World Investor Week 2017: Bangladesh perspective
Before investing in the capital market, analyze all related facts. Learn about the stock market conditions of the company and its shares you want to invest in
Md. Shafiqul Alam
The capital market regulatory authority of the country - the Bangladesh Securities and Exchange Commission (BSEC) has decided to observe the World Investor Week 2017 this year. This is the first time such kind of inimitable program is in progress of observing from 2nd October to 8th October. It is to spotlight that in the year of 1983, the International Organization of Securities Commissions (IOSCO) was established with 218 securities commissions of more than 100 different countries as a member. This year, BSEC has conducted this weeklong program in Bangladesh on the request of IOSCO. The key theme of this weeklong program has been set as Investor Literacy and Protection. A committee has also been formed to substantialize this one and only program successfully as well. As an envoy, former skipper of Bangladesh national cricket team and worlds best all-rounder Mr. Shakib Al Hasan was named to serve the nationwide investor literacy activities program. Of late, a new agreement has been signed up with the capital Regulator organization of country - Bangladesh Securities and Exchange Commission (BSEC).
The inaugural ceremony was set to initiate in the Bangladesh Shilapakala Academy in capitals Segunbagicha, where the honorable finance minister of Bangladesh government Mr. Abul Mal Abdul Muhit inaugurated the program. The key objectives of all activities of IOSCO or BSEC are to defend the interests of investors and overall development of the capital market. Here are some facts attempted to discuss on the capital market and investment learning, on the occasion of the World Investor Week-2017 are presented briefly below.
One should invest in the capital market only that time when one is compatible of taking the risk, otherwise not. Because along with having the likelihood of making a profit, there is a chance of loss. However, it is likely to reduce the risk when the investment is done after understanding, observing and having the depth knowledge. Bangladesh is expected to turn into a middle-income nation from developing nation by 2021 and stand up to the queue of a developed country by 2041. To meet this target, investing in the capital market can be exploited as the salient medium. Currently, the capital market contributes only 20 percent of the countrys GDP, though many countries of Asia contribute more than hundred percent. First of all, we have to make our investors fortify in right way to establish the capital market as the pillar of the economy like a developed country.
01. Before investing in the capital market, analyze all related facts. Learn about the stock market conditions of the company and its shares you want to invest in. Then you may invest there, as the capital market is an analytical investment field. There is no scope for investing there based on estimation.
02. Keep track of all potential information about the company where you are interested to invest. Keep a close monitor on the companys business status, profit and loss information. Because you are going to buy a portion of ownership of that company. If possible, read newspapers regarding capital market and collect as much as information about the company in which youre going to share your potential investments you can, analyze that numerical information and note them for the future use. We should not forget that it is certainly a risky market. You have come here to gain and you should not forget that your wrong investment could make your financially damaged.
03. When any stock price starts to fall, it is more rational and wise to leave the shares on a temporary basis at little loss. In some cases, sort of loss can be taken as a strategy without being scared of any rumour or news. This money can be tried to benefit from investing correctly in other shares.
04. When the price is amended in the capital market, Invest money for the time after keeping some money in your hand. Heres my personal suggestion that someone should always keep a portion of money in his/her hand from investable money.
05. When the price of your shares starts augmenting, keep selling them at a fair price. And when the price starts diminishing, then try to re-invest prudently understanding the condition of the market.
06. If the value of any share falls, you may invest your investable money again in the same share and can abate the average price of the share.
7. Change your investing strategies in order to adapt to time and situation. The same technique may not work in all the shares.
08. Before finalizing the investment decision of purchasing a companys shares, you may gather all possible information and data that is published by the company.
09. In some cases, it may be wrong to make a decision even after considering all possible analysis. You should try to rectify the mistakes as quickly as possible in the least damage.
10. When a stock price starts rising or decreasing abnormally, tries to unearth the reason behind it. If you try with your adroitness, you can make enough money even in this anomaly.
11. Most of the people collapse in abnormality and problems. This is peoples normal mindset. Going to its contrary, that means trying to make money using them. Warren Buffett once said that as an investor it is wise to be fearful when others are greedy and greedy when others are fearful that means the capital market will fall down, you can boldly increase your investment.
12. Watch the price and earning (P/E) ratio. The less P/E ratio, the less investment risk. P/E ratio is a measurement of how many times of the price a company is selling its shares. If others facts remain same, it is more adaptable to invest as much as possible with less P/E companys shares.
13. See Net Asset Value per share (NAV) of the company. With this, there should be a consistency of market prices. Even if the company does not come to extinction, the value of assets of the investor isnt affected. Only the shareholders can get some portions of the assets when the company is abolished. In that case, bank loans and other dues are paid from the sold value of this asset and the rest are distributed among the shareholders.
14. See the Earning per Share (EPS) of the company. The more EPS Company is better for you. If the company has more EPS, you have the opportunity to get more dividend. At the same way, the fewer EPS you have, the less dividend you will get.
15. Most of the cases, taking a decision in the capital market should not be delayed. Whats a good decision for today wouldnt be good for tomorrow at all? So take a swift decision.
The capital market is a very sensitive market or place where many fraudulent people wait for the chance of weakness of others. There are many stories behind the capital market. Such stories may seem overwhelming. There are some gamblers or market manipulators in the capital market who constantly want to influence in the market. A recent story published in social media attacks my attention.
The story has been revealed below for the readers. In a certain village, theres an irritation of monkeys. Locals were hugely vexed with them. In the meanwhile, a man, with gigantic cages, came to the village and proclaimed that whoever would catch monkeys and gave him, he would pay TK 2 for per monkey. Within a short time, the cages were about to full, and the number of monkeys was reduced gradually in the village.
Now that businessman announced TK 5 for per monkey. After some days, no monkey is found in the village, because some left the village and the rest were caught. Eventually, he announced TK 50 for per monkeys and deployed 5 people whose mission was to sell monkeys to villagers for Tk 40 per monkey. Accordingly, with the assistance of his agents, the businessperson sold 15-20 monkeys at TK 40 per days and brought for TK 50 per. Within 2 or 3 days, the agents acquitted themselves with the villagers swiftly. As the demand for monkeys was touching the peak to the villagers day by day, the agents of monkey businessman started selling per monkey at TK 45-48. In the same way, the agents sold all of the monkeys to the villagers that theyd in their cages.
But when the villagers came to sell their monkeys to the businessman, they found him that he was leaving the village closing his business activities. But the villagers asked him, whats the matter?, where are you going? He replied that theres no profit in monkey business and thats why he left his business. Thus, the man sold all monkeys at TK 45-48 per which were brought at Tk 2 per and left his business making a lot of profit. There can be raised questions about the credibility of the story, but as an ordinary investor, there should be no doubt about the more caution we should have to be.
The writer is a financial analyst
