3/19/2019

The Rape of the Stock Market

There use to be a saying, the stock market is always there. No matter how quiet or depressing is the state of market activities, the stock market will not die or go away. This use to be the unspoken truth but I am increasingly seeing the stock market dying or shrinking to a point that it is no longer meaningful.
 

The whole rational for the existence of a stock market has been eroded by the proliferation of derivatives and computer tradings. Derivatives are instruments that piggyback on stocks and diverting interests from trading stocks directly, thus undermining the real value of stocks. The more funds are diverted to trade in derivatives, the lesser will be the interests in stocks. Algo and computer trading are more dangerous to the values of stocks as they have no interest or respect for the real value and prices of stocks. They trade either way to profit and could drive the prices of stocks against their real values, against their fundamentals. As a result, stock prices are in their doldrums and many are undervalued and defeat the purpose for listing. When listed companies could not raise funds from the market due to unacceptably low PEs against high listing fees and costs, many good companies would choose to delist instead.
 

Yes, there will be IPOs. But these are desperadoes wanting to raise some funds from the public. Unfortunately such fund raisings are likely to be a one time affair. After listing, through lack of investor support and a stock market in coma, many stocks would end up as penny stocks, worthless, left to die prematurely and ended up being suspended from trading.
 

The short sighted fund managers and exchange administrators could not see further than their eyes as to where the stock market is heading. Without the stock market, there would not be any derivatives to talk about. Without the stock market, the REITs too would disappear. Without the stock market, the computer traders would have no where to trade and exploit the small investors.
 

The whole stock gambling industry is based on the existence of a stock market, real or fictitious. Neglect and allowing the stock market to die a natural death would drag the whole industry into the grave.
 

New gambling chits could be devised as variation of derivatives without the stock market. Some may think this is a viable option, trading in fictitious paper instruments in place of real stocks and shares. If the administrators continue to choose to let the stock market peters away as an irrelevant or obsolete beast, can there still be computer trading, derivatives, fund investments, online trading etc etc that are parts and parcels of a thriving finance industry? The stock market is the corner stone on which a whole industry is built on.
 

The stock market depends not only on the derivative writers, the algo and computer traders, but also on the listed companies and the investors. A stock market that only protects the derivative writers and algo/computer traders and failed to protect the interests of listed companies and investors would lose its raison d’tre to exist. When companies see it futile to list in a stock exchange there will be no need or interest in the exchange.
 

Whither the stock market? Why is the stock market dying? When would the abuse and rape of the stock market be put to an end?

37 comments:

Ⓜatilah $ingapura⚠️ said...
This comment has been removed by the author.
Ⓜatilah $ingapura⚠️ said...

@ RB

Yeah,it seems that way. But "the market" breeds new markets for other types of "securities" --- such as derivatives.
Securities in quotes “” because I don’t believe they are really that “secure” 😎
Why are there so many derivatives? Because there are huge markets for their “offshoots” --- aka the new new exotic “securities”, thank you very much to the very smart young men and women boasting PhDs not in finance or business, but in science (physics,notably), engineering and mathematics who populate the rapidly growing FinTech space.

Armed with spectacular computational power, and a plethora of complicated “models” only they can understand, they’ve designed new types of TOXIC WASTE masquerading as “investments” to sell to gullible people --- especially old folks who are looking for “better returns” since their money is earning them fuck all.

So you get new new products like “perpetual bonds”, “mini bonds” any sort of brilliantly named “investments” only marketing people can invent.

And of course there’s the rise of ETFs. Very popular. 58% of the market is in ETFs. Passive investors. They are price takers, not price makers like active investors are. Active investors perform an important role of price discovery --- you need these folks actively buying and selling so proper prices can be set. without their “action”, you get price distortions, and a misallocation of capital. The ETFs passives just sit back, and relac and collect all the benefit without the risk --- that’s what they think. (for dangers lurking in the ETF space, please do your own research...too much for me to write here).

Then you have motherfuckers tinkering with LIBOR...maybe even SIBOR (Singapore) or TIBOR (Japan) etc. There’s no shortage of people trying to game the system in finance and banking. Why? Because that’s where the big money is lah kotek!

