The history appears to be repeating itself for the nth time in the stock market. The small time enthusiasts, who normally join the band wagon right at the top of the market cycle, have once again jumped into the market arena. Completely overwhelmed by the left-out syndrome, they are queuing in hordes in front of the counters where they had lost their fortunes, not long ago. Many of these scrips are trading at a fraction of the price they were trading 3years ago. Some notorious stocks that have inflicted huge losses to the investors and traders in past decade are also topping the volumes charts again. A strong urge to prove a point, rather than greed, appears to be the dominating factor here. Everyone wants to prove that it was their bad luck rather than lack of financial acumen, which caused them loss last time. I wish luck favors these traders this time. But in my heart I know for sure, this is not going to be the case. They will again lose! No regulator, no matter how strong and vigilant, can protect them.
There is a poplar fable in the stock market
literature. Usually it is narrated by the market seniors after the bubble has
already burst. Like every time before, this fable aptly summarizes the present
state of affairs of stocks markets world over. The story goes like this:
“Once upon a time in a village a man appeared
and announced to the villagers that he is willing to buy monkeys @ Rs. 10 each.
The villagers lured by his offer, went out in the forest and started catching
monkeys. The man bought thousands @ Rs. 10 and as supply started to diminish
and villagers appeared tiring in their effort, he revised his offer. He
announced that now he would buy monkeys @ Rs. 20 each.
This renewed the efforts of the villagers and
they started catching monkeys again. Soon the supply diminished even further
and people started going back to their farms. The man increased his offer rate
to Rs. 25. The villagers would now spend hours in the forest to catch even a
few monkeys. Soon no monkey was left in the forest. The man would coax the
villagers every day to go and get more monkeys. The villagers would try their
best but in vain. As the frustration grew, the man made the offer even more
lucrative. He announced that he would now buy monkeys @ Rs.50 each! But there
was no monkey.
The man left his servant in the village and
left for the city. In the absence of the man, the servant told the villagers,
"Look at the monkeys in the big cage that my principal has collected. To
help the poor villagers, I am willing to cheat my master. I will sell these
monkeys to you @ Rs. 35 each, so that you could sell them back to my master @
Rs. 50 when he comes back from the city.”
The villagers queued up with all their saving
to buy the monkeys. Soon the servant had sold all the monkeys back to the
villagers. He then also left for the city with all the money he had collected.
Thereafter, no trace of the man or his servant could be found by the
unsuspecting villagers. They were left with a large troop of monkeys and hope
of selling them back to a willing buyer someday. In the meantime, they would be
forced to feed and take care of simians.”
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