One of the most stupid things that I have ever read are the headlines about market capitalization. They gloat over increase in share prices as though enormous wealth has been created overnight. If it were so where has all the wealth gone. How did it evaporate in a matter of days. What is often forgotten is that stocks are just a piece of paper which have no value other than the net worth of the company, which issued the stock certificate and the dividend it chooses to pay. Daily price of stocks is a product of manipulation. The demand and supply of each stock in daily trading sometimes is not even 5% of the total amount of the stocks of that company. Just because some one is interested in buying a few thousand shares at a higher price does not mean that the price of all the stocks of that company is going to fetch that higher price. If the volume of sales increased even on that day, prices would plummet. All that one can hope to get from a stock is nothing but dividend. By buying a stock we only transfer the right to that dividend. There was a time when some truly diligent companies which thought it fit to share their expected earnings through bonus issues or rights issues. These days the companies want everything for themselves. Even the IPOs are foolishly over priced. Under these conditions what is the fun of buying stocks, If companies expect their stock holders to earn money from the stock markets and nothing from the company itself, nothing can be more foolish than that
Traditionally, banks made money by lending the money given to them by depositors to businesses that created values and wealth. Where they have gone in recent times is the greed with which they invested directly or indirectly in stock or currency markets or commodity exchanges which generate no real values or wealth. Their lending to businesses has also been motivated by profiteering instincts than creating real profits and taking back a share of it. Unless the banks learn these basics they would driving the world in to crises every now and then. This is not the first time the financial markets have collapsed. But somehow, the vested interests are able find ways to siphon off hard earned money of the taxpayers to pay for their mistakes. There is no point in helping these banks without rewriting their rule books
Re: india
by prabha on Nov 25, 2008 10:10 PM
conti............
Anoyher eg. one Aphaya case
in kerala running for 16 years to find out the culprit.Do you think our police dept.is not eficient?,never everybody knows that. The actual culprit has swiss acount and our politicians are ready to protect them for their growth and survival.This govt and
politicians are more worying to protect the culprits only. Who will care about remaining indians.
A guy was severely beaten up by the goons hired as agents by the ICICI bank and later they came to know that that was not the same guy whom they were looking for. There was a defaulter of a car loan whom they were looking for and instead of the real guy they beat up this other guy severely and took all his money and other belongings from his car.
The article is bad..the comparisons taken for illustration shows total lack of maturity or understanding of financial business..and confuses a normal reader abt the scope fo the whole post...when one happens to be the head of a site anything he writes can be posted eh?
