Replying to LO29985 --
The loss to the index indicates that the prices of the indexed stocks have
come down; this means some have lost money and some have gained in the
trades involving these stocks. We may also read the fall in the index as a
reflection of the market's confidence in the future of the traded
companies.
>From this, it is possible to prognosticate the following:
1. Those who have significantly gained (millions of Pounds) in the
process, will try to master the underlying mechanism that produced this
windfall. Therefore, there is a likelihood of events and communications
which would tend to drive the general confidence of the market further
down.
2. Those who have significantly lost (millions of Pounds) in the process,
will try to understand their short-comings and try to strengthen
themselves. Therefore, there is a likelihood that such agencies would try
to poach managerial staff from stock-broking companies that gained. (The
salaries in the stock-broking sector may go up, although the total number
of jobs can go down!) They may also try to imitate the trading and other
strategic actions of the more successful traders. (For example, some
newspaper or media companies may be acquired by certain investor/trader
groups!)
3. Most common people (who have never seen a million Pounds in their
lifetime) are likely to stay away from the stock market. Culturally, a
stock-market operator is likely to acquire an image of a ruthless
unreliable manipulator. (Some marriages may break, as a result!)
4. Those who have lost their life's savings in the process are likely to
be disorientated and either enter into socially excluded practices or
commit suicide. A rise in substance abuse, criminal activities, and
cultism is possible. As a consequence, the government's budget in
controlling these will increase. Going by an unwritten law of bureaucracy,
an increase in the budget for one department also produces an increase in
the budget for other departments. So, an inflationary pressure on the
entire economy is possible.
In summary, such ups and downs of the stock-market tends to draw people
(and other economic agents) into practices that make life more tense and
nervous. People become scheming and manipulative. Powerful agents take
control over public media and manufacture public sentiments. Some people
who are able to master the ins and outs of the system command a higher
status. At the same time, most common people get attracted to culturally
degenerating practices.
[I am surprised] In responding to Andrew's question, I appear to have
taken a negative stance on stock-market operations. Usually, on any
matter, I find it more useful to avoid a negative or positive stance per
se, so as to keep the exploration and conversation going. On this matter
however, I am surprised to find such a strong position seems to be
emerging in my mind. This is a moment of self-discovery for me. I will be
happy to discover and learn more from your comments, dear readers.
With love and regards,
DP
India
>> ANDREW ACampnona@aol.com asked:
"the Footsie (London Stock Exchange Index) has lost more than 50% of its
peak of 6930.2 on December 31, 1999."
"Can anyone on LO prognosticate the outcomes/effects, if this pattern
continues?"
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