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Last Week, Market News Summary (Author: M Kabir Ahmed)
Posting Date:2010-02-07
#5
Last Week Market News Summary
A biggest single day drastic drop had happened last week in Dhaka Stock Exchange that was triggered by securities regulators when authorities reset cap on Margin account to reduce borrowing money from merchant bankers. To set stock market under easy going and realistic money following into the capital market, SEC enacted a new margin loan policy which negatively impacted on investors for a day. In a result, market index dragged to 103.73 points, and such a drop occurred in July 5th in last year when the index dropped to 103 to 5399.64 that was a 1.88 percent from the previous day.
SEC called upon all brokerage firms and merchant banks to provide margin loan to 1:1 from 1:1.5, such a margin loan decision came up a few days after when SEC already once settled margin loan at a ratio of 1:1.5 down from 1:2, this new policy on margin loans will be affected by Feb 7th on Sunday. The margin loan has been re-examined then enacted again to influence investors taking conservative measures in buying shares of companies’ PE floating at 50 or less. It is widely practiced in many other industrial countries where you can only borrow 50% of total investment; such a percentage of loans in stock market is regulated in USA for years. In order to buy Tk. 1000 worth of shares you can only borrow as high as 500 Tk. and other 500 Tk. has to come from your own pocket. The margin loan ratio 1:1 is much about conservative approach protecting investors from falling into higher debt burden in a situation when market faces huge drop as well as share prices that investors are holding and that can lead into inevitably having higher percentage of loans comparing what investors have started with own investment money.
Although SEC’s new plan is for protecting share market under control, the all share index (DSI) lost 86.57 points or 1.91 percent to close 4445.80, and also blue chips stocks in DSE-20 shed 71.68 points or 2.29 percent to 3049.46, in following trading day, the market rebounded regardless of what regulators tried to drag the market down from overheated market which is result of overflowing investing money in shares whose PEs are floating over 50 and even 100.
A new budget has been approved by the Finance minister for the SEC to facilitate Bangladesh Capital Market Institute (BCMI) with a greater knowledge based systematic market system that will be implemented by a team of skilled and professional people with the help of ADB and with Tk. 85.6 millions. The budget of 85.6 million Tk. will be used for buying necessary books, computers, software and other necessary materials for this project that will be affiliated with University of Dhaka or the National University.
It is also said by SEC executive directors that the objective of such a institute will provide all the necessary classes for investors as well as people in the firms in order to achieve certification, diplomas and even Master’s degrees, as higher as Ph.D. More importantly such a project can enhance knowledge and professional based investment environment to reach a set of goals of upholding the stock market reputation around the world and guiding to positive direction to bring market stability and steady progress in long-run.
In last week, a news came up that Grameenphone Ltd. and Orascam Telecom Bangladesh Ltd. together have signed an agreement on February 1st , 2010 to share the networks across the country that will bring benefits by lowering network cost with effective and faster services for both companies by sharing the same networks facility. Just to mention here in such an agreement, no other details have been given regarding to the number of years of contract and how to deal with in a situation when both companies cannot rely on same networks because of expansion of business model and increase of clients usages.
A new book building system has been implemented by Dhaka Stock Exchange that is currently up and running through a web site named www.bbsbangladesh.com and only a selective authorized institution of RAK Ceramics are allowed to follow book building process and bid on upcoming IPO on February 7th to determine the IPO price. To run this first time book building operation of the RAK Ceramics about 350 stakeholders are given instructions and necessary training in regard to participation of book building bidding. Investors are welcome to viewing the bidding process and the prices but only authorized stakeholder are eligible to login to the system and take a part of bidding. In an interest of participation in bidding by institutes need filling out the form through websites that will process offloading their shares through booking method.
The product level has been a double after Armait Ltd. has initiated to build second manufacturing unit and become source of increasing its capacity to 6.0 million square per year from 3.0 million square meters. The net worth of second production facility is Tk. 145 millions that will cope with current market demands which is rapidly growing at the face of industrial booming across the country. Aramit Ltd. Is a country’s leading manufacturing of asbestos roofing materials, drainage, ceiling insulating sheets that become very popular across the country due to its resistance to heat, electrical, and chemical damage and sound proof.
Apart from production of its own items Aramit Ltd is the prime sponsor of other sister concern companies of the Aramit group having significant portion of shares of Aramit Cement, Aramit Footwear Ltd, Aramit Steel Pipes, Aramit Thai Aluminium and Aramit Power Ltd, said the company chairman.
SQ group released a news that they are going to list on bourses in June, 2010 that is now under plan to raise an amount of Tk. 150 crore from the public offering but the amount can go higher as per SQ group’s requirement to complete the massive expansion. The company is considered as a major high-end exporter in garments industry, however, moving forward to setup an exclusive garment factory to produce underwear garments and that is a new niche market growing rapidly in international markets.
