Stock Market – The Vicious WEB - Tempting Rally in Stock Markets – Be DEAD CAUTIOUS.

Stock, Currency, Commodity Markets all around the world are sinking like Titanic. In Pakistan perspectives, we always have the dangerous scenarios waiting for us (How important nation we actually are).

It is pathetic that not even a single brokerage house has initiated any warning or caution warning for the sake of poor investors to be on side lined or exercise caution. All these brokerage houses seem to catch the brokerage commission and they care no others.

We are witnessing sucker rally in Pakistan markets, Sucker rally is a technical or slang term (derogatory in meaning) in Markets where investors either overestimate or miscalculate the price of the stock to the value and sometime they start cover their sell positions (short position).

Do not ever look at the current price of the stock in relation to the past price of it.

One had a higher purchasing power with his money 20 years ago as opposed to today. So seeing at a stock, lets say XYZ Company and its low, one has to compare its current price and feels that it is trading almost at a 10 year low. And that is the evil side of the mistake made by the poor investor. They got tempted into purchasing the “P R I C E” instead of the “V A L U E “. One has to understand that no stock is ever cheap or no stock is ever expensive. It is actually the worth that matters not the present price.

Investors who try to work with trade current prices got caught in between “buying based on price alone” and it gives impression to other investors that the market is rebounding. Never enter a pond with Crocodiles in it. No matter how good of a swimmer you are, you will get eaten alive. Let the crocodiles leave the pond. There is no rush. The pond is there, the water is there and YOU THE SWIMMERs are there.

Reference: Mir Muhammad Sahib’s article.