Tuesday, 11 January, 2011

Violence in Dhaka due to Stock Market Crash

Violence in Dhaka due to Stock Market Crash

Interesting, indeed, though a bit ridiculous!

Wonder when investors will realise that share prices can go up or down.

  • Both due to fundamentals / technicals
  • and due to speculative activities / scamsters.

You've got to be prepared for all that if you're interested in market returns.

After all, Dhaka market went up by around 80% in 2010, before crashing by 15-20% in the current crash.

Hence, an investor had invested $ 1000/= in late 2009, it would have become around $ 1800/= in 2010, before reducing to around $ 1500/= now. All numbers are, of course, approximations.

If the markets have been going up and down due to valid economic reasons - whether fundamental or technical, there is nothing much to complain and there ought to be no justification for such violence.

If, however, the markets have been manipulated, we must think of a few simple questions before coming to conclusions about any imagined justification for the violence:

  • If you're worried about manipulations, who forced you to invest your hard-earned money in the supposedly manipulated stock markets?
  • If indeed the markets are manipulated, they must have been manipulated on the way up and on the way down. If you were happy to keep quiet earlier, there's no reason to crib about it now!
  • Even if markets have been manipulated, you've still generated far better returns than any fixed deposit in any bank - by miles. You have no reason to weep over the supposed opportunity loss.
  • If you are a speculator trying to make a quick buck, obviously, you're "one of those speculators" and should be willing to lose money as much as you're happy when you're making super-normal profits
  • If you're a long-term investor, you ought not to worry - What has gone down today will go up tomorrow. You should only be bothered about the kind of rates that prevail when you're eventually planning to sell your shares. In any case, a disciplined asset-allocation approach would have ensured that you would have booked at least partial profits when the markets went up by 80%. If you feel that the shares have fallen to unrealistically low levels, you can use that money now to buy back more of the same shares that you sold.

Moral of the story:

Any violence supposedly due to the stock market crash in Dhaka is certainly not due to the crash. It is only due to some other reasons, which I'm presently unaware of.

  • Perhaps some kind of local politics.
  • Or a desire to have a holiday.
  • Or a desire to motivate the powers-that-be to intervene in the markets so as to get the bull run going.
  • Or a wish to aggrevate the crash further so as to buy the very same shares at even lower prices!



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1 comment:

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Money Maker

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