SQ Celsius represents outstanding record of holding with present paid-up capital more than Tk 50 crore, employing the number of its workers is 7,000 and inncluding entire group is 10,000 workers that may increase its capacity and enter into new market area to increase the amount of exports which is $70 million in 2009 and revenues in the future.
How to minimize risk (Author: M Kabir Ahmed)
Posting Date:2010-02-07
#6 How to minimize risk
As you are new to investing and getting ready to invest in the stock market then keep in mind that there is a large element of risk involved unless you reduce risks and exposure with care. A significant part of the risk comes from not knowing—the necessary knowledge of stock market, and the experience in investing. A lack of knowledge and experience constitutes the greatest risk for new investors but that can be managed toward gradual diminishing with a power that comes from extensive knowledge, and understanding. The more familiar you are with stock market-how it works, factors that affect stock value, materials you need to read every day , understanding thoroughly the balance sheet, the better you can navigate and shoot close to investment goals- that will only be direction of profit maximizing. The same knowledge that enables you to grow your wealth also enables you to minimize your risk.
Just think about for a second how a person in skydiving jumps out from an airplane over 3,000 feet high in the sky or a rock climber keeps his or her body hanging by fingers a hundred feet up a vertical cliff and pushing himself/herself to climb up much higher? How much risk is it for you? It must be close to risk of death. However, with enough experience, understanding of rock-climbing techniques and after a lot of training a person is able to build unconscious confidence, as a result skydiving or rock climbing is no longer risk rather fun games. Risk is related to knowledge, understanding, experience, and competence. Risk is contextual that is depending on the context.
Risk is an inherent part of investing in stocks. People always dream of making a fortune in the stock market, and many do it, but many other newbie investors have lost everything very quickly because of failing to minimize the risk involved with investing in the stock market.
Seeking Knowledge
Gaining knowledge is absolutely necessary before you do anything with your investment money, the foremost you can do is writing down lists of things on paper that such amount of time you are going to put aside for reading stock market articles, understanding the market system, browsing stock portfolio, reading market news. Then you create a few dummy portfolios just to watch and evaluate the shares you hold currently in the portfolios and also analyze them as a stock market analyst what has caused stocks gains or losses and these are results of what kind of investment strategy you have applied.
Pick a few stocks that you think will increase in value and then track them for a while probably 3 or 4 weeks and see how they perform; you can create multiple portfolios by using http://www.bdstock.com/portfolio.php page. Begin to understand how the price of stocks go up and down, and watch what happen to the stocks you chose when various events take place. As you find out more and more about stock investing, you get better and better at picking individual stocks. In this process- you haven’t risked or lost yet since you have not bought or sold stocks in real stock market rather holding them in your dummy portfolios. You can design a stock portfolio and track its performance with thousands of other investors to see how well you have been doing. If you can achieve overall 15% or higher percentage of profit gains in a three-four months of period which will be a remarkable achievement for a new investor due to current market trend which is up-beat and also DGEN/DSE indexes stand over 40% higher comparing to a 150 days moving average that is a sign of bullish market (in case, you want to verify it http://www.bdstock.com/marketcapitalization.php) that means market environment is on your favor and easier to make money than losing.
This entire topic here is to build a stock trading plan, strategies, trading objective, and involve in stock market education, and have enough experiences in order to reduce the risk and play as a master investor like George Soros/Warren Buffet. Have you seen an architect create a blue print who knows for sure a building will stand up for years, substance in the material and the infrastructure are so intact that will have strength to bear whole building? The quality of design and construction are measured perfectly while it is still on the paper as a blue print.
The bottom line is that you want to make sure that you are in control of your mind; you have learned enough, and gained experiences. Now, you are confident and able to analyze companies’ profiles, and follow the investment guidelines that you have created and experienced and detach your emotions from trading. If you are emotional with your losses or with your gains you are in for a roller coaster of a ride. You are either falling in love with stocks; hope shares will go up in the future without following investment guidelines.
Getting familiar with investing style:
Investing usually falls into one of two strategies: defensive and offensive. A defensive investing strategy looks to avoid stock market risk as it uses long term investing to post steady, consistent gains. Over time, defensive investing is the most likely to achieve its long-term objectives because it strict with investment guidelines to seek to virtually eliminate the risk in the stock market.
The second strategy is quite different. It is offensive in nature, looking to capitalize on opportunities in bull market. Offensive investing ignores or minimizes stock market risk as it looks to make rapid gains, mostly follow day to day market trend without following guidelines.
