Posted in Community :
Credit Derivatives
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Activity:
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last activity : 07 06 2010 20:18:09 +0000
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FEAR AND GREED
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Speculative Trade
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Short Selling
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FEAR AND GREED ARE TWO MAJOR FACTORS BEHIND THE MARKET MELT DOWN |
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by
taranath joshi, DGM Operations, EOL,
| 08 07 2009 15:20:36 +0000
Its quite true.
Fear in the minds of investor/s leads to selling pressure and causes the fall.
Greed of the corporate entities lead them to diversify into the field in which they are not having expertize and competencies. Each group of companies are having at least one quoted or unquoted subsidiary which is showng big losses, including Tatas and Birlas. Whenever a corporate wave comes, they float a subsidiary and would start looking opportunities for floating the issues to public.
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The market is heavily manipulated. The driving force behind the meltdown is speculative trade. The system of private regulation serves the interests of the speculators. While most individual investors loose when the market falls, the institutional speculator makes money when there is a financial collapse. With foreknowledge and inside information, a collapse in market values constitutes a lucrative and money-spinning opportunity, for a select category of powerful speculators who have the ability to manipulate the market in the appropriate direction at the appropriate time.
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No supporting Arguments for this idea
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One important instrument used by speculators to make money out of a financial meltdown is “short selling”. The role of short selling in bringing down companies is well documented. The collapse of Lehman, Merrill Lynch and Bear Stearns was in part due to short selling. Short selling has also been used extensively in currency markets. It was one of the main instruments used by speculators during the 1997 Asian Crisis to bring down the Thai baht, the Korean won and Indonesian rupiah.
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