The global financial system is broken lah, not just the SGX. The SGX is just a manifestation of a whole suite of larger and more dangerous problems.

FinTech is going gangbusters. You have all manner of products and services...everything from digital lending to insurance...and most of them have DERIVATIVE components in them. Also, now every bank fancies itself as a market participant and purveyor of financial products and services. Just walk into any bank, and they will try to sell you “investments”, and the choice is mind boggling.

So yah, RB. Welcome to the new reality. I hope we all can still make money. But I think the mantra should be: Don’t LOSE money!, instead of trying to make a killing, then getting killed instead.

Anonymous said...

Transaction volume on SGX has dropped over last 10 years becoz SG listed stocks are just fucked up. If so good, whether use written paper or computer, whether use human stockbroker or virtual AI, people will line up for 10km & queue for 72hrs to buy/sell, like hot condos during crazy times.

The responsibility for this situation has to be shared among govt, listed companies, brokerages and brokers themselves. They ownself raped ownself.

In other words, they simply mental masturbated themselves, closed both eyes & focused on sucking money from the investors & shareholders (the people), carry on same old same old everyday, without improving or generating increased value .... while the rest of the world moved on.

Anonymous said...

Early early sg is like that liao.

Everything....we want to be HUB.

But vv often ends up half past six!

Correct?

What are we really really GOOD at?

Anyone?

Anonymous said...

The stock market is the avenue for the super rich to entice the small players to eventually surrender their wealth to the top 1% who controls more than 99% of the world's wealth. Every economic activity is tied to companies and investment bankers that have shares trading on those exchanges. Who are the biggest owners of those shares?

Small players may win some and lose some, but like the Casinos, the end result is the same. Some lose their pants, but the super rich almost always wins. How did the wealth of the world end up in the hands of the 1%. Go figure it out!

Anonymous said...

@Anon 10:31am, @All,

“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”

“The stock market is designed to transfer money from the active to the patient.”

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”

“An investor should act as though he had a lifetime decision card with just twenty punches on it.”

“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”

“The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”

Ⓜatilah $ingapura⚠️ said...

@ 1108

All true. You left out an important one. The most important: more often than not you have to act AGAINST the natural hard wired aspects of human psychology, namely fear and greed.

However it is fear and greed of market participants which drive the market. Without fear and greed you won't be able to make gains. You won't be able to buy cheap when people are fearful and you won't be able to sell high when they are greedy and FOMO (fear of missing out). FOMO is the psychology which keeps driving prices higher and higher in every market when the perception is “scarcity”. ie supply cannot meet demand so prices trend higher.

What you wrote above only applies to INVESTMENT. Most of the market players are SPECULATORS. Without them there's no price discovery, and hence no concept of VALUE.

Ⓜatilah $ingapura⚠️ said...

@ 1031

>> Who are the biggest owners of those shares? <<

Usually it's the originators of that public company. And usually it's the only stock they care to own. Buffet : Berkshire, Gates : Microsoft, Bezos: Amazon, Ma : Alibaba, Zuckerberg : Facebook etc etc.

Chua Chin Leng aka redbean said...

If everyone buying stocks is a long term investor, it would be like if everyone is a monk, a celibate. You know what would become of this world or human civilisation if that is the case?

Anonymous said...

@RB,

If everyone is a speculator / trader, only the pimps, I mean brokers get rich.

You may feel shiok in the short term, but year after year, you'll end up with AIDS or other VD, thousands of $$$$$$$$ poorer, broken family or broken relationships, unable to establish long term relationships.

Anonymous said...

Human greed means biggest gain in shortest time. When that does not happen, they lose their pants, especially if they do margin trading. The super rich can afford to hold, or even snap up all the 'lelong' or 'suicide' sale during the worst of times.

Ⓜatilah $ingapura⚠️ said...
This comment has been removed by the author.
Ⓜatilah $ingapura⚠️ said...

