ramanan50

Fraud That is Stock Market, How Naming Drives.

In Business on November 16, 2013 at 07:44

I am one of the view that the stock market is a huge fraud and a form of legitimized gambling with the active connivance of the Governments.

The stock market is played by a minuscule percentage in India, may be .001 % of the population.

But th Government decides its policies on its performance.

One would expect the economy in prosperity when the stock market is booming.

But facts are other wise.

When the stock market is down, the economy is cited as the reason for the poor performance.

Prosperity of the share market is for the prosperity of the Rich.

Having been in a Senior management position I know how the IPOs are rigged.

You pay a percentage to the underwriters.

They, who have funds at their disposal or contacts, including the Banks and Institutions, buy up the stocks, and inflate the price.

Gullible Public laps it up and it drives by.

Again the stock prices go up.

The underwriters cash in on the boom and quit, depending on the new business they get.

The promoters, depending on whether they want to run the business or run away either cash in on the boom or continue fixing up Institutions.

This is only the tip of the iceberg.

Now The New Yorker has published a report as to how stocks rise in prices.

By a simple piece of clever naming!

 

Story:

Between the beginning of October and early November, the following eight companies were among more than twenty that began trading on the New York Stock Exchange: OCI Partners, Springleaf Holdings, Brixmor Property Group, Essent Group, 58.com, Mavenir Systems, Midcoast Energy Partners, and Twitter. They’re a diverse group of tech, energy, property, and finance companies, valued at their respective I.P.O.s between three hundred and sixty million dollars (Mavenir Systems) and $24.5 billion dollars (Twitter).

By the end of their first day of trading, Midcoast, Springleaf, 58.com, and OCI had risen in value, whereas Essent, Brixmor, Mavenir, and Twitter had fallen. At first it’s hard to discern a difference between the early appreciators and the early depreciators. Many experts argue that it’s impossible to reliably forecast stock prices in the short run. In his classic 1973 guide to investing, “A Random Walk Down Wall Street,” the Princeton economist Burton Malkiel famously claimed that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.” Investors, Malkiel argued, were at the mercy of the markets, and though prices generally rise in the long run, it’s impossible to beat the market reliably and consistently. Malkiel’s book has sold more than a million copies…

Short-term investing is certainly a gamble, but if you look back at the eight companies, you’ll find one subtle feature that distinguishes the climbers from the fallers: whether their ticker symbols are pronounceable according to the rules of English—that is, whether it’s possible to read them out loud as if they were words, without adding extra sounds. The pronounceable OCIP, MEP, LEAF, and WUBA (OCI, Midcoast, Springleaf, and 58.com, respectively) appreciated by between one percent and fifteen per cent, whereas the unpronounceable ESNT, BRX, MVNR, and TWTR (Essent, Brixmor, Mavenir, and Twitter) depreciated by between half a per cent and fourteen per cent. Eight stocks is a tiny sample by any standard, and stock prices are shaped by far more powerful forces—but the relationship between ticker pronounceability and early performance seems to hold with larger samples, too. (The trend holds if you include all twenty-three stocks that began trading between early October and early November: after twenty-four hours on the market, seventy-five per cent of the companies with pronounceable symbols appreciated, but only forty-seven per cent of those with unpronounceable tickers appreciated.)

Several years ago, Daniel Oppenheimer and I examined the performance of nearly a thousand stocks that entered the New York Stock Exchange and American Exchange between 1990 and 2004. We separated stocks with pronounceable ticker symbols from those with unpronounceable symbols. Across both markets, stocks with pronounceable symbols enjoyed a bigger post-I.P.O. boost than their unpronounceable counterparts. The effect was strongest during the first few days of trading; over time, it weakened, but never quite vanished.

http://www.newyorker.com/online/blogs/currency/2013/11/the-secret-science-of-stock-symbols.html?utm_source=tny&utm_campaign=generalsocial&utm_medium=facebook

 

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  1. stock market is a gamble and a fraud because of leveraged trading which helps those with inside information to make a killing,and participatory notes which enables secret funds to be routed through locations like Mauritius;if these two are banned,market will be steady,more people will invest in stocks and more entrepreneurs will be able to raise capital for their ventures;

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