ALI BABA AND FORTY THIEVES!
I have noticed that a large number of small and medium investors are always looking for an ‘advice’ from an stock expert: which stock they should keep and what they should sell it out.
Before I answer this very important question, let me explain few things, which I have explained repeatedly in my various posts on different forums and articles in last 4-6 weeks as a tip for the investors.
Before coming to Canada 12 years back, I was a very active investor of Karachi Stock Market. But those days, that is between mid 1980s to mid 1990s, stock business in Pakistan was not as lucrative and profitable as in last 3-4 years. The only reason was Pakistan’s uncertain political situation and chaos.
In all those 12 years, though I did not invest in Karachi Stock but I have more interest and knowledge of the stock business because of that experience of Pakistani markets. On the basis of that knowledge and experience, I started doing stock trading with Toronto stock Exchange and NYSE and thus I have brokerage accounts with some world class brokerage companies.
Things have also changed greatly in last one decade. Physical delivery of stock shares to brokerage accounts, CDC sub-accounts and online live trading has taken it’s place. It has not only quickened the process but settlement of accounts happen instantly.
AKD online brokerage company, based in Karachi is not only Pakistan’s number one online trading company but I can say with challenge that so far I have not come across such a top class online brokerage company in North America where AKD beat them in many of it’s unmatched features.
Today, you don’t need to run behind brokers what to do what not to do. If you have a little common sense, knowledge and experience, you could do buying and selling yourself. But if you are totally blank and dependent on brokerage advice, please do not indulge in this business, it is playing with the fire.
In North America, there are special TV business channels which broadcast 24 hours various programs on stock business. That includes expert’s advice for investors. Investors from different cities in different categories ask questions online to the experts. Newspapers carry special sections in the papers everyday about stocks besides, there are separate business papers and magazines.
But this all happens in an atmosphere where the world stock markets run their business in a set standard. The stock prices go up and down on the basis of companies’ quarterly, monthly and annual results like, profitability or loss, total assets, debts, revenues/sales, management expanses, declaring of dividends, bonuses, publishing of balance sheet etcetera. Because of these set standards stock prices do not plunge or surge as in Pakistan. A slight change happens because of any noticeable good or bad news but basically, the stock stands stable what the company forecasts and what experts predict looking to the overall position of a particular stock.
In Pakistan, stock market is TOTALLY opposite. There is no rule, no criteria, no principle, no character and no human values. The bull-players ( big investors or you may call them thugs ) come to the market every morning with a pre-set agenda that how many millions they will make today! The prices of Pakistani stocks do not go up and come down on the company forecast, productivity, profitability or loss or any other reason described above because our market-players who are really manipulators and profiteers play gamble with the stock trading. I do not want to name one stock, you take any smaller or bigger stock: Japan Power, Chakwal Cement, KESC, MCB, NBP, BOP, ACBL, PPL, PSO, FFC, FFBL, NML, OGDC, PTA, ICI, OICIC, PTC, SSG, TRG…you name it…every stock went up 40-50-100-200% without NO reason and dropped down without no reason too with the same volume after 15th March.
Before March 15, 2005, NBP, OGDC, BOP, ACBL etcetera were running at Rs.50 or Rs.60 sometimes in January-February 2005. All those stocks started shooting up and by the Mid March 2005 were touching Rs.190.00 and Rs.160.00 (NBP/OGDC). After touching 10300 points on 12th or 13th March, 2005, the stocks started sliding down and with in 15 days the 100 index lost over 3000 points, which is also a shameful record in the stock business of Pakistan.
First of all, why the stocks climbed from Rs.60.00 to Rs.190.00 and Rs.160.00? Was there 150 or 200% profit in OGDC and NBP? And if it was (it was not though) than did the companies declare losses of 150 or 200% that the stocks dropped down by Rs.100.00 and Rs.60-70?..of course not!
The bottom line is that the KSE stock is an story of Ali Baba and Forty Thieves!
If you want to play gambling like thugs do, it is your choice, sit tight and hold your wallet. But if you really want to generate some profit out of your hard earned invested money, you cannot hold the stock for a prescribed period as it happens in North America. The reason is, the stocks go up and down without any set standard or logic, on the basis of big investors’ manipulation.
What I would suggest the small investors to sit tight online through the LIVE brokerage company screen at the computer and see how market goes. You have to buy and sale stock multiple times during the 5-6 hours session in one day. That’s how, you can make some profit. I have seen NBP, OGDC, ICI, PICIC, MCB, NML, BOP stocks started with negative territory, suddenly rose by 4-5 rupees for few minutes or for an hour (s) and when market closed, it lost 4-5 Rupees again. So that was the time, if you had 1000 shares of OGDC or NBP, you would have made Rs.4000.00 or Rs.5000.00 in 5-10 minutes. I would call it ‘conceivable’ time as it happens in the case of pregnancy.
Should I hold PTA, KESC, OGDC, NBP or sale it….this would not apply here. You got to be a gambler and tricky to do the stock in KSE.
I would welcome individuals if they have general questions about the stock market or investment but I am not prepared to answer any question which relates to investment expertise as it does not apply in the case of Pakistani stocks. Gambling and stock market are two different portfolios. You cannot do long term investment in Pakistan. If you do so, at the end of the day, you might get some dividends but you might lose wide margin of profit which you could do the way I told you. Remember one thing though, that stock business, you have to work on pennies and not to be greedy. Whatever comes in plus, take it and do not wait for the next moment because, next moment might be downfall and you lose money!
LAST WORD:
If you see the world market, stock business is the backbone of country’s economy. In North America, England, Japan and other countries of Europe, the companies keep 100% credibility of their stock to attract foreign investments. That’s how billionaires from Arab world and other rich countries have invested in America and England. Not only their money is safe in those companies but they make safe return of profit every year. Whatever experts predict and forecast, 90% goes that way. While as in Pakistan, a trillion Dollar industry (KSE) even do not have few hundred million Dollars investment from abroad because, investors know that their investment is not safe in gambling environment.
The government of Pakistan should realize that they are losing not only credibility of investors in Pakistan but Billions of Dollars foreign exchange from abroad is hampered because of those manipulators.
This is also a matter of shame for Pakistani giant investors that because of their personal greed and manipulation, the country is losing Billions of Dollars every year. They are the real culprits, enemies of the state and thugs who for their individual profits are pushing the country’s economy into the ditches.
SHAFIQ KHAN
CANADA