One can never stress enough about investor education.

How many times have people bought into stocks, not knowing what the company does?

Some traders don't even know the names of the companies they trade, because all they care about are the stock codes and stock prices.

So whose responsibility is it to educate investors and traders?

It is true that investors themselves should do some homework if they want to make sensible investment decisions. They can better inform themselves through courses conducted by various financial institutions like brokerages, or affiliated bodies like the Securities Investors Association of Singapore. These courses range from teaching the man-on-the-street how to analyse companies' annual reports to technical analysis of stocks.

But business news should, in itself, be educational.

For starters, this means that industry jargon should be reduced to the bare minimal in business news stories.

The business media puts out reports to inform the public of breaking news stories and companies' developments. The intended audience should be the general public, not just the people who understand. Heavily-jargonated publications can turn some would-be investors away simply because these people “don't get” what's written. Trade publications are, of course, the exception.

Second, listed companies (who are already subject to media coverage) should not turn away those who want to learn more about their businesses.

One of the reasons journalists fear asking questions like “so what exactly do you do” and “why do you run your company this way” is that some companies frown upon such queries. Some heads of companies seem to think that reporters should have done their homework on them before conducting the interview.

What these heads don't seem to realise is that most journalists are sometimes bogged down with a few stories from different industries at once, so it really is a blessing that some reporters even bother to clarify some bits of information.

Sinwa CEO Mike Sim is an example of a company head who seems to believe in teaching people about his company.

When Sue En and me went to interview him at his office about a month back, he was able to paraphrase and explain on-camera his latest MOU (the press release was quite a mess to get through). After the interview, he got one of his department heads to show us around the yard, who also put into perspective how stocking ships is just like stocking up households, only in a different scale.

So the business media should have a hand in educating investors by reducing jargon in news stories.

And companies, in turn, should try to be more patient with people who ask them about what they do. Even if things look extremely obvious.

Serene Lim

Labels: business, investor education, media, sinwa