Tuesday, April 8, 2008

Dad and stock markets

The other day i showed my dad the trading terminal and said this is
how the stock market works. I thought he would actually be
awestruck by the amount of capital that comes into this game called
Stock market but i was taken aback when he said this thing called the
stock market is an absolute bullshit and that it doesnt add any value
into the economic system. I wonder how he can possibly say that
especially since stock market is the place where capital allocation
takes place and where dormant cash is set into motion to create more
GDP and the GDP indicates the ultimate form of an economic growth.
Ofcourse my dad is pretty new to stock markets and i can understand his
naive comments but i wonder how everyone who knows the word 'Stock
market' and not much more than that do eventually say that its as a place
to gamble, it doesnt make sense, its a place where u loose money and
its a place where u get fooled more often than not.

oh .. Common give me a break .. if u have a certain yardstick on stock
market then why the hell dont u have the same yardstick for the other
sections of the economy as well. Let's take for instance the
advertisement industry who on a lot of occasions overemphasize their
product to a level that they say "if u drink horlicks daily then u will
become a SUPERHUMAN for the rest of ur life" .. my goodness me .. why
cant u pple see this as a blatant form of cheating ??? .. In another ad
a youth tries to woo a girl but without much luck, when he tries it
again with wrigleys chewing gum, the girl comes right into his arms and
they start loving forever after .. so is Wrigleys going to give me a
girl if the its chewing gum doesnt work ?? .. u will call me a stupid
if i ask that question but dear why do u pple use a different yardstick
here .. this is cheating as well .. afterall he is advertising
something for which he has no intensions of giving a guarantee.

Another criticism has been the extreme levels of price discrepancies in the stock market.
Now lets have a check on the price discrepancies in the outside world :
Diesel (regular) in Mumbai : Rs.36.08 per litre Petrol (speed) in Mumbai : Rs.52 per litre Coca Cola 330 ml can : Rs.20 = Rs.61 per litre (does that make sense)
Dettol antiseptic 100 ml Rs.20 = Rs.200 per litre
Radiator coolant 500 ml Rs.160 = Rs.320 per litre
Pantene conditioner 400 ml Rs.165 = Rs.413 per litre ( i never knew maintaining my hair was such a costly affair .. i better be bald)
Medicinal mouthwash like Listerine 100 ml Rs.45 = Rs. 450 per litre
Red Bull 150 ml can : Rs.75 = Rs.500 per litre
Corex cough syrup 100 ml Rs.57 = Rs. 570 per litre
Evian water 500 ml Rs. 330 = Rs. 660 per litre
Rs. 660 for a litre of WATER???!!! And the buyers don't even know the source (Evian spelt backwards is
Naive)
Kores whiteout 15 ml Rs. 15 = Rs. 1,000 per litre
Cup of coffee at any decent business hotel 100 ml Rs. 50 = Rs. 500 per litre
Old Spice after shave lotion 100 ml Rs. 175 = Rs. 1,750 per litre
Pure almond oil 25 ml Rs. 68 = Rs. 2,720 per litre
And this is the REAL KICKER... HP deskjet colour ink cartridge 21 ml Rs.1,900 = Rs. 90,476 per litre!!!

Are u pple by any chance trying to tell me that the explicit costs
for a HP deskjet or a coffee or a bottle of pepsi is much greater than
the expenditure of an oil producing company ?? .. If u do that would be
the joke of the century .. yes i know that the govt. is subsidising
their costs but even then explicit costs of other industries are no
where near.

Give it another thought and then u will tell me that all these price
discrepancies is because of the demand-supply equation. This equation changes on a continuous basis and hence u will always see a change in price. The same goes
for stock markets as well, when lakhs of players play the game at the
same time there is bound to be a price discrepancy. People who
understand that play well and pple who dont lose the game.

Am not trying to say that there has been no fraudulent activity here
but please tell me an industry that has none.