@ RB

Dun worry lah uncle. You and I know that'll never happen. 🀣 Especially now when every industry is being disrupted. “Hold forever” is now “hold until some smart young Punk invents something to hantam my 100 yr old business model” πŸ˜‚ Creative destruction lah

Anyway, most market players are just too gatal. They cannot set and forget. Everyday must look and adjust going in and out. EFTs go in and out right through the whole day because they maintain an INDEX. So dun worry lah Whether you're online or human broker, you'll still be in business. πŸ€“

I was one of those gatal motherfuckers, which busted me not once but twice. 1st time was on 2nd board Western Australian mining stocks in the 1980s, then again in the early 2000s, leading me to be “gun shy” for 11 years. I owe a debt to War Stocks Guy for reigniting my interest. He says some things which resonate with me. This time, not gatal anymore... hopefully 🀬

Virgo49 said...

Mr RB,

Many unkos/aunties does this. They just in kopi tiams listened to their kakis bragging of how much they earned or gain cooking the stocks and shares.

They followed suit gasak buta or throw their dices like in playing Roulette numbers. What's fundementals or mentals you talking?

My friends said Good must be good lah. Just believe them as you believe in the PAP.

Long term investments lah.Sure ok and make monies.

Then they will hibernate and put their heads in the sand like Aussie Land ostrichs.

Later they pulled their heads out upon receieving their CPFIS statements or their broking companies Statements.

How come I brought 100 thousand K on this lot and the statement shown only so little zeros??

Only few hundred dollars?

The worst is that somemore you cannot attend their AGM and asked why the Sky dropped ah?

Because most under CPFIS and the Board is deemed to be the rightful holders not you.

Wah piang see liao.My 100K now become hundred plus.just because i took a nap.

Yeow siew, these CEOs don't know how they run the Companies. Now they chow luay liao.

Blame my bad luck.

Anonymous said...

@Virgo,

That's why I said Sinkie listed companies mostly fucked up --- mainly due to fucked up management abetted by PAPies anti-small guy and anti-shareholder laws, and amorally licked up & taken advantage of by brokers.

The rapid economic growth from low base, as well as the rapid growth of working-age population in the early decades helped to cover up the fucked up management & poor business models. Stocks, properties & prices all go up no matter how bad or lousy.

As someone said, when the tide goes out --- then you'll see who's swimming naked. Some of Sinkie-listed naked companies: old ST Micro, previous NOL, Noble, Hyflux, SMRT, SingPost, Singtel, Starhub, M1, SIA, Comfortdelgro, and a whole bunch of S-chips.

Anonymous said...

Things To Remember:


1. There are all sorts of players in the stock market: owners of companies, governments ( sovereign wealth funds), long-term investors, short-term investors, speculators, gamblers, remisiers, retirees, pensioners, housewives, students, cheats and criminals.

2. The stock market is driven by unrestrained illogical sentiments (emotions), not by hard patient thinking and calculation.

3. Timing is the key decisive factor that rewards or ruins. Both buying in and selling out required good, if not near perfect, timing so that substantial gains/profits can be made of minimum losses are sacrificed.

4. Knowledge is power, especially in stock markets. That's why insider trading, though has been made a crime, is still so rampant and lucrative. For those who have not been caught, they reap immense benefits, especially CEOs, Board of Directors, top government figures, bankers and accountants. For those who have no insider knowledge, do your research thoroughly and rub shoulders with those who have insider information.

5. Greed. The greedier the better. Driven by greed, you will become careless and impatient. Without greed you will not have the courage to win big. Therefore, you have to be very careful and patient. Never buy in sell in a rush. Always take your time to research and analyse until you are quite sure that you got a good bargain, a good chance of hitting your desired objective.

6. Wisdom must prevail in all decision-making process. Wisdom has to go hand in hand with greed, carefulness and patience. Without wisdom, nothing succeeds for long.

7. There is no short-cut to success. Every step of endeavour is conscientious, diligent hardwork. Do not take unnecessary risks and chances. Take only calculated risk and set a target to cut loss as well as to reap profit. Never think you are always right. Set yourself a bigger margin of error as your gauge on either end of the price.

Those are the seven guidelines I derived and used in my humble experience.