Defensive investing doesn’t mean you won’t make money; defensive investing means you take calculated risk and typically lower gains to consistently make money. We all know who won the race in a “Turtle & Rabbit Story” and completed the race at the end although rabbit is a faster runner; it was obviously the result of turtle’s stunning faith, perseverance which kept her running same pace in the race. The consistent gaining even a little bit of accumulation in a long period of time can bring greater success and suppress the faster gaining in a short period of time.
There are many investing styles. Some people invest aggressively, preferring riskier stock that might give a larger and quicker reward which is very close to offensive investment, while others invest more conservatively. Conservative Investing focuses on preserving the investment and allowing it to grow naturally over time. Conservative approach is the style for people who seek to minimize the risks using considerable fundamental analysis, usually investors prefer to invest in safe, well established companies’ stocks those companies have been around in the market for more than a few years with reputation, have shown increasing sales, increasing earnings per share over the years, have shown strong management skills by making new business deals, maintaining regular AGM and allocating constant dividend payments to investors. Conservative approach is a role that investors seed for long-term objective, are not playing the market for a quick buck rather traders focus on minimizing the risk by analyzing if these companies are seen as leader, playing a solid role as brand name and obviously these type of companies are not going anywhere because they are pillar of Bangladesh’s economy.
You may be thinking why I would spend so much time and effort understanding the process of analyzing shares and reducing risks when I can buy stocks with the help of other people suggestions, recommendations? No one would doubt about it, and neither do I, however, you will find different suggestions from different people and most of times they have no clue and are not expert on analyzing shares because they are new as much as you are in the stock market. Even you may make good money in a short period of time using those rumors, individual stock recommendation. But greater experiences come from failing a few times, but still striving to learn every aspect of investment methodology because a person knows I rather get experienced and expert on how to catch fish forever rest of my life rather given me big fish a few times.
How to build confidence in an unconscious mind. (Author: Kabir Ahmed)
Posting Date:2010-01-04
#4 How to build confidence in an unconscious mind.
Curiosity inevitably follows when you find something fascinating, does not it? For that reason, we begin puzzling due to lack of knowledge on a subject and then we start wondering, questioning, researching information that directs us to learning; such a practice in a real world and thrive in learning continuously lead us only to the level of understanding of the materials and extensive learning.
Some points later, through continuous learning and practicing the necessary steps we become a master of our own minds in making many good decisions from our personal life to business, and also our stock market investment decisions.
Learning is conceptual understanding in the process of grasping and comprehending something is an essential keeping oneself on the edge and making also sound decision; they can’t be apart from each other and neither in integral part of our lives. As decision making is perceived by having enough knowledge and careful consideration most likely the outcome would be good or at least less risky. That’s why people say to put more weight on the head than heart in a business decision because pragmatic thinking may secure a better financial advantage. It is true investing in the stock market – just because stock market investment is a business. Winning a stock market in every investment requires mental fitness with solid mental habits that will only practice rules of thumb or investment principles. It is no less than exercising and running every day for physical fitness to win a marathon. The exercise is one day for one thing at a time-- learn, practice and build mental habits.
A habit is a learned response that has become automatic through repetition. One good decision based on mental habits can make you to get another higher rate of good decision as you continue to do so that will grow only the rate of compounding and leave you a financial success.
The key is here learning and how spontaneously making good judgment on a stock. Let me ask you a simple question if you are an experienced driver. Aren’t you expert on making instantaneous judgments — exactly when to slow down, speed up, turn right or left for avoiding a potential accident or running into a pothole on the road.
You can probably recall times when you have hit the brakes or swerved to avoid an accident — have you been aware of the complete driving movements? Probably not, rather you have been busy listening music and talking to friends while driving, all these pre-cautious actions and decisions made entirely at the subconscious level of your mind. Such pre-programmed automatic reactions come as the result of years of experience.
Think about it for a moment and you’ll realize that driving a car on a busy traffic road is quite a complicated activity. Think of all the things you’re monitoring at the same time:
• Is that kid going to run onto the road?
• Is that car behind me too close?
• Will that car stop at the corner although no signal light given?
• Is there enough space between me and the car in front in case he brakes hard — unexpectedly?
Have you ever thought of multi-tasking activities you are involved in driving in unconscious mind? Even an apparently simple thing like changing lanes on the freeway is what’s called a multi-body problem in physics. You have to monitor your speed, the speed of the traffic, the speed of the cars behind you and in front of you on the lane you’re in and the lane you want to move into. And you do all these at the same time, almost instantaneously. In a state of unconscious competence, you solve the multi-body problem automatically — what to watch precisely are pre-programmed and ingrained into your brain by practice.
