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It is a case of “buying high and selling low.” Many people lost their entire savings. The Stock Market Boom in 2011

+3
Kumar
manula
Asoka Samarakone
7 posters

Go down  Message [Page 1 of 1]

Asoka Samarakone


Expert
Expert


It is a case of “buying high and selling low.” Many people lost their entire savings.
The Stock Market Boom in 2011

As more people invested in the stock market, stock prices began to rise. Stock prices then bobbed up and down throughout, followed by a strong upward trend. The strong bull market enticed even more people to invest. Stock market boom had begun.

The stock market boom changed the way investors viewed the stock market. No longer was the stock market for long-term investment. The stock market had become a place where everyday people truly believed that they could become rich. Interest in the stock market reached a fevered pitch. Stocks had become the talk of every town. Discussions about stocks could be heard everywhere. As newspapers reported stories of people making millions off the stock market, the fervor to buy stocks grew exponentially.

Although an increasing number of people wanted to buy stocks, not everyone had the money to do so. When someone did not have the money to pay the full price of stocks, they could buy stocks "on margin." Buying stocks on margin means that the buyer would put down some of his own money, but the rest he would borrow from a broker. Buying on margin could be very risky. If the price of stock fell lower than the loan amount, the broker would likely issue a "margin call," which means that the buyer must come up with the cash to pay back his loan immediately. Many speculators (people who hoped to make a lot of money on the stock market) bought stocks on margin. Confident in what seemed a never-ending rise in prices, many of these speculators neglected to seriously consider the risk they were taking.

People across the country were scrambling to get into the stock market. As more people invested in the stock market, stock prices began to rise. The strong bull market enticed even more people to invest. The stock market had become a place where everyday people truly believed that they could become rich.
Few days later, the market started dropping. At first, there was no massive drop. Stock prices fluctuated throughout until the massive drop. Stock prices plummeted. Vast numbers of people were selling their stocks. Margin calls were sent out. People across the country watched the ticker as the numbers it spit out spelled their doom. The ticker was so overwhelmed that it quickly fell behind. The low numbers of the ticker had shocked many speculators.
As the stock prices plummeted, no one came in to save it. People were in a panic; many couldn't get rid of their stocks fast enough. Since everyone was selling and nearly no one was buying, stock prices collapsed. Many people lost their entire savings.
Every day there were a dozen new stock market tips that make sure your financial success. Every day there were hundreds if not thousands of people that jump on the bandwagon, and every day, each of those people were disappointed.
Every one had a hot tip about the next “big thing” and investors were jumping on stocks as they shot up. Unfortunately, most of these rockets came crashing down just as quickly and many investors held on way too long. The disastrous result was an exact reversal of what every body hoped. In the end, it was a case of “buying high and selling low.” As of yet, there has been little agreement as to the causes.
Stock market is very often difficult, complicated and challenging. Yet for every factor that threatens to hold you back, there are dozens of other possibilities for moving forward.
Feel the regrets, and then quickly redirect energy into meaningful and productive pursuits. Learn from your regrets, act on your knowledge, and soon you’ll have nothing at all to regret.
Asoka Samarakone

manula


Vice President - Equity Analytics
Vice President - Equity Analytics

nice work ...real story..

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Good points to gather.
Initially this was a battle between demand and supply of the shares.
When demands rose steeply so many came into the scene blindly.
Now they are crying and moaning.
Nothing to do with the market.
Plus buying high selling low is completely stupidity, but still we can play "buy high and sell higher".
Thanks for sharing a valuable article.

sriranga

sriranga
Co-Admin

Thanks a lot for sharing valuable article.
Keep it up.
@Kumar
'buy high and sell higher' is also a good point to be noted.

http://sharemarket-srilanka.blogspot.co.uk/

manula


Vice President - Equity Analytics
Vice President - Equity Analytics

Kumar wrote:Good points to gather.
Initially this was a battle between demand and supply of the shares.
When demands rose steeply so many came into the scene blindly..

