputation can be bought with money, but investment performance cannot.”
Related articles
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- “Almost no long-term Taiwan investors“
- “Public reaction on Almost no long-term Taiwan investors“
- “Taiwan vs US stock market – For Taiwanese stock investors investing in US stocks“
- “5 high-yield ETFs in Taiwan, irreversible trends, and how much do Taiwanese like it?“
- “The failed Taiwan software industry policy“
- “Valuation methods significant different between US and Taiwan investors“
- “Dividend-rich industries and 6 big differences from Taiwan“
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- “Why long-term investment is better?“
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