Virgo49 said...

Wow Anon 4.29 ame 5.44

Very enlightening.

Cheers

Anonymous said...

Sri Lanka accuses Singapore of sheltering suspect involved in $74 million trading scam.


The Sri Lankan President said that he appealed to Singapore Prime Minister Lee Hsien Loong two months ago (Jan 2019) to return Mahendran - who is now a Singapore citizen - back to Sri Lanka.

So far there is no response from the Singapore PM. If there is, then it could have been done behind closed doors that the public is not privy to.

This is going to be a test case: Whether new citizen who commited fraud or crime in their previous country of residence can continue to be citizen of Singapore when discovered.

This case may be the tip of the iceberg. In a rush to import new citizens to satisfy political objectives, the PAP leadership could have made a big bungle by not screening criminals (convicted or not) properly and thoroughly. There could be thousands of these criminals enjoying life in a safe haven that has slowly but surely become known as Singapore.

Scoundrels or scavengers, as long as you can help Singapore "GROW THE GDP AT ALL COSTS", you are welcomed with open legs! Ministers' annual bonuses are pecked uoin GDP Growth. Is this not the root of all ills and evils?


Where is the quality control? Talent in any definition, any shade, any form and any crime is still talent.

"What's wrong with collecting more money?" - LKY.

Chua Chin Leng aka redbean said...

Other than 5:44pm that made some sense, most of you are talking cock, esp 2pm.
You don't even know what was happening in the stock market and anyhow shoot. You were all led to the slaughter house and still did not know how you die.

During the bull run, it was unrestrained greed from many parties, esp the fuckers that were supposed to jaga the stock market and not allowed it to run wildly. They contributed to the fall.

But before the fall, everyone could make some money or lose some. With proper control and management the play could go on with lesser damage.

Today, the fuckers let the market turned into a casino with loaded dice but none of you fuckers could see it and still kpkb like smart asses. The situation today is a one sided game. Like I used to describe, the computer traders are like vacuum cleaners, given permission, aided, to suck the market dry.

That is why the market today is like a cemetry. Practically everyone has been sucked dry and discarded like a squeezed orange.

Please lah, find out more before coming here to talk nonsense.

Anonymous said...

@RB

Were you 1 of the fuckers? ��

If you were good enough, you would have traded your earnings / salary in the markets & accumulated at least a few million in cash plus no debts and no mortgage. Just sit at home shake legs & collect $20,000++ dividends per month. Once a while do some opportunistic trade for $20k or $50k kopi money.

Anonymous said...

MOSCOW, March 19. /TASS/. The construction of Russia’s habitable lunar base is expected to begin after 2030, Executive Director for Manned Space Programs at the State Space Corporation Roscosmos Sergei Krikalyov said on Tuesday.

"A flight to the Moon is set to take place by 2030. After 2030, the deployment of this base should begin. At the beginning, it will, perhaps, be small and briefly visited and then it will grow larger and people will stay there," the Roscosmos official said in a video of the Roscosmos TV studio posted on the YouTube video hosting platform

Anonymous said...

Singapore is the most expensive city to live in for the sixth consecutive year.

Three cheers to PAP. Well done! First in everything. First all the way!

Hope not the first city to sink. Then be known as Sinkapore!

Anonymous said...

"In many areas of the economy, despite the adoption of many laws and government decisions, positive changes have not been achieved," he said in a statement at the time.

Chua Chin Leng aka redbean said...

Fucker 10:06pm, whatever, my income is definitely much more than yours. And why the need to sit at home when I can sit in the office and continue to collect a nice income?

I don't like to brag but with fuckers like you, I need to tell you straight in the face.

Chua Chin Leng aka redbean said...

Oh, forgot to tell you, I am going to collect kopi money more than what you said, without having to punt in the market.

Chua Chin Leng aka redbean said...

"A flight to the Moon is set to take place by 2030. After 2030, the deployment of this base should begin. At the beginning, it will, perhaps, be small and briefly visited and then it will grow larger and people will stay there," the Roscosmos official said in a video of the Roscosmos TV studio posted on the YouTube video hosting platform

March 20, 2019 12:50 am

This is further proof that the Russians have not been to the moon, and neither the Americans. Both did not have the technology then, and now.