The Four Stages of Learning
Pro-Investors act apparently effortlessly and instantaneously in a way that they don’t even pause to think, screening a stock comes from built in mental habits like driving a car in a highway, but other inexperience investors seem find risky because of lack of knowledge and lack of competency. Investor saga “Warren Buffett” can decide to buy a multi-million dollar company in 10 minutes or less, doing all the calculations in his head. He doesn’t even go back his guidelines and spend night after night to evaluate a company. What’s more, most of the decisions he’s made so quickly have proven to be the right ones.
“That’s only possible for someone who has gone through the four stages of learning:
• Unconscious incompetence: in a state of mind he doesn’t know that he doesn’t know. Little knowledge is dangerous…..
• Conscious incompetence: in a state of mind one knows that he doesn’t know. A person knows about confused with how to read balance-sheet and all the earning reports.
• Conscious competence: in state of mind knows what he knows and knows what he doesn’t know. A person has understood precisely the limitation of his knowledge and competency.
• Unconscious competence: knows that he knows in depth and has trained subconscious mind to take actions unconsciously.
Unconscious incompetence is the state where you don’t even know that you don’t know: the state of mind so many young drivers are in when they begin to learn to drive. That’s why young drivers have many more accidents than older, they fail (or refuse) to recognize their limited knowledge, skill and experience.
People in this state are highly likely to take risks — expose themselves to danger or loss — for the simple reason they’re totally unaware that that’s what they’re doing.
It is also the reason why the worst thing that can happen to a novice investor is to make a pile of money on his very first investment. His success leads him to believe that he’s found the secret of trading or investing and that he really knows what he’s doing. So he repeats whatever he did in the past — surprisingly he has lost everything.
Conscious incompetence is the first step to mastering any subject. It’s the conscious admission to yourself that you really don’t know what to do, and the full acceptance of your own ignorance.
This may result in feelings of despair or futility or hopelessness — which stops some people from investing entirely. But it’s the only way to realize that to master the subject requires a process of intensive learning.
Conscious competence is when you’re beginning to have mastery of a subject, but your actions have yet to become automatic, not complete yet. In this stage of mastery, you have to take every action at the conscious level. In this stage, your reactions are far slower than the expert’s.
This doesn’t mean you can’t do it: far from it. You could make the same investment decision as Warren Buffett. But what took Buffett 10 minutes to decide might take you 10 days...or even 10 months: you have to think through every single aspect of the investment.
An amazing number of investors believe they can skip this stage of learning entirely. One way they attempt to do it is to duplicate theory after reading about Dow Theory, or Technical analysis book or whatever, and follow the steps outlined, or who adopt someone else’s trading strategy, sooner or later find that it doesn’t work for them. There’s no short-cut to unconscious competence.
As your knowledge expands, as your skills develop, as you gain experience by applying them over and over again, they become more and more automated and move from your conscious mind into your subconscious.
Unconscious competence is the state of a Master, who just does it — and may not even know how, specifically, he does it.
When he acts from unconscious competence, the Master appears to make decisions effortlessly, and acts in ways that might scare you or me to death.
He knows what he is doing. Similarly, there’s bound to be something you do in your life that, to an outsider, seems full of risk but to you is risk-free. That’s because you have built up experience and achieved unconscious competence in that activity over the years. You know what you’re doing — and you know what not to do.
To someone who doesn’t have your knowledge and experience, what you do will seem full of risk. Many of us will find full of risk in sky diving, skiing, rock-climbing, scuba diving or car racing. For others, it is merely challenging games playing almost every week.
Risk declines with experience: There is a risk in everything but can be a risk free with built up the necessary knowledge and experience.
When George Soros (another saga investor in our time) shorted the pound sterling with $10 billion of leverage in 1992, was he taking a risk? To us, he was. But we tend to judge the level of risk by our own parameters; or to think that risk is somehow absolute.
But Soros knew what he was doing. He was confident the level of risk was completely manageable. He’d calculated that the most he could lose was about 4%. “So there was really very little risk involved.”
As Warren Buffett’s own words: “"Risk comes from not knowing what you are doing."
Narrated from a book named “the Winning Investment Habits of Warren Buffett and George Soros.”
A Mega GP's IPO Hitting to the Market (Author: Kabir Ahmed)
Posting Date:2009-11-15
#3 A Mega GP's IPO Hitting in the Market
Where would you start with IPOs because so much whisper, momentum and speculation are in the market, all the talks we have right now about IPOs is like an IPOs Eid occurring in the month of November and December of this year which is a
best season ever in IPOs history in Bangladesh.
