Should We Invest in Stock Market or Not?

 Should We Invest in Stock Market or Not:

HOW DO WE DECIDE THE PRICE OF THE SHARE :


TAKE AN COMPANY : WE STUDY : 

1. DEMAND AND SUPPLY OF THE COMPANY

2. BALANCE SHEET OF THE COMPANY

3. GROWTH OF THE COMPANY

LETS UNDERSTAND THIS WITH AN EXAMPLE: DEMAND AND SUPPLY  

A CIRCUS OWNER GOES FOR THE SEARCH OF MONKYES IN THE JUNGLE BUT DOES NOT FIND ANY, AFTER A LONG SEARCH, HE FINDS A VILLAGE WHERE THERE ARE MANY MONKEYS. SO THE CIRCUS OWNER ASK ONE OF THE PERSON SITTING BY IN THE VILLAGE FOR THE MONKEYS. AS THE MONKEYS WERE AVAILABLE IN ABUNDANT THEY HAD NO VALUE, THE PERSON SITTING BY THOUGHT FOR A WHILE AND SAID TO THE CIRCUS OWNER " SIR THIS MONEY COST RUPEES 500 EACH". THE CIRCUS OWNER PAYS FOR THE MONKEY AND TAKES AWAY SOME MONKEYS. AND SAID WOULD RETURN NEXT MONTH FOR SOME MORE. 

AFTER SOME DAYS THE CIRCUS OWNER THE COMES TO THE SAME VILLAGE TO BUY SOME MORE MONKEYS. NOW THE VILLAGER TELLS THE CIRCUS OWNER THAT THERE IS SCARCITY OF MONKEYS AND NOW IT WOULD COST RUPEES 1000 EACH.  THE CIRCUS OWNER PAYS FOR THE MONKEY AND TAKES AWAY SOME MONKEYS. AND TELLS HIM THAT HE  WOULD RETURN NEXT MONTH FOR SOME MORE.

AFTER SOME MONTHS RS. 2000...

AFTER SOME MONTHS RS. 3000...

AFTER SOME MONTHS RS. 5000...

AFTER SOME MONTHS RS. 8000..

AND THIS GOES ON TILL...COST RUPEES 10000 EACH. 

NOW AFTER SOME DAYS THE VILLAGER IDENTIFIES THAT THERE ARE VERY FEW MONKEYS LEFT IN THE VILLAGE AND IF THE CIRCUS OWNER DEMANDS FOR MONKEYS IT WOULD BE NOT POSSIBLE FOR THEM TO FUFIL HIS DEMAND SO THEY  ARRANGE FOR MONKEYS FROM ANYWHERE POSSIBLE.

THE CIRCUS OWNER KNOWS THAT THERE WILL BE DEMAND FROM THE VILLAGE FOR THE MONKEYS SO HE SETS HIS AGENT FOR THE SALE AND SELLS  THE MONKEYS FOR RS. 6000 EACH..SOME FOR RS. 8000... SOME FOR RS. 10000... AND EARNS HUGE PROFIT.VILLAGERS WERE HAPPY THAT THEY GOT MONKEYS AND EXPECTED  THAT THEY WOULD SELL THOSE MONKEYS FOR RUPEES 12000 EACH BUT THIS NEVER HAPPNED. THE CIRCUS OWNER NEVER RETURNED TO THE VILLAGE THEREAFTER.  

AS THE DEMAND OF THE MONKEYS WENT HIGH THE PRICE OF THE MONKEY ALSO WENT HIGHER. FROM RS. 500 TO RS. 10000

LETS CONSIDER AN ANOTHER EXAMPLE: 

NOW CONSIDER AN APPLE: HOW WILL YOUKNOW THE PRICE OF AN APPLE 

ANSWER : WE GO TO THE MARKET AND WE ASK IN TWO TO THREE SIMILAR SHOPS OF FRUITS AND WE ARE CONFIRMED THAT THE PRICE OF THE APPLE IS RS. 10 EACH

SO THE POINT IS IF WE DISCUSS OR HEAR A PRICE OF A CERTAIN THING IS RS.XX WITH CONFIRMATION OF MANY PEOPLE AND THAT IS THE REAL PRICE FOR US. 

SO IF WE ASK THE SAME QUESTION IN SAME AREA WHERE THE ACTUAL FARMING OF APPLES IS DONE THE PRICE MIGHT BE AS LOW AS RS. 2 EACH OR NEGLIGIBLE . SO WHAT IS THE REAL PRICE OF THE APPLE? ALWAYS A MYSTRY...

