VICTOR OGIEMWONYI
Following the economic crisis in these other regions, our markets reacted and witnessed a slow down, not any thing close to what we have today. But then, there were very few players in the market. The prolonged slow- down also resulted in many commentators accusing the markets and its operators of manipulation and fraud. I remember reacting at the time; I had written an article for the Guardian which was published with the title Hate comes to the market. I argued then that markets are what they are, they go up and they come down. The duality of the elements that govern the market never change, people just don’t learn.
The truth is that the investing public needs extensive public education about how the market works. Investors, particularly new investors need to understand that the stock market is a market for long-term savings, not where you double money, unless of course you know what you are doing. Even these set of speculators who embark on these high risk plays some times get caught and they pay dearly for it as we have seen recently worldwide. The stock markets have no experts, It is an approximation game. The science of pricing stocks is very imprecise and capable of fooling the most acclaimed experts; ask those celebrated stock operator in the 30’s some of whom were reputed to be a billionaires, they were wiped out with the 1929/33 crash of the American stock markets.
Most recently the Saudi Billionaire Al Walid who was considered a very shrewd investor because of his intelligent investment picks, especially his investment in Citibank, which was well timed resulting in rapid growth of his holdings in, he was caught napping in the current meltdown; he lost a bundle, when Citibank stock tanked, losing 80% of its value.
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The celebrated American investor Warren Buffet is mostly confused as a stock market investor. Far from it, Warren Buffet’s strategy has largely been to play the stock markets as a long-term private equity investor. He finds a good entry point to make a bet on a company and stay with that investment forever. His investment in Washington Post Company, Coca cola and Gillette fit this pattern of long-term investing. He has kept these investments for upwards of 20yrs, how many of our investors take this perspective?
The boom and bust story of the market is almost random .It usually follow a pattern of economic boom, creating liquidity that pushes prices up , creating profits who are lucky to own those stocks in that period, the stories of these new profits, draws in new investors to join the party .
At the height of it all, we all become giddy, until the economy slows down and there is a bust, prices come tumbling down and we are back to reality. The most recent investors become the next victim and they all cry foul and the whipping boys in the stock markets are called to account for the foolish judgment of greedy investors. And the cycle begins all over again, Stockbrokers become the new Villains. Their good deeds in good times are all forgotten. Concluded