Anonymous said...

An extremely well rewarded just in retiree, going to have time to write a global bestseller book:
1. How to buy high & sell low consistently for 15 years.
2. And still get paid very well.

Anonymous said...

Rb, calm down lar. The fucker needs to be sodomized to wake up larπŸ˜€

Virgo49 said...

Aiyo, Mr RB.

As I had posted much much earlier in your earlier posts, the Remisers and Brokers of hey days are mostly Millionaires in their earnings. That's why at one time so many quited their other jobs and clamored to be one.

One Remisers Couple just plonked CASH on a Penthouse on CasaLago in Melaka

If you are among one of them in the hey days then should be also one of them.

Cheers

Anonymous said...

Uncle, you just let out a trade secret. This fucker may just apply to be a remisier.

Chua Chin Leng aka redbean said...

Virgo, for a retiree with no debt and children all grown up and on their own, a few hundred K would be enough to live quite comfortably.

Not everyone can become a millionaire.

Anonymous said...

@RB

Aiyo a few hundred K is just kopi money lah. Just 1 accident or major illness away from being wiped out by expensive medical costs.

If you're really rich, what for go to office in your 60s or 70s? Singapore is not like some fairy-tale cool weather low-population-density friendly picturesque small town, where going to a nice relaxed work 10am-to-4pm with friendly bosses, colleagues & customers can be a nice retirement affair.

I know a couple of ex-SAF generals -- 1 of them my relative, another 1 is a church member. Both given million-dollar CEO jobs at either stat board or GLC many years back. By 60 or 65, both also don't want to continue working even though collecting million dollars each year. What for?!? They already got enough money to last 3 generations. Their sons / daughters all earning top 5% of incomes in Singapore & don't really need their money anyway. They rather relax & enjoy life while they're still fit & healthy.

Anonymous said...

Anon 12:58pm, what about you, a gian png comes here to pass time? Your relatives may be ex general, but what are you, ex corporal?

Do you know that RB's office is in one of the most expensive corner of Singapore, called MBFC? You can afford or not? You got no chance to work in one of these posh offices in the choice downtown area.

Where are you, hiding in your pigeon hole?

Sour grape is it?

Anonymous said...

I'm mostly cooped up in my aircon condo everyday doing lots of reading & monitoring investments. Otherwise I'll be having a swim at the condo pool, talking cock with security guards or hanging out at the nearby mall in library, starbucks or burger king. Mcdonalds & kfc too noisy.

Working in mbfc & staying in mbfc is 2 different things. Cleaner aunty also enjoy atas mbfc everyday. LOL

Virgo49 said...

Aiyo. 12.58

Wow, Relative and church member ex-Generals. You only mixed with these high class elites and ex CEOs.

You know how these JLBs orJiao liao bee soft rice no backbones got these positions.

Not by their abilities or metrocrazy but by por lam pars or sucking their balls of their Masters.

To us they are pak ley (hokkien) meaning useless parasites who do not work their way up by true abilities.

Scourge of the people by sucking their blood and hard work.

You how lian behaving like somebody. Pride always come before a fall.

One fine day kena wiped out all your inflated riches and instead have to be a Scwreety Guard or cleaning old man in.fast food joints.

Seen many in my lifetime .

Anonymous said...

His ex general relatives and ex ceos don't mixed with him lah. So he lan lan go talk to security guards and aunties in the market and hangs around in fast food joints or kopitiam lah.

The companies he keeps is very telling. Told him MBFC he also cannot understand. Liat boh kiu.

Anonymous said...

RB: "The Rape of the Stock Market"


Over time the truth will appear?

Mb worst than "rape" if one by one (GLC) go by the same fate as NOL?

Very Jiat Lat and we younger generation dunno what to say (same same TPL video during 2011 erection)

This old man dunno why make succession plan like that after less than 4 years he kicked bucket the wheels one by one coming off?

There is nothing much to do except planning to jump sampan and get out permanently from the clutches of ....