Friday, April 20, 2012

The brigands are trying to make a comeback – no chance of that for 3 years

The SEC yesterday lifted the 10% band, which when it was imposed in the heady days of the overheated market, where the pump and dump boys were in action, creating a veritable casino in the stock market. Now in a dead market, which is likely to remain like this for about 3 years before the next boom cycle comes on board, this band was lifted, with the proviso that it could just as easily be reimposed if the need arises. Ask the question? Why remove it if there is uncertainty as to the fact that if they see a pump and dump they could immediately reimpose using different criteria to that currently used.

Is this a convenient method by which the Govt. stooges and players can indulge in a little pump and dump to get rid of some of their large unrealized loss positions on currently held portfolios that were purchased at much higher cost?

If the latter is the case then it is regrettable, to continue to politicize the stock market as well, which will only dampen the investment decisions of the market.

Whilst I am aware that the SEC chairman took the position offered him, on condition that he will not tolerate interference from his decision making which will be independent, no doubt even he is under pressure to find a solution to the current malaise where the market is dead, hundreds of thousands of small investors have lost a lot of money as even the EPF is showing appalling returns.

The current malaise is here for a while, until the falling economic indicators take a turn for the better in about 3 years when confidence will return to the market when there are others at the helm of he economy who hold a lot more credibility than the bunch of cowboys that operate today, on whom all overseas investors have lost faith.

The economy has taken a turn for the worse, which will directly impact on the profitability of the companies which will then in turn depress their share prices. We cannot see any light at the end of the tunnel, but as nigh follows day we will eventually be able to get over the crisis, once the people realize that there is no other answer to democracy, and that the dictator ship we currently have is bad for business in the 21st century.

Let’s hope that once the shares drop sufficiently they will look attractive. It is the foreign investors again who will buy at the low prices and sell when he market goes up, whilst the locals will be late to follow and reap smaller rewards in th e next stock market run up. Till then it is best to get the 16% interest and stay put!!!                                                                  

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