The Zimbabwe Stock Exchange is currently rated as the best performing exchange in the world. Zimbabwe's inflation is also rated to be the best (worst) there is currently standing at anything between 2million - 500 billion % depending on who you are, how you are measuring and why you are measuring. It is not uncommon at present to have a share rise by 50%, 200%, or 500%. That is just how things happen in a hyper-dynamic market.
A friend sent me the following story that I found interesting and instructive. It typifies the irrational exuberance that stock markets sometimes exhibit. Here we go...
Once upon a time in a village in South-East China , a man (or it could have been a woman) announced to the villagers that he would buy monkeys for $10. The villagers seeing there were many monkeys around, went out to the forest and started catching them. The man bought thousands at $10, but, as the supply started to diminish, the villagers stopped their efforts. The man further announced that he would now buy at $20. 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 offer rate increased to $25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man now
announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now act as buyer, on his behalf. In the absence of the man, the assistant told the villagers: ' Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for $50. '
The villagers squeezed together their savings and bought all the monkeys. Then they never saw the man or his assistant again, only monkeys everywhere!
Welcome to WALL STREET or better still, The Zimbabwe Stock Exchange! (ZSE).
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4 comments:
If this is how the ZSE and Wall Street do business then would I be wrong if I say there is no business ethics in the Stock Exchange or rather that the ethics of the Stock Exchange leave a lot to be desired.
The Stock Market operates on a set of rules. Going into it without advice and with the posture of a gambler could be heart breaking and purse breaking.
With a good strategy it can be a very profitable undertaking and a worthy investment vehicle.
Interesting story- except for now we're still buying monkeys- sorry, I mean shares- and no one has started offering them back en masse...
I need education- someone tell me isn't this bubble going to burst anytime soon! I'm actually afraid to keep putting money there
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