Yes.. pepole thought this is the easy way to make the money.. some want with in one week their shares to be high.. so many posts i saw in that period.

Kumar wrote:
Now they are crying and moaning.
Nothing to do with the market.
Thanks for sharing a valuable article.

But how the upward was brake?? why it was brake ( like papdam) There can be up and downs in any market but in our market no one can predict what going up . There are many threads of the market trend.. so here i want to show the change only

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Good investors or traders play the game different to those who played in CSE.
They know the holding stock intrinsic value and the market value.
Many of them got a plan when to exit the arena.
Market will go up and comes down that is the typical share trading pattern, this is not a rocket science.
If we are intelligent we need to exit on the upward trend before the high(bcos no one can predict the high or bottom)and buy the same stocks in the downward trend.
I think there are so many posts in this forum, regarding this subject.
Cut short the story, IMHO most of us need to invest time in learning the market. I know no one will agree. Left to them.
Amen.

Tiger

Tiger
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Kumar wrote:
Initially this was a battle between demand and supply of the shares.
When demands rose steeply so many came into the scene blindly.

It was not blindly, SEC blinded many new people and dragged them in to the market.

Re: SEC grills brokers, fires letters to investors - Will this effect to the market????
by Tiger on Fri Oct 14, 2011 11:23 am

Also SEC should re look at their programs to introduce the CSE to village folks. This program is like herding chicken in to a lions den. Rather it should facilitate a smooth transition.

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Tiger wrote:
Kumar wrote:
Initially this was a battle between demand and supply of the shares.
When demands rose steeply so many came into the scene blindly.

It was not blindly, SEC blinded many new people and dragged them in to the market.

Re: SEC grills brokers, fires letters to investors - Will this effect to the market????
by Tiger on Fri Oct 14, 2011 11:23 am

Also SEC should re look at their programs to introduce the CSE to village folks. This program is like herding chicken in to a lions den. Rather it should facilitate a smooth transition.

Yes, you are right to certain extend.
Most of us are willing to point the finger on others, that is the basic human instinct.
My point is why we cannot update ourself?
Why we need to go behind this stupid guys?
Because we are in the herd mentality, we are not educating our selves.
This is going to happen generation by generation.

Trillionaire

Trillionaire
Manager - Equity Analytics
Manager - Equity Analytics

As usual....a good article. Smile Thanks!

laka

laka
Senior Equity Analytic
Senior Equity Analytic

Asoka Samarakone wrote:
.Since everyone was selling and nearly no one was buying, stock prices collapsed.

I wish you used the word " illiquidity " rather than above. If some one just call and ask brokerage houses that how many parcels are held for sale only in banking sector
@ current price. Then they will understand how much of inflows we need to Turn Over A New
Leaf in CSE...

Mr.Asoka.. In your view what are the solutions for that ??

Now retailors and local big boys can't change the direction of CSE. After the next ded cat
bouncing (when rules amended) ASI would be Out Of The Frying Pan And Into The Fire.

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

laka wrote:
Asoka Samarakone wrote:
.Since everyone was selling and nearly no one was buying, stock prices collapsed.

I wish you used the word " illiquidity " rather than above. If some one just call and ask brokerage houses that how many parcels are held for sale only in banking sector
@ current price. Then they will understand how much of inflows we need to Turn Over A New
Leaf in CSE...

Mr.Asoka.. In your view what are the solutions for that ??

Now retailors and local big boys can't change the direction of CSE. After the next ded cat
bouncing (when rules amended) ASI would be Out Of The Frying Pan And Into The Fire.

"Since everyone was selling and nearly no one was buying",
This is one of the bear market bottom sign.

"Now retailors and local big boys can't change the direction of CSE."
That is correct laka,bcos no one can determine MR.Market.
Mr.Market always right, we investors/traders thinking to beat the market and beaten by the market at last.

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