THEREFORE THE REAL PRICE OF THE APPLE CONFIRMED FROM MANY PEOPLE OR THE GROUP OF PEOPLE IS THE REAL PRICE OF THE APPLE THAT IS RS. 10 EACH ...i.e. GROUP AGGREMENT.

SO WHAT HAPPNES WITH THE SHARES IS THE SAME : ONCE THE PRICE IS FIXED IT IS ADVERTISED AND BROUGHT FORWARD WITH THE HELP OF MEDIA WHICH INCREASES ITS DEMAND (SOCIAL MEDIA,GOOGLE, DISCUSSION OF BROKERS BETWEEN THEMSELVES)

SO IF THERE IS A CONTINUOUS DISCUSSION OF A CERTAIN SHARE AND THE PRICE OF THE SHARE IS FIXED WITH GROUP AGGREMENT TO BE RS. 100 WHICH IS DISCUSSED TO BE IN DEMAND WILL ACTUALLY GET INTO DEMAND AND THE PRICE OF THE SHARE WILL INCREASE. FROM RS. 100 ... TO RS. 150...TO RS. 300... TO RS. 500.. AND SO ON...

NOW IF THERE IS A CERTAIN NEGATIVE NEWS IN THE SAME ALL TYPE MEDIA OF THE SAME SHARE THE GROUP AGGREMENT OF THE PRICE FIXED BREAKS AND THE PRICE WILL START DECERASING FROM RS. 500... TO RS. 300... TO RS. 150.. TO RS. 100... AND SO ON....

THE POINT IS THAT THE PRICE OF THE SHARE IS DEPENDENT ON THE NEWS IN THE ANY FORM OF MEDIA AND NOT IN OUR CONTROL.

SO IF THERE IS A POSITIVE NEWS PRICE WILL INCREASE.

AND IF THERE IS ANY NEGATIVE NEWS PRICE WILL DECREASE.

NOW IT BECOMES DIFFICULT TO DECIDE HOW THE PRICE ARE FIXED, ITS NOT DEPENDENT COMPANYS BALANCE SHEET, PROFIT LOSS STATEMENT NOR IN OUR CONTROL. THERE ARE MANY FACTORS ACT AS NEGATIVE NEWS FEED FOR THE COMPANYS IMAGE. ( NEWS OF : POLITAL PARTY CHANGE, BANK SCAM NEWS, CORRUPTION NEWS, FALSE ALLIGATIONS ON COMPANY ANY MANY MORE, CHANGE IN GOVERNMENT POLICIES)

GROUP AGREMENTS CAN BE DONE AND GROUP AGGREMENTS CAN BE BROKEN WHICH ARE DECICED BY THE BIG PLAYERS IN THE MARKET. SO THE PRICE OF THE SHARE CAN BE INCREASED OR DECREASED BY THE DISCUSSION OF THE PRICE OF A CERTAIN SHARE IN A POSITIVE OR NEGETIVE MANNER.

NOW FROM THIS WE UNDERSTAND THAT HOW DEMAND AND SUPPLY AND THEIR PRICE CAN BE MANUPLIATED.

NOW WE WILL DISCUSS HOW THE SHARE PRICES ARE DECIDED: BALANCE SHEETS STUDY

WE ALL KNOW WHO PREPARES THE BALANCE SHEETS AND HOW EASILY THE CAN BE ADJUSTED AS PER THE RUNNING REQUIREMENT OF THE COMPANY.

THEREFORE THE PRICE OF SHARE ALSO DOES NOT DEPENDANT ON THE STUDY OF BALANCE SHEET OF THE COMPANY.

IF WE WANT TO INVEST IN SHARES OR MUTUAL FUNDS HOW DO WE DECIDE.

ANSWER: BASED ON THE LAST 3 TO 4 YEARS STUDY OF THE COMPANY WHICH CAN BE MANIPULATED AS DISCUSSED ABOVE OR IS AT RISK DUE TO OTHER FACTORS DISCUSSED.

SO YOU DECIDE IF YOU DONOT HAVE ANY CONTROL OVER YOUR MONEY. HOW AND WHY SHOULD YOU RISK YOUR MANY INSTED INVEST IN PPF, FD, POST OFFICE INVESTMENT, PURCHASE LAND, PURCHASE GOLD WHICH WILL ACT AS ACTUAL ASSET TO YOUR WALLET. AND REMAIN IN YOUR CONTROL. 



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