So many questions and excitement have been around and also carrying news to us about up-coming IPOs which are coming to appear in the secondary market at what price stocks will start bidding in a first hour of opening day, then second hour and
so on until end of the day. There are so many thinking going on and also speculation building up on all these IPOs especially Grameenphone’s price that is baffling everyone’s mind right now. It is unknown in a way what will happen, what price and with
what percentage of gains when GP’s stock hits in the market today.
Regardless of what is going to happen, a true investor need a careful evaluation process of stocks through analysis which means whatever information available at the balance sheet need to be studied thoroughly to match with your own investment principals and
make sound logic because there is no other information available for IPOs for charting. That will put you in a safe side of investment in order to secure own investment money.
Here is a leading cellphone company with Grameenphone’s $70 million initial public share offer is going to make its share market debut on Monday ( today) in both stock exchanges, has raised 13.51 billion taka with the offer of 69.44 million shares in
public and 65.5 million of shares in private placement at 10 taka with a 60 taka premium each. Investors are much hopeful than ever and exciting to tank GP’s share which is a biggest IPO ever in Bangladesh and expecting to play a significant role in
creating more weight in the index values. GP Company is so far ahead of capturing more market share over 45% than its competitors (Aktel, CityCell, Gulf-based Warid and Teletalk) by seizing 22 million permanent subscribers out of 50 million members
in a cell phone industry and in addition to, this industry will grow more rapidly than before in coming years.
It’s a fair question to ask you, would you give money to someone when who has no record of making money for himself? Of course not, only time I will give money for investment he/she has found an Aladdin magic lamps who can change things
over-night because having such a new cutting-edge technology, innovative ideas, completely a new market only one company leading, lots of cash available or when there is a proven record of making money which is so called a growth company whose
revenues increases at least 20% or higher.
Taking its total income in 2008 which ended December 31st in 2008, the GP’s earning per share is Tk. 2.46 and net asset value per share is Tk. 22.70 are calculated by considering 1.215 billion of shares instead of altogether 1.350 billion of shares.
Taking a consideration of a growth company who’s PE can go as high as 30 in any industrialized country which will be absurd to see such an average PE in GP’s stock price. On the other hand, company is earning only Tk. 2.46 every share of pre-IPO
placement and it is also guaranteed by GP to pay you premium of Tk. 60 for every IPO worth of Tk. 10 which tells that price has to start with at least Tk.70 and rest of pricing would be based on how much weigh investors want to add using either an average
growth of company’s PE times earning per share or average percentage of return (400%) which takes place in IPO adaption in secondary market or any other higher/lower percentage of return that we have not seen so far.
The best philosophy in investment is to study a company thoroughly and evaluate a stock with own safety principles and sound satisfactory rate of return and buy a stock at a price which defines the intrinsic value of a company in future prospects.
(Author: )
Posting Date:2009-11-08
Feedback from The Skywalker Said About Role of Stock Recommendation (Author: )
Posting Date:2009-10-14
the_skywalker said...
I wonder how many of the brokerage firms in Bangladesh have got trained analyst. The market is too much retail dominated and speculation driven. I have my doubts whether analyst recommendations would be effective. Even here in west analysts are often hilarious in their recommendations because they always play safe and work with the companies. We first need good news sources like CNBC-INDIA so that people get real information rather than depending on word of mouth.
Monday, October 12, 2009
The Role of Stock Recommendation (Author: Kabir Ahmed)
Posting Date:2009-10-07
#2 The Role of Stock Recommendation
I wonder how we can get together and work for common purpose to improve many things that we do for living, obiviously we would come up with millions of things are not going right comparing to developed countries. Many dreams are never formed but thrown away to the air as soon as hopes are never seen lightened in our lives. Developments, progress and achievements are rarely seen here compare to many other countries where every five years you will not recognize the place due to economic growth, developments and implementing new systems. It’s all about changing, and work together for continuous improvements. Before changing anything to outer-world we need to change our minds and attitudes toward progress, changes have to come within ourselves and apply inside to outside environment, and also firm believer in order to see greater affect and progress in what we do for living.
I know you are confused with changes and stock recommendation, but let me share partly one of letters with you that was sent out to brokerage/financial firms in Bangladesh in the month of Ramadan to engage them into stock recommendation process, and of course, the intention of this is to work together in the direction of setting Bangladesh Stock Market to systematic market system and attracting more professional analysts into analyzing companies in order to provide recommendations…such great works can be rewarded with performance-based approach. Market needs professional analysts’ involvement in order to uphold the image of Bangladesh stock market. Here is a letter--
“So far, over 800 people registered with www.bdstock.com within last three months of period and most of them have showed great interest of receiving recommendation in the process of registration. They are eager to receiving some guidance in the selection of specific companies’ share which perceive greater value based on out-perform/market-perform, great earnings, performance-based management, etc. or opposite of all these to sell stocks.
