Crash or correction? “Manipulation” or just capitalism-as-usual?

Demonstrations? The wrecking of offices? The burning of the flag of.. err sorry, no flags were burned yesterday! It was not a demonstration for Palestine, Iraq or against the Cartoons. This time it was the ‘investors’ taking to the street in front of the stock market. What on earth is happening?

I don’t have one piaster/cent invested in the stock market (yet), so I can afford to watch what’s happening with a little smile and some detachment.

I’ve been hearing comments from people like: “what is happening is not normal”. “The stock market in Jordan rises and falls in an ‘unrealistic’ manner”. “It’s all the fault of the 7eetan (the so-called ‘big whales/sharks of the market”. And yesterday the demonstration was accusing the regulatory authorities, the central bank, some public companies, some brokerage houses and the launching of too many IPOs for the “disaster”.

Well.. If there are unlawful practices, like insider trading or false disclosure, then the authorities need to do crack down on that, no question. But is that what’s all about?

I mean HELLO!

The crash of the internet bubble

Haven’t those angry investors heard of the stock market crashes in the US or Asia. Haven’t they heard about the risks associated with trading stocks. Haven’t heard how some people that invested in the internet bubble of 90’s lost 90% or more of their money?

Or is the definition of ‘normal’ in the minds of our (apparently naive) investor community that things can only go up and up indefinitely. The stock market has risen TRI-FOLD over the past few years. And now a 20% correction or crash is seen as a national disaster!

It’s a lot of naive people who put their life savings into stocks (some even go into debt to buy stocks) and who treat the stock market like a guaranteed lottery ticket. The way these people talk about stocks is just hilarious. “Hey man, I heard this stock is really hot!”. Heard? Investment based on ‘rumors’ and ‘tips’ is not such a good idea. Betting all you investments on one ‘hot’ stock is bad investing.

I bet that many small investors don’t even look at company results and they probably don’t know a P/E ratio from a falafel sandwich. And now they accuse their brokers of ‘misleading’ them.

Dear Jordanians: welcome to capitalism. Yes there will be sharks. Yes there will be people playing the market. Yes there will be corrections and crashes. Learn to live with it.

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7 Responses to “Crash or correction? “Manipulation” or just capitalism-as-usual?”

  1. Khalidah Says:

    I salute you …
    Wonderful piece … if only they listen and learn *sigh

  2. Basem Says:

    Very well said…

  3. hamede Says:

    I agree with you it is melt down.

  4. Ahmad Says:

    Ahmad you amazed me!

    Finally, a decent article.

    I salute you!

  5. Karim Says:

    People love shortcuts. If stock markets are booming, people of all ages and backgrounds will just jump into the wagon and start trading. Same applies to real estate, and not only would people start buying and selling real estate, but you will find people quitting their jobs to become real estate brokers or agents in a one man operation without an office, armed with the daily-reborn hope to sell a land or flat that comes with a JD10,000 bounty in commissions!

    But when this drive to make easy-money or side-income becomes deeply injected in people life-style and daily actions I think it becomes quite disgusting. I remember entering shops in Amman where the owner of the shop would be on the phone talking about stocks while leaving his customers waiting to be served, or I would ask a pharmacist for a certain medicine, and he would glue his eyes to the stock market ticker on the TV for a few minutes until the stock prices of the companies he invested in appeared and then ask me again for the name of the medicine I asked for, and then fetch it from the drawers swiftly, and check you out in a rush.

    But then, all this is normal. The stock market boom is new for people in Jordan and the region. Maybe all this price correction taking place will let people be more careful and diligent in their stock market investments, and will rationalize their actions. Although I agree with you it is quite ridiculous for people to demonstrate in front of the regulatory entity that overlooks the market, I do think that much can be improved on the regulation and enforcement in the market. I would have wished they were at better times when the market was booming, so that the message to the regulatory entity would have been stronger, and not weakened by hard feelings to the latest losses in the market. But in good times, everything is good.

  6. hareega Says:

    It’s funny to see demonstrators in suits, not a typical MAsjed-Hussaini demonstration lol. It reminds me when some young doctors arrived in theri BMWs to the ministry of health to demonstrate for not getting theri 70 JD monthly salary.

    Stock markets are unpredictable, especially in our region.

  7. manal Says:

    Unfortunatly im no’t a reading type personm i cant concentrate while reading i dont like to read long articles ( that do not concern my major) and it takes me months to finish a 400 pages book, which i have never finished one yet :( and im not friendly with news papers, but your blog interest me so much it is like a news paper to me, you blog diffrent than the rest and you always add an information or expand my knowledge about things, its like a little bit of everything,which i like.
    keep it flowing

    I would like to add that people are shooting themselves due to the stock landing,and having heart attacks yes it is happening here in jordan. To be in the stock bussiness you either already rich trying to double a couple of millions of what you have, and it wont matter if you lost a large amount of money or you have a very brave and strong heart and a good back up plan not a taxi driver that took a loan from the bank to enter the stock, who dose that i find people here so naive when it comes to money matters. But then maybe so disprate.

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