How much investors depend on analysts’ report? Probably more than what you expect because either a person is a beginner or a pro as an investor. And people around the world always rely on a whole set of decision making processes to pick the best stocks. This decision making task is a part of a daily process for market analysts in order to select a list of good stocks. The analysts conduct extensive research on companies’ annual reports, corporate governance, management behavior & expertise, company’s competitive advantages, new contracts for selling products, new deals, company news, innovative new ideas and so many others.
A good analyst report should serve the purpose of better understanding the status of a company’s growth to justify if a company’s outlook is positive to buy or negative to sell stocks. Analysts’ reports remain a valuable tool and offer credible information about a company for investors as long as they are diligently and independently done. Reviewing analysts’ recommendations gives investors a better idea of what professional analysts think about a stock. Thus, when an analyst initiates coverage of a stock, it opens the door to thousands of investors who may never have heard of the stock before. In this way adding a company to a recommendation list brings awareness of a stock which translates to increased demand. This kind of research can be extremely expensive and time consuming but the analysts’ work can be rewarded by selling research reports to local as well as global investors and establish a reputation in the market through the accuracy of performance on the stocks recommendations.
As we know, recommendations are found everywhere in the U.S. Stock market. Thousands of recommendations appears on a daily basis through financial websites, TV news and other media ranging from a small brokerage firm to world class companies like Merrill Lynch or Goldman Sachs. In short, the analyst buys & sells ratings and earnings forecasts shown on many financial sites which contain important information that could help investors making better investing decisions at the same time brokerage firms can charge for providing valuable research information.
The Bangladesh stock market is still new in comparison to the size of the capital market with other stock markets in the world and also has new investors who are involved in stock market investing for the first time in their lives, what I mean saying is fathers of this generation or grand-fathers never heard of stock market although their children involve in stock market. It’s a new generation of fresh-minded individuals who feel the stock market is a great investment place that is no less than in real estate, fixed deposit in a Bank or buying gold for investments. Just because a new face of stock market and its investors, it requires guidance and systematic process of involvement by all financial institutions and brokerage firms to upgrade the image of the Bangladesh stock market. Just as many brokerage firms involve in recommendations, market Analysts who publish all or part of valuable research would give more control and direction to the investors and boost professionalism, importantly overcoming rumors on stocks often created by individuals or groups of people shorting those stocks just to reach their own objectives. Recommendation should be advised from professional individual (maybe required license by completing specific course in the future) and institution as any other country we see in stock market.
As you are an analyst or security firm owner, we invite you to take a look at our stock recommendation page at www.bdstock.com/recommend.php to discover all the facilities available for recommending stocks either to buy, sell or hold. This will enable you to be part of the recommendation process and ensure involvement in other news activities, thereby getting your company spot lighted in the market. Most importantly, it will enable you to reach long term objectives in the market growth strategies and attract more investors in local as well as global long-term profit making that will show favorable in the professional environment with a proven systematic marketing system. The vast majority of investors who use a systematic process, usually have a better understanding and confidence in the market. That will only happen when we are able to create a professional environment collectively, being accountable with the emphasis on doing excellent work in analyzing (risk-based rewarded), predicting and maintaining a high-standard of accuracy in recommendations.
Please join with recommendation process by creating your account with bdstock.com at http://www.bdstock.com/account.php page, and then email us with your Email address and name of your firm to webmaster@bdstock.com. Then we will email you back with details information that your account is ready for recommendation. You have a list of choices like under-perform, neutral, hold, strong buy or sell, market perform and etc. Once specific account is assigned to individual firm you have access to your own recommendation for update, delete or create.”
It is unfortunate that only a few firms have taken this letter seriously and emailed me for details information. However, I am still hopeful in way that some day there will be a systematic process in Bangladesh Stock Market, and some developments will be taken place that we may be able to say we complete the marathon, although we are in the last place in the competition of global financial market improvements
comments on Many of us look down on stock market investment (Author: Bangladeshcorporateblog)
Posting Date:2009-09-19
Jeeshan said... Good article and great thoughts. Epitomizes the work of Robert Kiyosaki. Really explains why the Rich only get richer while the middle class and poor stay where they are.
Wednesday, sept 16th, 2009
the_skywalker said....Friday, Sept. 19t, 2009
It seems that as usual, I need to make a long comment
The article has presented some interesting aspects e.g. relationship of GDP vs. economic growth stock market or why stock market is an alternative medium of funding businesses (this is big in developed market especially in USA). But the article has not focused much about why/ why not BD market could be attractive for investors ( whether institutional, retail investors or foreign investors). There are quite a few structural issues with Bangladesh market:
a) Supply of good companies is very low. So, BD market often runs at ridiculously high PE. This is not a healthy situation.
b) It is a retail investor¡¦s dominated market. Such market generally moves based on news/rumors/euphoria rather than fundamentals. So, quite dangerous for someone who cannot follow the market regularly.
c) Most companies are family oriented and do not want to dilute ownerships. They also do not find incentives to go to stock market as most they can get bank financing very easily and with political influence they can take as much time as they want to repay the loan. So, why to dilute ownership? We may keep in mind that there is good tax incentive for listed companies. But still most companies are not willing to get listed in the market even company such as UniLever.
d) Institutional investments (Pension funds/Insurance funds) are almost non-existent in BD market. Even corporate houses invest their extra cash into fixed deposits (because they get 10-11% return) rather than putting into marketable securities. Hence, we might seek answer to question such as why corporate houses/businesses are not investing their extra cash into stock market rather than trying to ponder why our common people are against stock market investing.
e) BD market does not allow to short or take leveraged positions or trade some other sophisticated items such as CFDs( Contract for Difference). So, one cannot take a Hedged positions by combinations of long/shorts/CFDs/Options etc..
We also need to keep in mind a few other points. Academics say that stock market has evolved to distribute wealth amongst common. In fact this is one of the tenets of the efficient market theory though its validity is seriously questionable. On numerous occasions, it is proven that market is not efficient. One major reason is that information flow is asymmetric. Only a few privileged ones get access to information ahead of others and this is one reason why only few people make big money in market. In addition many types of manipulation such as pumping and dumping in collaboration with regulators, media and corporate are so common even in west. Most people do not have enough time/patience/resources to be vigilant against these kinds of activities going on in the market. These kind of crooked activities can be and in fact are carried out far easily in BD market where information flow is very poor, poor/no availability of good research reports, poor quality accounting/auditing and above all very weak regulators. As long as regulatory body remains weak, accounting/auditing standards are questionable, and incentives ( just giving tax break is not enough) for companies to get listed are imperfect , BD market will struggle to develop on a solid ground. It is stupidity to think about attracting retail investors rather than correcting market¡¦s structural issues.
Robert Kiyosaki is a big fraud. It¡¦s just a fantasy book like Harry Potter ƒº. He is not a real investor. No real investor would like to write these kind of stupid books.
Many of us Look Down Stock Market Investment (Author: Kabir Ahmed)
Posting Date:2009-09-13
#1 Many of us look down stock market investment
Why middle class of our society, so called educated people, are reluctant to be part of Stock Market even with a little bit of investment interest and moreover, look down those who invest? If you are investor and want to discuss with your buddy or dear friends, unexpectedly you will be discouraged by them. Didn’t happen to you? You bet, I have faced such a situation many times, even my own family members don’t show any interest of investing in stock market rather they discourage in a way that investing in stock market is not a decent earning source and consider as a gambling or haram. How do you change their attitude toward stock market role in our society and get them to be part of investment in a stock market?
Selling shares through a stock exchange is way companies get funded because a start-up company eventually ends up needing more money to take the business to the next phase. As a company enlists to the stock exchange which requires, actually mandatory, to unfold everything to the public, such as earning statement, purpose of raising money, types of products or services, company’s news, company’s activities in terms of community help. Basically, one has a full access all these evaluating a company whether their products or services are unethical or not. This is how a company goes public by issuing IPOs certification, once it happens, no individual person owns the company, but only individual and institutional investors collectively by owning shares. Stock Exchange reserves “rights” for investors those who own shares and earn a piece of a company to judge a company with their moral standard and evaluate the worth of a company openly in the fair market place. It is a process of supply and demand of the stock of a company, opposite of fixed price system, which determines the price of a specific company openly by investors. Also, investors are welcome to express opinions of a company in a general meeting or maybe through an electronic media to hold managers accountable for any wrong doing.
Having all these transparence information of a company, an investor can decide which company has a great prospect of growth by analyzing past earnings per share, revenues growth, pioneer of a business, new innovative ideas, performance base management group, new business deal and many others. Other day-traders like to use daily trade volumes of a company, and its chart to speculate a share price which is completely based on individual preferences. There is no “hard role of fix price practice” in stock market system, all the information is given as transparent to all investors, and any decision is perceived on buying or selling stocks is individual preferences. All the goods and services provided by companies are absolutely essential and productive to our society for advancement. Yours every taka buying a share goes to producing either products or services—they are great part of leading the society advancement.
Stock exchange is a most vital role player for a country’s economy and instrumental raising money directly from public which, of course, has a great purpose of assisting a company to expand businesses and grow its potential in a competitive free market system that will not only provide excellent services, innovative, durable products but also most competitive reasonable prices for the interest of the consumers, such a role in the growth of the industry or commerce of a country that eventually affects the economy of a country to a great extent. Economists consider Stock Market as an economic indicator of how well a country’s economy is doing. In many studies show, the rise of value of stocks and value of corporate equities in a stock market enhances growing Country’s GDP. However, economy and value of capital market are not purely correlated in a same growth rate but they are much more parallel in same direction. The studies also show based on collected data on 47 countries from 1976 to 1993 that banking and stock market size, volatility and integration with world capital market accelerate the current and future rates of economic growth, productivity growth and they are robustly correlated to GDP.
Recent economic crisis is a good example of how much stock markets around the world affected going downward slide which simply explains that economic expansion affects the stock market to go upward and while economic contraction, recession, causes the stock market to shrink. As a market going downward reduces wealth and stock market equities that cause further reducing GDP.
It is time to let go old ideas or beliefs and go beyond conventional wisdom for constructive thinking and finding opportunities in every aspect of investment. Stock market investment is much controllable and easy access in terms of buying or selling shares instantly with a little amount of money and less hassle than investment in real-estate, gold and fixed deposit in the Bank.
Here is a chart shows how GDP and the value of corporate equities relationship reflects(Source: Congressional Budget Office. http://www.cbo.gov/doc.cfm?index=4009&type=0 )
Retail Love: Free Bus Service (Author: Posted by Shehzaad Shams )
Posting Date:2009-09-10 http://www.bangladeshcorporate.blo
As a shorts-donning young boy, I used to ask my lungi-donning abba, 'If we ever go wearing this to Sonargaon hotel, will they let us in?'. Abba used to casually and confidently reply, 'If we go wearing a lungi, they might put us in a special cell and never let us in there. But with shorts, you might get in'. Same with cars and baby-taxis (CNGs!) I guess. I always used to think that if I ever end up at Hotel Sonargaon by a baby-taxi, the gatekeepers of the then posh hotel would not give me as warm a welcome as I would get if I would have got off a car. One day our pilot Shafiq (our chauffeur) was asked to carry out the week's grocery shopping from Nandan. As a preparation, he then decided to shed his lungi and put on trousers instead, he also insisted that he be allowed to take the car along with him. Upon asking why this ornamental preparation for merely doing a grocery shopping at Nandan, he replied 'Bhaiya oigula borolok er jayga, lungi poira ar haita gele dhukte dibo na' (Bro those are places where the well-off shop, they won't let me in if I walk in and that in a lungi'). Funny how even big retail malls such as Nandan might have a perception of being as posh and exclusive as five star hotels, barring entry to those who don't comply with unwritten dress codes or vehicle status quo (no car no entry...wearing lungi no entry).
I wish how nice it would be if Nandan or Agora could come up with their branded mini-buses to ferry customers from different locations of the city (or even from outskirts) straight at the doorstep of their respective retail fortresses. If they are wary of the fact that there are too many free-ride lovers in Dhaka city who might take them for a ride by travelling in the vehicle to go to other destinations or disappearing from the entrances, then they can atleast provide free transport (as free love from the brand) to those customers who have just finished shopping and are waiting frustratingly on the streets to convince a CNG or a stubborn yellow cabbie to take them back to their destinations loaded with a whole range of shopping bags. So say for example a bus could run from the Rifle's Square branch of Agora every 30 minutes to cover areas such as Dhanmondi and Mirpur and selected points en route. Similarly another bus can cover the Gulshan branch and areas such as Uttara or even Gazipur. Shoppers who have made a purchase of a minimum amount (say 100 Taka) míght qualify to get on the buses by showing their proof of purchase.
I think the feeling that the brand cares for the customer even after they are done with the shopping is of great importance. Customers without any private vehicles can shop happily and heavily without the anxiety of how to get back home through the horrifying traffic jams of Dhaka city, worse even if the weather is bad too. As their favorite retail shop has air-conditioned mini-buses stand by every half an hour to ferry them for free.
Ikea, the giant world famous retailer of house-hold products provides similar service all around the world to its customers for free and this act of free love from the brand is well appreciated by its customers. As we see branded mini-buses from leading telcos in the city ferrying their employees, we stare and try to see the faces through the tinted glasses of the priveleged employees and wonder how nice it must be to work in those companies. Similarly we will stare at Nandan or Agora branded mini-buses filled with happy customers and keep wondering how nice it must be to shop at those places. Even if the retail shops take you for a ride in terms of product prices, atleast they would offer you a free ride back home with all the shopping. Also, from outside, no one can figure out if the customers had a private car or not, or wearing a lungi or trouser. Provided they let us in in the first place in a lungi, rest can be a happy experience till the end.
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